11 Apr 2011

Loan payments unlikely to be on time - ALF

6:23 pm on 11 April 2011

Allied Farmers says it's unlikely to repay two loans to its failed finance arm on time.

The troubled rural services company owes $19.2 million to Allied Nationwide Finance, which is now in receivership.

Radio New Zealand's business editor says the two loans, one of $7.5 million and the other, $11.7 million, are due at the beginning of July.

Allied Farmers says it won't have enough cash to repay the loans on time because it has not been able to sell properties in what it says is a market saturated with the assets of failed finance firms.

The company is pinning its hopes on a resurgent farming sector to buy supplies at its rural stores to generate cash, and will use that fact when renegotiating the loans with Allied Nationwide's receivers.

Meanwhile, the sales of properties at Jack's Point and Clearwater have reduced debt from $13.3 million to $10.4 million.

Allied Farmers says it also have sales contracts that should reduce debt by another $4.7 million.