Allied Farmers Ltd faces further asset value writedowns in its accounts as the Matarangi beach property development it acquired from Hanover Finance is likely to be sold after HSBC pulled funding.
Allied Farmers said its subsidiary Matarangi Beach Estates Ltd has received a notice from HSBC cancelling that company's loan facility and thereby requiring the $19 million loan to be repaid.
This has started a further process that may see the asset sold. The carrying value, net of debt, of the property at June 30 was $7m.
"It is not known at this time what the impact of HSBC's action will be on this value, but a further reduction in value is likely," Allied Farmers said.
Matarangi Beach Estates was acquired as part of the Hanover transaction and was one of the property development assets contributed by Mark Hotchin and Eric Watson to the Hanover debt moratorium at a net value of $26m.
"This has always been one of the difficult assets in the portfolio," said managing director Rob Alloway.
Allied Farmers had not achieved the property sales needed and a recent campaign to sell the entire development was not successful.
HSBC's consent to the change of ownership of Matarangi Beach Estates was still outstanding because it was seeking replacement shareholder guarantees while Allied Farmers was not prepared to put the group's wider assets at risk.
Allied Farmers reported a $77.587 million loss in the 12 months to June 30. Its finance company Allied Nationwide Finance has collapsed and the value of assets it acquired from Hanover last year have been drastically written down. Its chairman left and Mr Alloway has signalled his departure.
The company has reduced debt after selling its Five Mile property near Queenstown Airport and has fully repaid a loan facility with Westpac.
