Showing posts with label United Finance. Show all posts
Showing posts with label United Finance. Show all posts

Friday, March 5, 2010

Allied Farmers Fraud passes with little fanfare

So Allied Farmers Ltd [ALF.NZ] "assets" are now worth NZ$175.5 million according to their half year result to 31/12/09, whereas back in November 2009, just 3 short months ago, they were presented to prospective and existing shareholders in Allied at more than double that at $392 million. The prospectus had a balance date of 30 June 2009.

The assets in question were assumed from their purchase of Hanover Finance and United Finance and Allied's own assets.

The prospectus value was calculated on a gross realisation basis; however, the NZ international financial reporting standards (IFRS) require acquired assets and liabilities to be recorded at acquisition date "fair values" or closer to the depressed market rate of what most of the semi developed or undeveloped land and building assets that the company has on its books - most of that is junk.

At the time of the announcement of the transaction in November the nearly $400 million of assets was used as the basis of valuing shares in the restructured company and therefore its capital value on the NZX. At the time ALF shares were trading at around 30c, which valued the company at more than half a billion. Clearly there was some fat in the system even then!

At its current share price of 7.9c per share or around $154 million total capital value, this values the company at $20 million under the current asset valuation.

My point is that given that under IFRS standards their assets should have been valued at the lower rate of $175.5 million because that is the way figures should be honestly represented in any prospectus, Allied Farmers shares should have been issued at closer to 10c per share to Hanover and United creditors and not over double that.

Directors of Allied, Hanover and United, and the NZX and Securities Commission who are respectively supposed to do due diligence themselves on companies listing on the NZX and manage the appropriate regulations in a manner that sees shareholders presented with honest disclosure, have all failed to pass the bullshit test, that is come up with an acceptable excuse as to why they either allowed this fraud to eventuate and fail to act at least when the true asset valuations were fully disclosed - even though most commentators knew at the time that their assets had a false sense of their own security.

Either way the market seems to have come to a fair valuation of its own and that I think maybe that it is higher than the assets will realise in the current market.

In other jurisdictions some of these people would be in chains for doing what has been done here.



Allied @ Share Investor

Allied Farmers: What's it Worth?


Related Share Investor reading


Hanover's "White Knights" are really daylight robbers
Hanover collapse: It was just a matter of time
Money Managers Saga: 3 Story wrap
Money Managers gives First Step investors the middle finger
Greed is bad: Geneva Finance Folds
Financial 101: Learn before you leap
Kevin's Blog

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Related Amazon Reading

Resisting Corporate Corruption: Lessons in Practical Ethics from the Enron Wreckage (Conflicts and Trends in Business Ethics)
Resisting Corporate Corruption: Lessons in Practical Ethics from the Enron Wreckage (Conflicts and Trends in Business Ethics) by Stephen V. Arbogast
Buy new: $64.00 / Used from: $21.50
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c Share Investor 2010

Friday, December 4, 2009

Hanover, Allied Farmers deal more of the same

So the Hanover Finance "rescue" package proposed by Allied Farmers has been given the big tick in an "independent report" by Grant Samuels . Well GS does reports on a number of companies and favour in its reports usually falls on the side of the party paying the cheque, so we can largely discount the GS report.

This is what it basically said though:

The Allied Farmers proposal is superior to the status quo and a high risk of receivership for Hanover Finance investors, according to Grant Samuel. NZ Herald

I happen to have an alternative view.

As I said back in November 2009 when Hanover proposed their moratorium, the best thing to do would have been to vote to wind the company up and get what you could get.

Hanover investors instead voted to give Eric Watson and his fellow fraudsters another chance and of course we now know that has blown up in investors faces just one year latter.

Investors in Hanover and United Finance, who Allied are also interested in buying, have the choice again to this time give directors at Allied a chance to get some money back on assets that are not likely to improve in value any time soon, in a property market that is uncertain at best or to simply bury their pride and vote to wind up the companies and get the best they can get at today's market rate.

I bet you Mark Hotchin's $35 million house in Paratei Drive that taking the money now rather than crossing your fingers for a recovery under future management will be the best bet.

Related Share Investor reading

Hanover's "White Knights" are really daylight robbers
Hanover collapse: It was just a matter of time
Money Managers Saga: 3 Story wrap
Money Managers gives First Step investors the middle finger
Greed is bad: Geneva Finance Folds
Financial 101: Learn before you leap
Kevin's Blog

Related Amazon Reading

Resisting Corporate Corruption: Lessons in Practical Ethics from the Enron Wreckage (Conflicts and Trends in Business Ethics)
Resisting Corporate Corruption: Lessons in Practical Ethics from the Enron Wreckage (Conflicts and Trends in Business Ethics) by Stephen V. Arbogast
Buy new: $64.00 / Used from: $21.50
Usually ships in 24 hours

c Share Investor 2009