Follw the pipe piper and drown in the river esp when clients got in at 50-60 cents.
http://www.sharetrader.co.nz/showthr...ted-ALF./page5
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Follw the pipe piper and drown in the river esp when clients got in at 50-60 cents.
http://www.sharetrader.co.nz/showthr...ted-ALF./page5
damn... used to be able to see that chick spin both ways but can only see counterwise today... My share picking skills have also taken a turn for the worse lately, so perhaps you're right Minimoke lol!!
The comments from Rob Alloway, I find very curious. To me their original disclosure notice was perfectly adequate and made it clear that an "extension" had been made through to march next year. If some media have reported it incorrectly that is hardly ALFs problem. I.e. if the media are being over negative print a clarification, if the media are being over positive thats their problem not ALF's.
It seems to me alloway is very worried there is still a lot more to play out on their banking arangements, why else come out with a negative press release. I sold my ALF on friday on the tone of the announcement. Plus at 6.9 cents, they really are starting to get well above the NPV of their loan book.
Keep an eye on this one though i'm thinking there will be plenty more oppertunities to trade this one.
Hi Alan, can only provide two estimates I am afraid. And they are not particularly insightful.
The first is the disclosed fair value, most of you will discredit these as nonsense, however I would remind everyone of the impact of the IFRS on calculating these assets, meaning they are infact discounted using appropriate ( In this case high) discount rates. After impairments are calculated.
The Value of assets received from hanover are currently valued at 86.5 Million.
I estimated you can add around another 17 mil to that from the amount that has not been reviewed yet. (Thats a simple pro rata calculation nothing scientific.)
So the figure is 103.5 Million.
Plus you can add to that any net assets from the ALF previous to hanover takeover. The rural supplies bussiness still has a value, the finance company was virtually insolvent before hanover came along. Un-fortunately we don't know alot about these as they are no longer really central to ALF operations. Now I view the rural bussiness as having a value however, have a concern that the old finance was walking a tightrope. So Im going to hope that the net balance of the old assets are zero.
103.5 mil / 1952290000 = 5.30 cents per share.
This is really a generous estimate, however there is some potential upside to this due impairments not necesarily being realised.
The next estimate is one i probably like a little more although it is probably more generous, grant thortons report gave 56 cents as the bottom of the range for its report. They already payed out 6 cents, so minus that off and ascribe a value of 78cents in the dollar which is what the original transaction was based on.
396.2 mil/ 0.78 *0.5 = 253.974
Then discount these, (This is bascilly a junk bond and in all seriousness you would expect about an 18 percent return to take on these kind of crap asstes)
253.974/ 1.18 ^3 = 154.8621 /1952290000 = 7.9323 cps.
So NTA in my view is somewhere between 5.3-7.9 cps.
There are risks to this:
Too the downside:
-we don't know what has been happening in ALF's other bussiness's. There could be more writedowns in it's old non-hanover loans.
- The developent market could continue downwards.
-high legal and administrative costs.
Too the upside:
Impairments may not be realised, particularly overtime.
Interest collected on some loans may exceed expectations. (penalty interest)
Sorry Allan I dont have any insightful information really, only some guesses. To me the bigger uncertainty lies not in the hanover loan book but the old ALF loan book which was subjected to far less scrutiny.
Personally I see it as a buy in the low fours and a sell at anything above 6. We will know more when we see the annual report.
What I really want to see is the rural supplies business sold, it's only a distraction now.
Many will ridicule my estimates and insist there is no value here at all. It will be interesting to see how this one plays out, but to be honest I see movement to the upside possible over the longtime.
I agree the assets are not worth alot however, I don't accept and never have that they are worth nothing. If you have nerves of cast Iron then there will be many trading oppertunities on this one in the days to come.
Doyle I think your analysis is fine at the start of the acquisition, but Grant Thornton valuing at 56 cents in the dollar makes 400m loan book worth 224m.
ALF's announcement from 28 May showed they now only value the book at $124m. So GT's estinmate is way high, unless you still thinks this estimate is good? ie the assets will be revalued upwards by 100m?
On 9 June (page 16 of this thread) I estimated 3.725 cents per share, based on the current financials and the future weighting of the 500m shares still to be issued under the bonus securities.
Hi Silverlight,
The possible 500m shares from converted bonds - this will depend on the VWAP at any date of conversion?
Am I correct in assuming that, if the shareprice is 3.725 and this converts the bonds to 500m shares, then a (hypothetical!) share price of 7.450 (twice as much) converts the bonds to 250m shares?
Thanks,
Alan.
Hi guys, I did forget about the bonus securities (rookie error). In response to your question in short yes i see some revaluation in the loan book, which is why I still put some credence in Grant Thortons valuation. The impact of IFRS in the current market is huge, which is why I am slightly wary of the updated valuations. I guess the issue of the bonus shares comes down to when they are issued? from my own memory that was not to be until most of the loan book was realised. So in short some way off yet.
P.s. Don;t forget 6 cents was already distributed after the grant thorton report was made. The grant thornton report was based on 56 cents in original capital not 56 cents in the dollar of assets.
Hence why my figure was 253.974 million.
It would be good to have someone else recheck the amount of the bonus securities under the formula. I seem to remember a journo (Chalkie?) published something that mentioned the bonus issue a few days after Silverlight did, but got only 50m (just going off memory here, so might be wrong). I started trying to calculate for myself, but must have got distracted... has anyone else checked it?
Just tried the calc and got 82.6m shares to be issued June 2011 at $272m shortfall. Any others?
Lizard you are right! :)
I can't offer any excuse for my shameful first calculation, I just got 82,689,546 shares.
I used a notepad first time, this time excel :p
I can... the formula was not particularly straightforward or obvious (and there was a key bracket missing)! Actually, I just found the Chalkie article and he/she calculated that each bonus share would convert to 14.6 ordinary shares (his calculation was published 3 June), so that is different again - I just figured at the time that one of you was out by a factor of 10. From what we've both now got, it would be 21.9 shares per bonus share (or a 220% increase in each original ALF holders (pre-Hanover) shareholding.)
Worth noting that from here, any increase in the shortfall would accelerate the quantity issued though. While the IFRS amortisation effect would decrease the shortfall (as would more sales at above current value), there is also the possibility of further decreases in property values and the question of likely impairments on the remaining $37.5m loan book still to be examined. But would need about a $370m shortfall (i.e. Hanover asset value of just $26m) to be issuing over 500m shares.
0.044, Glad I had a stop loss trailing this one. Made 50% in 20 days and 5 days later we are just about bak to where I started.
Umm, so now they're asking 80 year old ex Hanover debenture holders to put money in?
Is it April Fools day?
Pretty much.
This is the key line - The recent extension to our
banking arrangements with Westpac, albeit with restructuring and capital
raising milestones that are required to be met, signalled confidence in our
plans, which we too are confident provide a solid foundation for our future
growth.
Capital raising failure = bye bye company.
I have been voicing loud and clear for those that did want to listen.
Bet you that most of Hangover holders who are now Allied shareholders don't even know what a rights issue is .... heck many didn't knoe about shares or have a CRN number and such things
Maybe they might be tempted if Allied say heck guys the last lot you got were 20 cents odd and these are 2.5 cents ....... what a bargain eh .... cheap as
wow cant get much closer to my 2 c valuation than this , unless they go bust of course which must be a possibilty now if they have to go to the drastic action of a rights issue at this price.
April last year a rights issue at 40 cents .... good one
And whatever happened to the $7m Resimac from Aust 'committed' last October ..... that propped up the balance sheet big time and sucked Westpac in for a while ..... and now the chicken has come home to roost ..... and desperate measures now needed ..... wasn't it Shoeshine in one recent column talking about such things used the word deception
I quite like this line as well" "I am also encouraging our current shareholders to take up their rights, not only to support the business and its future plans, but also to avoid any dilution effect from the capital raising"
Encouragement = "you are over a barrel. We've taken our pleasure with you via Hanover but we want to be around a bit longer so we can take advantage of our salaries and director fees. We need your support because there is no money in Hanover and other parts of the business don't look that flash. We've comprehensively managed to dilute your original investment and we encourage you to give us more NOW because its near on impossible to dilute value when its at Zero.
this will take total shares to over 2.5 billion
A 100 for 1 consolidation after the rights will make the Hangover people feel rich ... and the 2.5 cents will then be a real bargain ..... see its all about perception .... not deception
Haha you really have to laugh at this carry on. The fact that it is 50% underwritten gives it some hope of success. Still getting even 50% subscriptions will be a mission. How much capital do they need to survive? because I have to say this is the most destined to fail capital raising I have ever seen.
Mark and Eric must be choking on their beer as they line up the deck chairs around the poolside in Hawaii
You will all enjoy Chalkie's article in this morning's Press.I could not find it on stuff website,but no doubt it will appear.
Here ya go:
Time for Hanover investors to get angry
http://www.stuff.co.nz/business/opin...s-to-get-angry
I will try to give you the link,if it does not work go to www.stuff.co.nz then enter Chaklie in search.
Here goes with link http://www.stuff.co.nz/business/.../...s-to-get-angry
Sorry just tried the link, did not work,but Chalkie in search did.
So the Trustees of Allied Nationwide reckon they are in breach of one of their covenants with one of their financial rations out of kilter. The company has withdrawn its Prospectus at this vital cash raising time and has 14 days to satisfy the Trustees. Not a great look when ALF has gone to market looking for more cash. The end of August is going to be interesting in so many ways.
Bye bye company.
In the mean time the SP will probably drift below the rights price, meaning it will have to be discounted further. This is real trouble here, I bet the institutions who took the placement are spewing and looking for an out.
Talk about shifting the deck chairs on the Titanic .. "It is possible that the solution to the Trustee's concerns will involve Allied Farmers providing additional capital to Allied Nationwide ....... one option may include the transfer to Allied Nationwide of some of the assets acquired from Hanover Finance and United Finance
Jeez those Hangover assets must be really worth something .... they sure have been valuable to ALF .... saved them from going under last year .... enough to make ALF a NZX50 company for a few days (or almost) ..... and now we can use them to provide more (paper) capital to keep a finance company afloat. Surely the Trustee won't fall for that trick .... but 100% guaranteed they will.
Whatever happened to real money I ask
All this carry on with ALF and SCF is quite laughable really
As I said before... wont be long now guys.
So the trustee reckons that total liabilities is greatrer than 90% of tangible assets ....... Allied disagrees .... they obviously think that liabilities are less than 90% of assets
As liabilities are usually a real number quite apparent that the trustee and Allied have different views of the assets figures ................ and the trustee doesn't think they are worth as much as Allied does ... what a surprise
Some admire Allied for their 'fighting spirit' (in keeping the thing afloat apparently) but it is when you are fighting to survive that judgement sometimes gets a bit blurred
Any bets on where ANF and ALF might be in 3 weeks time
of total liabilities to total tangible assets. Under the Deed, the company must not let its total liabilities exceed 90% of the value of its total tangible assets.
Maybe Alloway should practice what is emblazoned across the Allied Finance home page
Know where you stand, Know where you are going
The know part seems to be missing
Chalkie doesn't bring up we didn't already know this morning but reckons the board should be sacked and Allied Finance put into liguidation
So if Chalkie says that should happen must be the way to go .... but many admire Allieds fighting spirit
Still would like to know if Resimac was/is really serious about putting in the $7m or whether it was just a ploy to give Westpac some confidence .... prob why Westpac are so pissed off now .... yes Resimac still have that option, yeah right .... didn't Shoeshine use the word deception in one of his articles.
Hanover assets now valued at $94.3m. Takes the shortfall to $301.7m and, by my calc, the no. of ordinary shares to be issued to ALF Bonus Share holders at 31 Jun 2011 now at 120m (presuming of course that there is still an ALF to issue them). That's a conversion rate of about 32 ords to 1 bonus.
Is a CC credit rating on negative watch good?
When I went to school a C was still a pass .... maybe not in this case
So we go from $400m to $175m to $124m and then six weeks later to $94m ,,, what a joke
And they want to use some of this $94m to prop up ANF ... if I was the trustee i would be wanting twice what is needed to sort of cover myself, just maybe
I understand they are still capitalising interest on many of these loans ..... could just report an operating profit .... nice one
Hangover investors have been shafted more by ALF than what Hotchin et al did to them ... at least they knew what they were letting themselves in for with Hotch et al
What a joke .... as Chalkie says put everybody out of their misery
Common guys, Giddee-up...do your homework and google Standard and Poors and learn about their ratings. I'm not going to post a link as IMO people need to learn to do their own reasearch.
CC on negative credit watch is an appalling rating and its nothing to do with the grades you got at school.
Of course - thanks. No point even trying to do basic math when head is full of cold but my math is as good as Bernard hickey whos site says. - time to find that medication.Then I might be able to find the other $1.1mQuote:
The acquired Hanover property assets were valued at NZ$24.5 million at June 30, Allied Farmers said, and loan assets at NZ$57.8 million.
The market is so wrapped up in falling stocks it has forgotten about ALF, If we were paying attention it would be below 3 cents already. Running out of positive things to say about this one, might jump on board for one last trade at some stage, but it would seem that the end is nigh.
The guys that did due diligence on this must be a tad red faced at the moment.
The colour of their faces must match Mark Hotchins sun tan in Hawaii?
Did they get independent advice like the directors of Feltex?
Disaster zone.
Roger ..... you should know us better than that
We are nice guys here and just didn't want to use the word junk .... or crap or whatever
You can get a D from S&P so CC not that bad
Always hard to remember that 3 c's are better than 2 c's which is better than 1 C .... so a few more steps down yet for ANF
Bit like nudge nudge wink wink all this stuff .... and retrospective as well
Lewinsky - if we look back to the time teh Allied / Hanover deal was done some key points in teh booklet that went out to investors at teh time included"
- The Independent directors, Henry and Hammond, "unanimously recommend that investors vote in favour" of the proposals.
- The independent report from Grant Samuel also recommends investors should vote for the proposal as it is "superior to the status quo (and the prospect of potential receivership)".
- Guardian Trust, the trustee for Hanover debenture holders, warns that if the proposal is accepted and investors decide to sell their Allied Farmers shares straightaway they are likely to get less than 72c each (the value ascribed to the shares in the deal).
- It also warns that if the deal is approved, Hanover investors will "cease to have any claim against the company, its residual assets or rights, or any shareholder support regardless of whether you voted in favour of the resolution or not".
- Guardian Trust general manager corporate trusts, Bryan Conner, also makes it clear that if investors vote in favour of the proposal they are swapping illiquid debt securities, which are secured against the assets of Hanover for shares in Allied Farmers which are liquid, but rank behind Allied Farmers' other liabilities.
- Also the report says there is little likelihood another offer will eventuate, and that if Hanover stays in its moratorium there is "every likelihood" the company will end up in receivership.
Grant Samuel says that investors are likely to receive less from a receivership than from the moratorium.
Watson and Hotchin must be laughing about how they dumped their crap on alf and escaped liability if it went bust. Probably sunning it up somewhere drinking a Pina Colada
Hope ANF trustee accepts the Hangover assets as new capital so ANF can survive past early October .... minimoke, Liz and myself (and roger) don't want to and can't afford to repay depositers
I doubt they are. If you go back to when ALF took over Hanover the stupid (and I'll take the heat for calling them stupid - as well as greedy) Hanover investors thought ALf was a better option. The grass was greener and they would get more money from the deal. But they didn't read that it was clearly flagged that ALF back office were way less competent than hotchin and Watson and that the values were questionable. Hotchin and Watson breathed their sighs of relief a long time ago - complete with $10 - $20m extra cash in hand. I suspect they would have moved on a long time ago - which is why ALF holders are in the poo.
Jeez, I'm sitting here wondering just how much we are going to be asked to stump up with - is if around $200m. I'll take heart from Chris Lee's wise words just less than a month ago: "Allied Nationwide Finance, in our view, is a well managed business and the shareholders are beginning to display a willingness to add more capital as they convert the Hanover assets into useful cash."
But then I'm dragged back to reality and reminded ALF / Hanover investors knew ages ago that at least 73% of Hanovers loan book was impaired and 90% of Uniteds was either unsecured or second mortgage loans (now where does this sound familiar - Oh I know SCF and Aorangi). And we are being asked to support the Deposit Guarantee because of turmoil in world financial markets and maintaining public confidence in our Finance Sector. Give me a break - they (the investors and Companies) are incompetent so why should we support them!
I don't accept that this is capitalism. Without wanting to start a whole debate on what capitalism is or isn't we know that broadly speaking its about a free economy where risk takers get rewarded for taking risk (without government intervention) and bear the loss when the risk goes bad.
I just fail to understand why the tax payer is standing behind useless investors who continue to blindly put money into crappy investment companies (Allied with its CC rating and SCf with its short term C and negative credit watch to name but two) and even now people are prepared to pay $0.034 for ALF. And the tax payer has to stand behind them when things go bad - and the worst of it is that investor money isn't going into the productive sector - its just going to pay earlier depositors off.
How is it that capitalism has evolved so that the Finance Companies get "Special Industry" status. They get free Kiwi saver money; they get tax payer cash; they mange to steer clear of the toothless regulators - yet your ma and pa owned SME down the road gets nada in the way of support.
I don't know what to call it but it sure ain't capitalism.
Apologies - I should have provided a citation. If you follow this link and scroll down to 22 July you can bask in the deeps pools of his wisdom. http://www.chrislee.co.nz/index.php?...July&year=2010
This whole GFC has helped reveal what a sick version of so called capitalism we are currently operating (in some instances). The GAINS are privatised but the LOSSES are socialised, at least where the entity in question is deemed "too big to allow to fail". Small wonder we get poor corporate accountability as a result. They simply desert the sinking ship and move on to the next feeding frenzy.
A little off topic but here is his latest view on SCF
"Footnote. If SCF did collapse, the Crown should ultimately recover virtually all of the money it would pay out.
SCF’s assets have been subjected to such scrutiny that there should be no horrific surprises around the corner."
That was 29 June
Ding - just hit $0.03
They say a week is a long time in politics - it sure is in the world of finance companies. This si what ALF said just over a week ago "The new shares will be offered at 2.5 cents per share, which represents a discount to Allied Farmers' current share price of approximately 5.5 cents per share."
Ding. I don't think its too unreasonable to assume that the capital raising plans are now dead in the water. Whats the point now the SP has hit $0.025 - theres no substantial discount on offer now!.
So where does this leave ALF. Allied National in breach of its trust deed. ALF with reduced assets. ALF probably without the ability to quickly place capital into Allied national, a CC credit rating on negative watch. Alloways hand (or that of the trustees) must now be on the pug - surely its not long before it is pulled.
And as for idiot investors why on earth would you buy at the start of the day (when the news was already available) at $0.036 to end the day on $0.025. And I'm expected to be happy we have a Deposit Guarantee protecting these people. Give me strength!
Entirely rational question, but I would note that back in, or around, 2001 (ish!) Fletcher Challenge Forests had a rights issue (I think it was) and the theoretical minimum prices for the rights was breached which meant you could 100% guarantee no loss through arbitrage - you might have made good money, but your worst outcome was zero (less any commissions you paid of course).
Perhaps my memory fails me, but I'm sure I remember watching it happen.
The market, and perhaps more specifically, some of the market participants, are not always 100% rational.
Alan.
Underwriters to the FFS issue ended up with 40%+ of the rights issue or about 22% of the company.
Went on to make a fortune as they got the stock at 25 cents and sold them at over 35 cents.
The rich gets richer while the great unwashed out there gets out at the bottom.
I doubt the Hanover Investors are getting out today. If you have followed it down this far you might as well hope for a reversal rather than take peanuts in the hand. Traders would have a different view and no doubt would have lost only a fraction of the amount of the long term investors.
Fair enough, I was just having a bad day and feeling a bit knackered, is anyone else sick of the winter and wants to holiday in Hawai, maybe a certain scam artist could put all us poor souls up for a few weeks in his five star resort.
Seriously...I havn't lost any money on this or in what must be one of the biggest scam's ever, but it just beggars belief that ALF could have done proper due diligence and the assets are now worth less than a quarter of what they were about nine months ago.
Surely this truly appalling fisaco deserves a thorough independent investigation ? How truly ironic that the vote only just scraped through by the barest of margins, wasn't it 75.4 % or something really close to that ? I feel sad for all the old people that have been scammed.
Bernard Hickey was blogging from that voting meeting and he advised people to vote for the ALF deal. I think he'd met with Alloway and he'd told him his plans and what not....probably buttered him up with a nice lunch on ALF or some other nice pressie. I was pretty disgusted with it....1/ Receiver would have got something back money wise for these long-suffering investors 2/ Receiver would have exposed any irregularities is the Hannover loan book to the harsh light of day, taking down Watson & Hotchin. Now the Hannover investors have shares worth diddly squat.
Allied Farmers were a minnow trying to swallow what they convinced everyone was a whale, but which they privately thought was a dolphin, and it turned out in actuality to be a sprat.
Now they are a dead goldfish about to be flushed down the dunny.
I for sure am sick of winter but I'm more sick of these frickin finance companies and their slow sinking ship which inevitably tries to suck in more punters in the whirl pool as it goes down. I'm already supporting a couple of Hanover punters (and a few more in SCF who will need a hand when that tips) and it just pisses the pants off me these ongoing shenanigans - which only goes to show its been a tiring winter and the tolerance levels aren't as high as usual. Pull the plug and get the whole thing over and done with so people can move on.
But back on topic. PWC had a go at valuing Hanover (and the ****wit punters believed them), it was rumoured GPG had a look but didn't turn up with a deal and Grant Samuel had a look as well. There was even some speculation that SCF might have come to the party but Lachie probably had his hands full buying peas. It was plain that Hanover was ****ed, Hotchin and Watson had exploited their own personal piggy bank (now where have we heard that before) and it was beyond redemption. But throw the punters a line of hope and like a coke addict they snort it up. The sooner the govt gets rid of the Deposit Guarantee and force the punters to go cold turkey the better.
Oh well thats my rant for the day - nearly time for something medicinal!
Question then arises - where do the underwriters of FFS for eg end up with 40% plus of te issue at the heavily discounted price of 25 cents? A cynic would even say that they purposefully drove the sp below 25c to spook the small investors into not picking up their rights.
Am watching ALF with interest.
I do not hear the bell ringing just yet.