Plenty left over for Allied Farmers if 5 Mile deal proceeds

There will be plenty of cash left over for Allied Farmers if the conditional sale of Five Mile’s second stage in Queenstown goes through.

Friday, June 11th 2010, 8:03AM

Allied has secured a buyer for the 23.4 hectare piece of land, and though managing director Rob Alloway said the offer was north of the $23.2 million valuation and would easily cover the prior-ranking mortgage with Stephen Lockwood's Uno Finance, formerly known as Lockwood Finance. The mortgage had been organised by previous owner Hanover, and Alloway said it had not been paid earlier because early repayment would force a lump sum payment of the interest for the entire term.

Alloway said he could not name the bidding party, who wants the contract to move along a little further before coming out, though the deal would not need approval from the Overseas Investment Office.

Allied Farmers has had a tough time since taking on board the Hanover assets, writing down the value of the loan book by almost a third this year alone. Rating agency cut the credit rating on its finance unit, Allied Nationwide Finance, two notches to a B, and it hasn't secured protection from the government's extended retail deposit guarantee.

Alloway said after missing out on entry to the government's extension to the guarantee, Allied Nationwide is now operating as though it will not gain entry, and with an upgrade to a BB rating a distant possibility, gaining access to the scheme is not a priority for the company.

Last week, Allied Nationwide hiked its deposit rates for 12-month through five-year terms by 50 basis points, and introduced a nine-month special of 7.5% in a bid to attract retail deposits.

Allied Farmers said the Five Mile section is suitable for future commercial and residential development, and the sale is subject to various conditions and approvals, which will be sought over the coming month.

Five Mile was originally owned by Christchurch property developer Dave Henderson, who won drawn-out battle with the Inland Revenue Department which was turned into a film, and was put into receivership by Hanover in July 2008. The first stage of the development was sold in November last year to Queenstown Gateway Trust.

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