30 Nov 2010

Investor wants Allied Farmers to pay for mistakes

10:17 pm on 30 November 2010

Board directors at Allied Farmers and their advisers should be made to pay for mistakes that hurt investors, a shareholder says.

The company's managers have fielded angry questions from shareholders at its annual general meeting in Hawera on Tuesday.

It is the first meeting since Allied Farmers bought the assets and loan books of Hanover Finance and United Finance for $400 million in December last year. They are now worth only about a quarter of that.

The Serious Fraud Office announced on Monday it has been investigating Hanover for the past three months and now has reasonable grounds to suspect fraud.

Allied Farmers says it complained to the SFO about Hanover Finance shortly after it acquired the failed finance company's assets and loan book.

But one Hamilton investor at the meeting, David Bryant, said the media comment was an attempt to take sting out of the annual meeting.

He says the rural services company is a shambles, investors are devastated and directors should to take a lead and cut their fees.

Mr Bryant says the directors should be accountable - along with lawyers, accountants, auditors and others who advised them poorly.

Allied 'going back to rural roots'

Allied Farmers managing director Rob Alloway told investors it has been a very tough year as the company dealt with the lingering effects of the global financial crisis and pressure on the finance sector.

He says significant restructuring is needed to cut debt and stop asset values, revenue and profits falling further.

Mr Alloway, who was to leave at the end of this year after leading a restructure of the firm, has agreed to stay on an extra six months.

He told the meeting the company has cut debt from $80 million to $45 million and is returning to its farming roots.

A director of Allied Farmers, Andrew McDouall, admitted that the board made mistakes that hurt investors, but regulators are also to blame for lax rules.

Mr McDouall says the slowness of government officials in tightening finance company rules is an indictment of their competence.

Shares in Allied Farmers were unchanged at 2.3 cents on Tuesday.