I have been writing about the takeover of the defunct Hanover Finance Company by Allied Farmers Ltd [ALF.NZX] run by Rob Alloway for over a year now. This merger has turned into a disaster for Allied and Rob as he and his fellow directors failed to do due diligence on the assets Hanover had on its books.
Mark Hotchin ran Hanover into the ground by removing a good portion of its cash as dividends for his own pocket, investing in poor quality assets and hocus pocus interrelated lending.
As big a failure Rob and the deal he did with Hotchin was - and it was a whopper - it comes as more than a jaw-dropper to find out that Hotchin has decided yesterday to come out with his gloves off and take an almighty swing at Rob and the way he is managing the assets that were subsumed from Hanover into Allied.
Please keep in mind that most of these so-called assets are of very low quality and are being sold into a market not this depressed since, well, the Great Depression.
Mark let rip yesterday in a letter posted on Hanover.co.nz:
Over the past 12 months, the Board of Hanover Finance Ltd (Hanover) and United Finance Ltd (United) has been alarmed at the decline and continuing erosion in the value of the assets that were transferred to Allied Farmers (Allied) in the debt for equity swap in December 2009. Increasingly we are being contacted by investors who share this view and are asking what action, if any, we are prepared to take.
Apparently investors in assets that Hanover used to operate and own and lost all their money in are now coming to the very same man who lost that money for advice?
The letter goes on to say that former Hanover assets are being flogged off in "fire sale" and that Alloway has been misrepresenting the financial state of the company to investors before the 2009 merger and defaming Hotchin though the media. This is of course true but Mark has a track record with this sort of stuff himself so can clearly spot this bird even without its feathers.
You can stop laughing now if you like but this might get you going again:
We are no longer prepared to sit aside and allow this to happen and will actively campaign on behalf of shareholders, including seeking to have Rob Alloway removed from the Board of Allied.
So Mark is going to bat for investors in Allied, most of them former Hanover investors. Isn't that like putting Bernie Madoff in charge of the prison accounts?
I am absolutely stunned by the gall of this man in the face of what he has done to thousands of investors in Hanover.
By the way, he will be updating us on his Hanover website as this saga develops.
I cant wait.
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