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Hanover investors vote yes to Allied merger

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Investors cast their votes at the Hanover Investors Meeting, Auckland

Investors cast their votes at the Hanover Investors Meeting, Auckland

Wed, 16 Dec 2009 4:18p.m.

Investors in the failed finance company Hanover have voted by the slimmest of margins in favour of a deal with Allied Farmers.

Today 75.4 percent of voters said yes - with 75 percent the required figure for each category.

United Finance investors voted 79.48 percent in favour, subordinated noteholders voted 97.47 percent in favour and Hanover Capital investors voted 88.33 percent in favour.

Allies Farmers' shares were placed in a trading halt ahead of the vote.

The deal means investors will get shares valued at 70 cents for every dollar but there's a catch. Allied is issuing close to 2 billion new shares and they will only be worth a fraction of their current value when they hit the market.

The deal involves Allied Farmers taking over all of Hanover's remaining assets valued at $396m and will see Allied enter the NZX top 50.

Hundreds of millions of dollars of investors' money has been trapped in Hanover for more than a year. They're hoping today's deal will enable them to get some of that money back.

Little over a week ago around 90 percent of Allied Farmers' shareholders voted in favour of the takeover.

During the past three years about 30 finance companies have gone into receivership or liquidation, entered into moratoria or had frozen repayments to investors.

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Comments [2]

Shafted
16 Dec 2009 6:39p.m.

I dont think there is much risk of Allied going under. With the Hanover loan assets they are now very well capitalised by paying for these with shares and not cash. Cash flow will be an ongoing problem however as the loans are realised Allied can keep the cash rather than by paying it to shareholders.

The main issue as I see it is the massive overhang of Allied shares that will be offered for sale and really nobady to buy them except at bargin basement prices. I expect we will see a share price of 1 or 2 cents in the new year.

Once again the investors have voted the wrong way.

Dee
16 Dec 2009 5:27p.m.

Do I want to thank those Hanover Investors who voted to go with Allied Farmers - no I most certainly do not. At least if Hanover was liquidated I stood some chance of getting a portion of the $250,000 I had invested. What do I have now only a lot of worthless shares in a company that was already in trouble (when was the last time their shareholders got a dividend) and if they go under in 12 months time what then; we will all have zilch.

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