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Hanover Finance - Source: ONE News -
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The directors of Hanover and United Finance have recommended that investors vote in favour of Allied Farmers' offer.
On November 18, listed rural services and finance company Allied Farmers proposed to buy the finance assets of Hanover and United in a deal worth about $400 million.
As part of the deal, Hanover and United investors would receive shares in Allied Farmers.
David Henry, the chairman of Hanover Finance, Hanover Capital and United Finance, says directors unanimously made the recommendation.
"We are of the view that Allied Farmers has the potential to add real value enhancement to the Hanover and United loan and property assets that is not possible under the debt restructure plan currently in place," Henry says.
Hanover and United Finance are about one year into a five-year moratorium that investors agreed to as an alternative to receivership.
The company owes investors over $500 million to investors but recently said it was unlikely it would be able to repay them in full.
Under Allied-Hanover deal, Hanover's secured depositors would receive a total 78 cents of value in Allied - an improvement on Hanover's estimated repayment of 70 cents.
United Finance secured stockholders would receive 90 cents which includes a six-cent payment already made.
Subordinated noteholders, who are currently not in line to receive any repayment from the finance companies, would received 30 cents of value in the deal.
Henry says an alternative superior offer is unlikely.
Hanover, United and Allied representatives will begin investor consultation meetings around the country on Thursday, starting in Hawke's Bay.
Investors are expected to vote on December 16.
