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Former Hanover debenture holders face massive dilution

Friday 19th of August 2011

Allied Farmers says those holding shares before the debt-for-equity swap when the company acquired Hanover's loans are in line for a significant bonus share issue.

Hanover's debenture holders had their interests converted into a majority holding in Allied Farmers as part of the transaction and now the bonus shares will significantly dilute their holdings.

"Given the likely extent of the impairment of the acquired loans and property assets since acquisition, the calculation is expected to result in a significant number of new shares being issued" to pre-Hanover-deal shareholders, Allied Farmers told NZX late Thursday.

It says it hasn't yet received all the valuations of the remaining loan and property assets acquired from Hanover and sister company United Finance, but "it is likely that these valuation will result in further impairments."

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All things said are great aspirational goals for a great financial advice industry, it mirrors what both the legislation and the code requires. However, like most things discussed it talks about what's expected not how it's done. The hardest aspect of financial advice today isn't what it is, it is how it is done. The how only comes from those that have done it, the how is only provided with examples. Guidance documents that spell out what's required along side how it it done. We’re still dealing with the same issues we started with in 2021, figuring out the how. And figuring out the how in every advice business is consuming resources that could easily be shortcut by the FMA demonstrating what they are expecting. It's not about “do it this way” its about this is the sorts of things we’re looking for. In the absence of standards and expectations, guesswork prevails. That represents significant risk to FAPs and the result is onerous overcooked advice processes for multiple advice operations and undercooked she’ll be right for single operators focused on getting the work done. Both approaches have potential for harm and as its been said earlier, leaves advisers open to explain they haven't been speeding with the authorities have pulled them over. The advice industry needs guidance on the how we know the what already.
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To correct errors in my previous post: "policies, templates, and controls" should read "policies, processes, systems and controls", and "is more conductive" should read "is more conducive".
2 days ago Paul Flood
FMA outlines its latest expectations for advisers
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2 days ago agressively passive