12 Feb 2013

Repayment of loan wanted from Allied Farmers

7:09 am on 12 February 2013

The price paid for shares in Allied Farmers have fallen nearly 7% in the wake of an announcement that it has received a surprise demand to repay a $500,000 loan within 15 days.

The troubled rural services firm said it won't be able to repay the loan without the support of its Government-owned secured lender, Crown Asset Management.

The loan was due to be repaid from the proceeds of a $3.75 million asset sale last November but that deal fell through.

Allied, which has been in trouble since it bought the loan books of Hanover Finance, said on Monday it has been in talks with the lender about extending the loan further.

But it says that the lender is now making a statutory demand for the loan - which with interest totals $540,000 - to be paid within 15 days.

Allied said it is surprised by the lender's action and it won't be able to pay the loan without the support of Crown Asset Management.

It said that as a result, it may need to substantially write down the undelying asset, which is valued at $3.7 million.

Shares in Allied Farmers closed at 2.7 cents on Monday, down from 2.9 cents after two small parcels changed hands.