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Hanover Finance - Source: ONE News -
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Hanover and United Finance investors are yet to cast their vote on whether to agree to a reverse takeover of Allied Farmers, but a share price has been set.
Investors gathered at a meeting in Auckland have been told that a share price of around 21 cents has been agreed, should they vote in favour.
This gives Hanover's secured deposit holders 72 cents in value, which added to the six cents already paid by Hanover under its debt restructure deal, reflects 78 cents for every dollar they originally invested.
Listed rural services and finance company Allied Farmers in November offered to acquire the financial assets of the troubled Hanover Finance for around $400 million in stock.
Allied Farmers have given their go ahead for the deal, and it is now over to Hanover investors to approve the deal.
If they do, it will effectively give them around 97% control of Allied Farmers.
Hanover investors at the Auckland meeting have reportedly been engaged in a fiery question and answer session.
An outcome on the vote is not expected until 2:30pm.
Allied value plummets
Since Allied's vote in favour of the deal, its share price has lost almost a third of its value. MacQuarie Private Wealth analyst Brad Gordon says this means that the number of shares issued to take over Hanover will increase by around 50%.
"Currently there are about 37 million Allied shares on issue. That is going to increase to over two billion based on the current share price," says Gordon.
And, he does not believe it will be a fair outcome for all investors.
"There are a number of Hanover investors that need to get their hands on money very quickly and I don't think there's going to be the after market demand for shares. Therefore shares could trade at a fraction of the value that they're looking at now," he says.
Gordon says a number of Hanover's assets are literally "holes in the ground" and the only way Allied will be able to see those assets through is to lend property developers more money.
He questions whether that is what Hanover investors want.
