3 Feb 2010

Allied Farmers confident of selling Queenstown project

7:10 am on 3 February 2010

Allied Farmers is talking to four potential suitors for the Five Mile development in Queenstown.

The asset was acquired when the company took on the loan book of Hanover six weeks ago.

Managing director Rob Alloway says he's confident the development will fetch up to $40 million, and in turn, help buoy investor confidence that the company will be able to recover Hanover's loans.

Allied Farmer has already sold a handful of former Hanover property properties at market value.

Mr Alloway says he's been scrutinising Hanover's loan books in detail and he's pleased the company's new shareholders are also taking a considered approach with their investments.

To date, only 60 million of the two billion new shares have been traded, which equates around $20 million of Hanover's debenture stocks.

This is far fewer than most were expecting and the company's share price now appears to have stabalised at about 10.5 cents.

However, McDoull Stuart is bullish about prospects for Allied Farmers.

Head of research John Kidd predicts the company, which now has a market cap of $218 million, will join the NZX50 by March.

But he says the test will be how investors respond to the first lot of news from the company.

Next developments

Allied Farmers will announce in the next few weeks, the appointment of a new chief executive to run Allied Farmers Investment, a new entity set up to manage the assets acquired from Hanover.

The new boss has a tough job ahead of them. Analysts at Forsyth Barr recently classed more than 90% of Hanover and United Finance's assets as underperforming.

Allied Farmers's interim results are out later this month.