Allied Farmers holds off rights issue plan
Allied Farmers has put on hold its rights issue plan as the company hopes to resolve the concerns raised by the trustee of its finance arm Allied Nationwide by infusing capital into the company.Allied Farmers' rights issue of NZ$19.3 million had a record date of August 10 but a new date hopefully will be set after a short delay, the company says.Allied's finance arm Allied Nationwide pulled its prospectus last Friday, saying its Trustee, Guardian Trust, raised concerns about a breach in a financial ratio. The company is now more specific, saying the issue was around its future liquidity position and how it will be funded post expiry of the government guarantee.Allied Nationwide's reinvestment rate fell to 29.3 per cent in May 2010 from 55per cent to 60 per cent in December 2009. The company is also reliant on its parent Allied Farmers to fulfil some payment obligations.Allied expects to resolve the Trustee's concerns by getting additional capital from Allied Farmers to Allied Nationwide. With Allied Farmers already facing both a liquidity and a capital crunch, the only possible option could be the transfer of Hanover and United Finance assets.It may be noted that Allied Nationwide's auditor Pricewaterhouse Coopers abstained from giving their qualified opinion on the company's going concern view in the audit of the statements for the half year to December 2009.