Allied Farmers agrees to settle

RICHARD MEADOWS
Last updated 16:01 20/12/2013

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Allied Farmers has conditionally agreed to settle a $2 million debt owed to Palmerston North-based fresh food company Speirs Group.

The farming services company's liability dates back to a "put and call option" contract with Speirs from 2008.

In July Speirs chose to exercise its "put" option, meaning it wanted to cash up.

According to an Allied update to the NZX, the companies have agreed to settle the obligation by issuing Speirs 14.7 million new Allied shares.

Based on the latest closing price of 3.6 cents, that values the private placement at about $530,000. The shares have gained 19.4 per cent today to 4.3c.

Allied has also agreed to pay Speirs $500,000 at the end of April 2016, which will be unsecured and will not incur interest in the interim.

The deal is a related-party transaction, because Speirs director Nelson Speirs was until recently also a director of Allied subsidiary NFA, which is in liquidation.

That means the settlement is conditional on Allied receiving a waiver from the NZX, as well as Speirs receiving permission from its shareholders.

Allied chairman Garry Bluett said the directors considered the settlement to be a good result for the company and its shareholders.

The company's shares have tracked upward recently after plummeting as low as 0.8c in October last year.

Since then, Allied has resolved a dispute with the Inland Revenue Department over a liquidation notice for $4.2m, and another dispute with a major creditor.

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