16 Dec 2009

Hanover investors accept Allied Farmers' offer

10:39 pm on 16 December 2009

Investors in the troubled finance company Hanover have accepted an offer from Allied Farmers to buy its loan book.

The $400 million offer involves swapping Hanover's debt for shares in the rural services firm.

Hanover directors told more than 1000 Hanover investors gathered in Auckland on Wednesday it was their best option, and that the company could face receivership without it.

The acceptance needed the approval of at least 75% of investors voting at the meeting, plus those who put in a proxy vote. Hanover has 16,500 investors.

Hanover Finance-secured depositors voted 75.45% in favour while United Finance investors voted 79.48% in favour.

Subordinated noteholders voted 97.47% in favour and Hanover Capital investors voted 88.33% in favour.

The results, which were initially due to be released at 2pm on Wednesday, were delayed by recounts.

Allied Farmers shareholders have already voted in favour of the deal.

Directors speak

Speaking before the votes were counted Hanover director Mark Hotchin, who fielded angry questions from many of the investors at the meeting, apologised for the company's inability to fully repay investors.

"Clearly I'm remorseful. I'm very saddened that we're here; I'm very saddened that everybody's being asked to take a loss. That clearly wasn't our intention. Our company failed. We lost all our money that we had invested in it, all the goodwill that we'd built up in it, and now sadly there's going to be a shortfall."

Hanover independent director Des Hammond says he's very pleased with the outcome, with a 75% majority a substantial hurdle to jump over.

But Allied Farmers managing director Rob Alloway says the company will have big challenges ahead.

"We're moving from a small, rurally based listed company where we've got 5200 shareholders to having in excess of 20,000 so we've got a lot of challenges in terms of communication to shareholders. Clearly our strategy going forward needs to be crystal clear, well understood and well executed."