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IRD demand adds to Allied’s woes

Allied Farmers has been hit with a second statutory demand in the space of a fortnight, this time by the Commissioner of Inland Revenue for $3.7 million.

Monday, February 25th 2013, 3:17PM

by Niko Kloeten

The demand has been served on Allied Farmers Rural Limited (AFRL), a wholly-owned subsidiary of Allied, and it must be paid or a compromise reached within 15 days or the IRD can begin liquidation proceedings.

The receipt of the statutory demand is an enforceable event of default under ALFs secured loan facility with government-owned Crown Asset Management Limited (CAML), which has indicated that it is continuing to reserve its rights and remedies.

Earlier this month, on February 11, Allied received a demand for $500,000 from an un-named creditor, due this Friday.

Allied said AFRL had been in dialogue with the IRD – which has indicated that any proposal would require CAML approval - for some time on presenting a proposal to repay the debt. 

It said it had advised IRD on February 14 that discussion with CAML was on-going.

“AFRL is therefore surprised that the statutory demand is dated 14 February 2013 (although not served until now) and AFRL was not given the opportunity to provide the IRD with a CAML supported proposal before this action was taken,” Allied said in an NZX announcement.

“AFRL believes that it will be able to complete a proposal for repayment of the debt on terms satisfactory to the IRD and with the support of CAML, given that the continued trading of AFRL would ultimately result in a superior return for both the IRD and CAML."

CAML bought most of Allied’s remaining ex-Hanover assets last year at book value of $13.5 million.

Allied’s share price fell 0.8c to 1.2c in early trading today.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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