23 Aug 2010

Allied Farmers seeking fresh capital

7:01 am on 23 August 2010

Allied Farmers will continue to press for fresh capital and insists its business as usual for the rural services company.

Its finance arm, Allied Nationwide Finance, was placed in receivership on Friday, owing about $130 million to 4500 investors.

The bill will be picked up by the taxpayer, as the company was covered under the Government's retail deposit guarantee.

The company says it's unable to keep funding its finance arm since its prospectus was withdrawn two weeks ago, after its trustee, Guardian Trust, claimed it had potentially breached its trust deed.

Managing director Rob Alloway says it's a regrettable decision, but Allied Farmers' assets are best used for the benefit of its own shareholders.

Mr Alloway says the company is still in discussions with the underwriter of a $19.3 million capital raising.

Allied Farmers chairman of six years, John Loughlin, is also stepping down.

Shareholders Association chairman John Hawkins says it's too early to say how Allied Nationwide's receivership will affect Allied Farmers.

He says the company has been a "basketcase" for some time.

Shares in Allied Farmers 0.1 cents to 2.6c on Friday.