Allied Farmers settles debts
Allied Farmers has finally secured agreement to disentangle itself from collapsed Allied Nationwide Farmers after striking a $2 million deal with the government-run finance company bad bank.
In a release to the NZX Allied Farmers said it had struck an agreement with Crown Asset Management (CAML) to pay two tranches, each of $1m, to settle debts still owing following the 2010 collapse of Allied Nationwide Finance.
CAML was formed by the government to absorb and work out the considerable rump of toxic assets held by collapsed finance companies, including Allied Nationwide, that were covered by the Crown Retail Deposit Guarantee Scheme.
Under the deal Allied Farmers would immediately pay $1m in cash, with a further $1m to follow by October 3.
The first payment to CAML is being funded by the sale of 10 per cent of shares in NZ Farmers Livestock to other shareholders. The shares are owned by Allied subsidiary Allied Farmers Rural which would continue to own 57 per cent of NZ Farmers Livestock.
The second tranche is proposed to be funded by issuing non-listed three-year bonds in Allied Farmers Rural.
The settlement has also secured the approval of other Allied Farmers Rural bondholders to extend the maturity date of bonds due for repayment next month by 12 months.
Accounts for Allied Farmers show the company owed $2.65m to CAML at December 2013. The accounts note this liability is secured by a general security agreement.
If Allied Farmers fails to make full payment by October 3 CAML would ‘‘continue to reserve its rights’’, the company said.