By Adam Ray
Shares in Allied Farmers took another battering today as Hanover investors began receiving their allotments of Allied stocks.
Colleen Taylor got her mail today to find she is now a former Hanover investor – a letter confirming she and her husband now own hundreds of thousands of Allied Farmers shares.
“It looks like big figures, lots of big figures; but in reality, not very much,” she said.
She is one of 14,000 Hanover investors who are now Allied shareholders. The shares were issued at a price of 20c; they are now worth just half that.
“It’s a disaster for Hanover investors to be honest, it’s always been a disaster for Hanover Finance,” said Bernard Hickey of interest.co.nz.
Mr Hickey says many former Hanover investors are desperate to get some of their money back and could sell their Allied shares at any price – but Colleen Taylor will try to tough it out.
“I think there's only one option that’s to hang on. How long we can wait to recoup, who knows,” she said.
Under the merger, Allied issued nearly two billion shares to Hanover investors and took over its loan book in return.
“It’s a massive increase in the number of shares on issue and each Hanover and United investor will have to make a decision around what they are going to do,” said Alan Anderson of Forsyth Barr.
But the shares can only sell if there is demand for them.
“It’s a speculative buy and, unfortunately for Hanover Investors, they need speculative buyers to buy 1,900 million of these shares,” said Mr Hickey.
Some of those speculative buyers made bids of just one cent per share today – a price too low for even Hanover investors.
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