Allied still in mess as MD Alloway quits

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Former Allied Farmers chairman John Loughlin says he was as surprised as anyone at the sudden resignation of managing director Rob Alloway with the company's finances still in dire straits.

"I've got no idea what's happening in the company," he told BusinessDay yesterday, two weeks after his own resignation.

"I haven't spoken to anybody. All I do is read the papers."

Mr Alloway announced yesterday morning he would quit as chief executive in December but would remain on the Allied Farmers board. He had given notice "to allow a timely search for a new CEO and a measured handover of the business".

Explaining his decision, Mr Alloway said a restructuring process at Allied Farmers was coming to an end.

"And [with] several asset realisations likely in the short term, the company will be in a different position in December when I step down. My key goal was to establish a more stable financial platform and normalise the company's banking and other commercial arrangements."

Allied Farmers, 98 per cent owned by former Hanover Finance investors after a stock-for-shares swap last year, is in talks with Westpac over debts of $16.9 million after several extensions were granted on repayment terms.

The latest talks follow the receivership of Allied's finance subsidiary Allied Nationwide on August 20, which meant the company could not meet agreed terms for repayment.

Mr Loughlin said appointing receivers was the only decision the company could take.

"I resigned when Allied Nationwide tipped over," he said. "I'd been chairman through the time the finance company was expanded and I felt the need to take responsibility for the losses that are owed from that."

Allied Nationwide owed its investors about $130m when it collapsed, but its debts were covered under the government's retail deposit guarantee scheme.

Mr Alloway said at the time it was better to call in receivers than use Allied's assets to support the finance company.

Those assets were mainly loans and property acquired from Hanover Finance, but subject to devastating writedowns since the controversial deal last December.

The underlying assets have been written down to just $94.3m from $396.2m.

Allied is yet to report its results for the year to June, due last Monday, but has received a stock exchange waiver until September 10.

- © Fairfax NZ News