ALF investors like it though - they get more shares for their money!
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I have noticed that there has been considerable " Hoovering " of ALF shares this week..
As they slide into oblivion.
Their price is five eights of *******. ( Beyond my pocket ).
For what reason ??
Tax write offs.. ??
Etc...Etc.. Etc..
Thoughts ??
You can get on the top twenty list for about $6,000 investment. Not sure that investment is the correct word.
Most holders must be effectively priced out of the market through brokerage. You need a fairly substantial number of shares to make up a large enough parcel to be worth buying and selling. Still, just a 1c lift required from here and you're on a six bagger!!
Attachment 3595
How many ALF shares can I buy for one hundred trillion dollars
The question is which chump(s) has been buying these shares all the way down?!?!!
I wonder what happens after $0.001? Does NZX then move to offering one hundredth of a cent increments? Or is $0.001 the minimum bid you can make, so this becomes the absolute bottom below which the share can not trade (until they have a consolidation).
Almost every consolidation i have seen ends up a act of desperation. Usually the shares continue to fall and within a very short time half again.
Some of you may know i was a dairy farmer and still am a cattle dealer.This year i will turn over about 150 cattle.Until very recently i used to trade through Allied farmers.Like the Morrinsville Allied auctioniars are great people to deal with,but about 4 months ago i laid down some conditions for further dealing as they are at the knife edge of going broke.The first was that at any one time they were not to owe me more than 5000 dollars and that the SP was not to fall below .6 of a cent.Hence for the last 3 months i have had to sell through Wrightson.
Now the agents tell me if everyone acted like me they would go broke for sure but risk is risk and i am here to look after me. in fact i feel some heavy selling farmers going through Allied are risking all and it is just musical chairs and the sh--t hits the fan when the music stops which could well be anytime soon.
Hi,
Good on you Digger.
Sound approach.
Hi MM,
If you fancy being a millionaire, then booking a trip to Bali is an option.
I have just come back and for $NZD848.44 today you can get 6,000,000 IDR (Indonesian rupiah) to spend in Bali.
Ref: http://www.oanda.com/currency/converter/
Hmm, another tempting proposition. I am however dissuaded on the basis that spending in Bali will only return me photographs and memories. Whereas a scrip certificate with a million ALF shares will last me forever. it will be something I can pass down from generation to generation as a reminder of how Moms and Pops used to invest in NZ.
I'm also conscious a Bali spend would also only help stimulate the Balinese econonmy. While some might suggest NZ is an economy heading that way I'm inclined to think my spend might be more worth while in NZ. The lawn bowls season is nearly upon us and I'd imagine there are a few ALF investors who could put my contribution towards a new hat. That they can't afford the car within which they could place their hat on the back ledge will be a reminder of their initial folly.
JR - you might be wondering what will happen if ALF goes to $0.001. Well the obvious thing is that you will see the value of ALF drop by 50% in one trade. That gives them a market cap of $2m. By this stage there won't be too many stocks around where a $0.001 increase in SP see's you double your money.
Alternatively you can do like what a canny ALF investor did today. You could flick your 17,000 shares at $0.002 in an off market trade. You get to keep your $34 dollars and the brokers miss out.
Anyone remember when Mr Alloway said the ALF deal was the best chance Hanover investors had of getting 100 cents back in the dollar. Those $0.78 debentures would have been looking pretty good now! And to think they weren't too impressed with that initial $0.06 payment.
Crunch day... how many shares are they going to issue?
Rumour has it that ALF has leased Canterbury University's Blue Gene super computer to do the calculations in time. Cactus Kate did offer a spread sheet however Excel created a blue screen of death when she hit the"calc" button.
For those thst don't recall here's the calculation.
A = percentage of Allied Farmers Voting Rights that should be represented by the Allied Farmers Ordinary Shares existing on the day prior to the Completion Date being calculated as follows:
(B x Allied Farmers Issue Price) / ($396m - Shortfall + (B x Allied Farmers Issue Price)
Where
B = number of Allied Farmers Ordinary Shares existing on the day prior to the Completion Date
'Allied Farmers Issue Price" = issue price which is the volume weighted average price of Allied Farmers shares for price setting trades on NZSX over the 5 Business Days prior to the date of the meeting of Hanover Finance debenture holders to be held to approve the proposal (to be held on or about 15 December 2009)
"Shortfall" The Exchange Agreement provides that a "Shortfall" will exist if in respect of the period up to 30 June 2011 the total amount achieved from the realisation of any Finance Assets and the total value of any such assets still held by AFIL or anyon-transferee of such assets (in each case, determined on a consistent basis to the price allocated under the Exchange Agreement) is less than the NZ$396.2 million price attributed to those assets under the Exchange Agreement. This calculation will be made as part of the audit of Allied Farmers' financial results for the period ended 30 June 2011 and is expected to be announced at the time the audited financial statements are released.
C = A x (Assessed Value / Allied Farmers Issue Price) / (1 - A)
D = number of additional Allied Farmers Voting Rights that will result from the amendment of the rights attached to the Bonus Securities calculated as follows:
C – B
(b) Following the calculation, the rights attached to the Bonus Securities will be amended as follows:
(i) The Bonus Securities will be subdivided or consolidated In the following ratio
E = (C/B - 1) / Bonus Ratio and each Bonus Security will be consolidated or subdivided in the ratio (existing: resulting) of 1:E; and
(ij) The rights attached to the Bonus Securities will be amended so that they are identical to the rights attached to fully paid ordinary shares issued by Allied Farmers.
Pure lazyiness on my part has prevented me from doing anything more on what is a purely academic exercise. No matter how it is presented teh answer will be "ugly"
Minimoke, it is not the bonus shares I am so interested in - it is what they calculate for the nta-based adjustment to the number of shares issued to placement holders last year... either I have misunderstood the notes to the accounts or they will need to re-negotiate with placement holders.
I've run this through my HP12C, and the answer is 42
so long and thanks for all the fish
OK, I'm going to need some help her. Can we assume NTA is $0.0060.
So $0.0060 - $0.02 = -$0.014 OK - I've now come unstuck cos thats a negative number and I end up with holders giving back 160,714,285 shares. But they were only given 90,000,000 in the first place.
So lets assume $2,250,000 at an issue price of $0.006 then we end up with 375,000,000 shares less the 90m already issued. Gives us 285,000,000 new shares.
Or an NTA 3.3 times the theoretical $0.006. Lets say we had:
$0.021 - $0.020 = $0.001. That then gives us $2,250,000 at a price of $0,001 which is 2,250,000,000 shares less 90,000,000 or a total issue of 2,160,000,000 new shares.
Warning math, like spulling is nto a strong point!
This reminds me of the dropping of counterfeit deutschemarks over Germany in WWII - look out Hawera.............
I read the adjustment to be that they get as many shares as it takes to make the nta add up to $2.25m, which is rather tricky when nta is negative. However, perhaps as you point out, some theorist might suggest that means they actually owe ALF shares. i.e. $2.25m/-.0032 = -702m. Add on the 90m they were issued and they had better start buying up shares to hand back... :t_up:
I don't think they will need to buy back shares. As substantial shareholders they will probably just be asked to cancel their 702m holding. Here's a tip for current ALF holders - get in there and buy at $0.003. With 2,042m currently issued shared, less 702m shares significant holders will cancel leaves us with 1,340m shares. Current capitalisation is $6m or $0.003 a share - my cunning plan will see the $6m cap equate to $0.0045: a 50% increase in your investment!
Footnote: you get that investment advice for free and without input from Alloway or PWC. Rest assured taking this advice will result in the same outcome as previously experienced. Once you've made a killing on that punt I've got a cracker bit of land in Queenstown which is just crying out to be added to your portfolio!
Mini, you ramper... you posted that and someone took out 1m at 0.4cps... hope your tip was "Class Advice"! :p
(I suspect it was Winner trying to make a make a comeback in the competition this month.)
Well that's good, because I know of a few Finance Companies that might want a bit of endorsement! :D
Looks like ALF is going to keep us in suspense until Monday. Actually, they said in their August update that the audited report was going to be available by the 28 September. Guess they are still trying to unfreeze the computer - or perhaps trying to string together the logic to claim they are owed 792m shares by the placement holders.:)
Audited 30 June Annual report hasn't been received by Stock Exchange. Trading in securities will be suspended if not handed over by COB 7 October. We know it takes a while to massage accounts to give them a decent look and convince the Auditors to let them through.
Well not sure how this works. In an update today they say " The audited 30 June 2011 financial statements included in the Annual Report are required to take into account a number of matters that have occurred since the release of the preliminary unaudited financial results on 29 August 2011. One of those matters, which is expected to have a positive impact on the group, was intended to be completed prior to finalisation of the financial statements.
The Board believes there is a good prospect of that matter being completed in the next few days. Because that event, if concluded, is expected to have a significant impact on the financial statements and the calculation of the rights attached to the Bonus Securities and the Price Adjustment Rights under the placement completed in August 2010 which are dependent on the audited results, the Board considers it prudent to delay completion and disclosure of the Annual Report for a short period."
So if an event occurs after year end, how can it be applied retrospectively. Are ALF like National - they think that if something doesn't go their way they'll just backdate things.
I would have guessed first-off that it might involve returning ANF to trading somehow and therefore putting it back in the accounts as a continuing operation. However, that wouldn't affect the rights attached to the bonus securities - that would require a positive move in the value of the Hanover assets. Difficult to see how that could be applied retrospectively though.
Given NTA, currently stnads around -$7.3m do we assume they have found at least this amount from somewhere. That then leads to a positive NTA and they can then do their share calcs based on that figure.
I can't figure the retrospective bit: either the event happened in that financial year or it didn't. I'm not sure how they could potentially miss a material transaction at the unaudited accounts stage.
Rob Alloway buying up shares at $1 "each" - that is $1 per parcel of around 172,500 and 162,500 shares - i.e. total acquisition price of $2 or about 0.00058cps (and that really is in cents per share, not dollars!). At least that is how I read it. Odd things afoot.
He has bought (or relieved the sellers of) Allied Capital shares for the $2 .... Allied Capital have some Allied Farmers shares - those not worth much methinks
You always get suspicious when these silly games start happening eh
I have hope - as does Alloway - that ALF will be 10 cents by Xmas ... just in time to win the stock picking compo ... don't think belg has ALF in his picks ... my point of difference to him
Well I've no idea how they calculated it, but they've managed to come up with a number of shares to issue for the placement holders - looks like they based it on about $0.0021 per share. So another 977m to the placement holders and 118m to the bonus issue holders... but then it probably doesn't matter anyway, as the ALF010's are going to convert to equity... all $12.6m of them. At 95% of the average of 20 business day VWAP's prior to 15 November...
You'd better start ramping that price, Mini. If you can keep that VWAP at .004m they should be able to get away with just handing half the company to the noteholders...
Ok I'll try.
Brilliant news. ALF has now increased in size approx 50%. Its gone from approx 2,000m shares to over 3,000m shares. So you are getting many more shares for your money and that's good value.
ALF is also $2m better off - thats $2,000,000. The unaudited loss of $43m is now only $41m.
And a pat on the back to those decent Hotchin and Watson chaps. They have willingly forgone $5m to the benifit of ALF. Lets not hear any more about them being rogues! Just goes to show those original Hanover Investors were backed by men of integrity. As for ALF - they have learnt the error of their ways (by saying nasty things about Hanover) and that can only show ALF is a much stronger company because of it.
And take some assurance from the covenant breaches, While they continue, its only an extra 2% that is being paid to holders. But the Capital Notes are going to be converted to shares which measn the company is only going to get bigger.
Buying today at $0.005 will see like a bargain in time to come!
I will ring my broker immediately.. Yeah Right !!.. :-)
Before you do, I have a container load of RWC Canadian Car Flags I'd reluctantly onsell to you at wholesale price of $6.00each. We know Canada will go all the way but unfortunately being in Christchurch I can't make the most of this fantastic opportunity. You could make a killing. Put you money into this investment rather than ALF - you'll have more to show for it at the end of the day - guaranteed.
Allied Capital held 5,442,963 ALF shares. So Alloway has bought $21,771 shares for $2???? ALternativlty has he bought these shares at $0.000000363 approx each.
Cannot figure this. According to the companies office, Giesbers and Macfie held 100% of Allied Capital Limited. Alloway has purchased 100% of Allied Capital. Apparently Allied Capital owns 5,442,963 of ALF.
Even 345,000 ALF shares for $2 is a value of $0.000005797 a share.
Disc: My abacus isn't good at counting to so many decimal places so I'm bound to be out by one or two.
Consolidation coming up .... keep it quiet ... esp from Lizard so she won't adjust things in her NZX compo
How long before the consolidated shares get back to 3cps ?
ALF010 into shares .... is that another trillion shares to be issued?
Depends on average of 20 days VWAP, although that's half in the bag at this point... and the price used is 95% of that value - calculate the number by dividing into $12.6m
Given another 1095m shares to be issued to bonus and PAR rights holders, the market cap is effectively around $6m at 0.2cps...so the noteholders probably going to end up with a little under two-thirds of ALF. Glad the Hanover investors don't mind sharing around the $110m of net assets they are now recognised as having brought to the table...
One thing I think needs to be asked here is how ALF can issue the 977m+ shares to PAR holders. They eventually end up with nearly as much of the company as Hanover investors, yet put in only $2.3m c.f. Hanover investors nearly $110m. Shareholders never got a vote on this and now won't - which appears a bit outrageous.
Earlier, this was going to be included in a shareholder vote at the upcoming meeting, due to the 20% limit on new issues, but now it seems they have been able to bypass this, as they can include the shares from the ALF010 conversion.
It is probably splitting hairs, given this farcical situation can only occur because the company is close to worthless. But this process does seem to have circumvented listing rules by effectively issuing shares under a placement that now equate to almost 50% of the shares that were on issue at the time of placement, yet shareholders don't get the chance to vote on this.
Oh, and it would have to be presumed that the allocation of these unissued shares is contributing to the effective share price (theoretically one-third lower than it would be without them) and therefore the VWAP at which the ALF010's will end up converting. A "double whammy" for existing holders in the dilution.
ALF issue of shares and dilution of some holdings sems to parallel the Zimbabwe inflation rate
Looks like ACC took might have taken the major part of that placement last year, as appear to have been allocated quite a few shares under the PAR rights.
Liz - I haven't been able to keep up ... so how nany shares did they end up with before the consolidation .... billions or trillions or zillions
All I know that ALF shareprice is now 5 cents ... much higher than the beginning of the year so should save my bacon in the NZX comp
After consolidation at 100:1, ALF shares were traded at 6 cents each. This is equivalent to 0.006 cents before consolidation.
Given it was 100 to 1 then the 6 cents today relates to 0.06 not 0.006 as that would be 1000 to one.
So just before considalation it was on average .3 of a cent it has now lost 4/5 of its value since considalation. Is that correct or have i got it wrong somewhere.
The idea of considalation from my experience is the allow further lose of value. Below .1 of a cent the company can no longer trade so consolidation is necessary to continue DOWN the slippery path.
Are these cals as others see it??
Yes digger, nothing wrong with your logic.
I'm wondering why the price would collapse today in particular - surely nobody sold at these 'higher' prices without knowing there was a consolidation, but to me that seems to be what has happened, or its a couple of the bond holders getting their cash out
with 58k of sales today, the MC has collapsed by 70% of what it was yesterday.....
How is it you always manage to fit more words between the lines than you do in them?
So excuse me if I read incorrectly, but what you are saying is.... "it would be fun to get away with this in the comp without Liz noticing, but at the same time I know she's not completely blind so I'll just opt for a laugh at the possibility" or perhaps "ALF are going to confuse a few former Hanover debenture holders with this - and may even be getting some comfort out of doing so" or (like everyone else here), "why the heck did the price go down so much on consolidation?"...
To the latter, I think you would have to go with Xerof's hypothesis that the bond holders found some liquidity to sell into and were willing to take a haircut (given many of them were already up for one on the bonds, so had already priced in the loss - or had bought below face value) and therefore taking the sp with them as they exit.
The drop today was cause of the 1.2 billion new shares (pre consolidation) issued today from the PAR thing and Capital Notes (about 70% of the total issued capital)
And then the 100.1 consolidation
Liz all those billions have me confused ...
The NZX website is still showing ALF has 2,550,971,709 on issue.
But my reading of it is the noteholders were issued just under 6 billion shares at 0.2c just prior to consolidation. The PAR holders got 977 million and the bonus share holders got 118.09 million new shares. Add that to the 2 billion odd already on issue and you had about 9 billion shares. Consolidate at 100 to 1 and the company now has 90.79 million shares on issue.
Yes, the announcement has it correct at 90,792,438 I think. NZX has had a few problems of late with some of their info of late...
with all these mind boggling numbers...... why are they still trying to make a go of it.
is it because the directors are still getting paid?
........because no one else is getting anything.
you would think that the nzx or some such body would just end it.
unless....... they have a master plan or can sell or develop the "cr.p" they got from hanover.
and in the meantime....... the world isnt looking so hot, so these property assets arent going anywhere but down.......... imho.
and what are the shareholders doing?
or the government agencies protecting shareholders?
the only real asset left is the trustfunds that some judge has temporally siezed which contains the mansions from one of the directors.
paid for via .............
or was it the party related loans were worth more than alf?
or the "other" party director who was..... is.... isnt ..... could of been ..... someone who got millions of divies but was never a director............
but obvious all legal, safe and honest in cowboy land NZ.
and this is just one story of the many failures in this sector that has destroyed billions or wealth for citizens, and still no one has "really" been held to account.
and yet we have government and commentators telling us to invest in NZ.
ummmmmm........ which part?
and is it safe to do so?
will citizens be protected from vampires?
does a wet bus ticket really make vamps play fair?
im sure our next generation is really going to invest in kiwiland bigtime......... NOT
forgot my disclosure....
never invested in any finance company........ thats for fools and old folks.
i invested in NZO.... a premier oil and gas explorer that is at the forefront of NZ hydrocarbon exploration with a big holding in the state of the art kupe gas field and custom made processing facility.
......... drats....... got let down there....... just like grandma with hanover
i see TR is holed up in a spiffy mansion.
Because the major creditor is now ANF and then the ANF major creditor is the Crown? And the ANF major creditor needs the maximum amount extracted out of ANF that it can get, and putting ALF into receivership would not help?
Anyway, now those note-holders are clearly equity and not debt, so that is an instant improvement to the balance sheet, eh? Heck, might even be able to find some more investors willing to throw in some more equity and improve the ANF/Crown position a bit...
Qualified auditors' report re going concern - ALF on its last legs?
Loan application turned down and now company trying to get a new one.
Tick, tick, tick.
ALF
08/10/2012 15:16
GENERAL
REL: 1516 HRS Allied Farmers Limited
GENERAL: ALF: ALF has received a request for payment of $500,000 loan due
Allied Farmers Ltd (ALF) has received a request for payment of a $500,000
loan due.
This loan had been scheduled to be repaid from the proceeds of the underlying
asset due in November 2012.
Allied has requested an extension of time from the lender to coincide with
the realization of the underlying asset. This seems a sensible solution for
both the lender and borrower.
However in the event an extension is not granted that would result in an
enforceable event of default under ALF's secured loan facility.
Chairman of Directors
Hi Balance.
Can you fill in a few details for me. I trade cattle mostly at Morrinsville saleyard. 1.5 years ago ALF was in the Sh-t for sure and i stopped trading through them and went to Wrightson. Remember if a firm goes bellyup just after you sold cattle throught them you may or may not get paid.Not an encouraging thing to do. About a year ago ALF spun off a firm called NZ Farmers Livestock of which they own about 70 to 80 % off if my memory serves me correctly.Naturally this firm NZFL wanted me back trading with them as they claimed they were seperate from the whoes of ALF. I did not think so and have stayed with Wrightson.
Now my question is what do you think happens with this holding ALF has in NZFL after they default next week??
Hi Snapiti
My quess is a cheap takeup for RD1. If it comes up at a forced sale I can not see the agents having enought Knowledge or resources to pick it up. Maybe they will try to flog it off to the existing clients,
Watch this space is about all i can say to sum up.
Irrespective of whether NZFL goes to RD1, PGW or goes down with ALF (if that happens), the prudent rule applies - which is not to deal with a credit risk as the extra 2% or so they may give is not worth the whole sum put at risk. The finance companies showed that glaringly - the extra 2% pa ended up costing the investors 60% to 100%.
I do not think ALF will go broke.
Refer latest announcements just before Christmas 2012.
https://www.nzx.com/companies/ALF/announcements/231570 and
https://www.nzx.com/companies/ALF/announcements/231572
I firmly believe they should be back in the positive equity territory by now. ie Out of the red where they can focus on growth instead of survival.
With over 90 years of history in NZ there is still a great deal of rural allegiance there to continue supporting them in their now non-merchandise business (bought mostly by RD1).
The 2 risks shareholders faced prior to the above announcements were 1) Further write-down of assets and 2) Reliance on CAML accepting ALF's funding proposal.
Both of these risks are now gone by the looks.
I have bought a shed-load of these over the last while and held zero prior to the Hanover disaster, which should no longer have any major negative impact on their future business so long as they stick to their knitting.
Views and comments welcome.
Best regards,
Vaygor1.
I read one sentence in their annual report which I felt was rather damning:
"The shareholder-approved Executive Share Option Scheme was introduced in 2007, allocating 1,300,000 Allied Farmers Limited share options to eligible senior executives. All share options had lapsed at balance date"
If senior management doesn't want to invest in their own company, why should I?
ALF unfortunately still has quite a few fleas and it will take some sorting out before I think of investing again. Essentially they are still in a state of selling off assets to pay their bills. Not something that makes me want to buy them!
Thanks for the comment blobbles.
Apart from yours, the silence has been deafening.
Given ALF's complete and utter demise since 2006/2007 I for one am very pleased they have let the Executive Share Option expire.
With bonus issues, rights issues, executive management share issues, shares for bonds issues etc etc etc ALF have issued approximately 1,500,000,000,000,000,000,000,000 shares in the last few years... well, not quite that many but I wasn't involved back then and the number of zeros hurt my eyes when I read back. The quantities involved were almost of biblical proportions and almost an embarrassment to the NZX and NZ in general at the time.
Actually, over the last few days I have read every single post in this ALF thread, and nearly had an infarction laughing so hard at the wonderful comments posted here during all these share issues and the conjecture over how the formulas would work. I wish minimoke still contributed to this forum 'cause he/she was brilliant. (I looked up his/her profile and he/she hasn't logged in for quite a long time).
I am going to drip feed info to this ALF thread over the next while but 1st the obvious points which are:
ALF is no longer a finance company.
All the Hangover-Handover-Hanover assets are gone.
ALF appear to have a tidy arrangement now with CAML and I think there is much more to this arrangement than meets the eye.
Shoeshine man Rob Alloway and the other hopeless dreamers/idiots out there who were in charge have gone. NZX top 50...what a joke.
ALF are almost certainly back in +ve equity territory and if not, soon will be.
They have over a century of history in their traditional sector and that is an asset that takes 100 years to achieve and, unless you go completely broke, much more than 5 to destroy.
They have downsized tremendously and rationalised. In fact I am surprised they haven't de-listed as this would save a buck too.
Apart from merchandise (which they sold to survive) they are now focussed on their traditional sector(s) in my view.
They can focus on growing now instead of putting out fires.
God forbid if they ever decide to buy a sawmill again let alone a bloody finance company.... I mean buy a sawmill????... Good God, I mean if that was a 'natural next step' they may as well have got into making toasters, or become a nationwide distributor of door-knobs, or something else else even dumber like buying a finance company. To be honest, even the toasters bit wouldn't have surprised me... what a ginormous bloody disaster... and what a mess.
Anyway. It's over (maybe not over for Hotchin and Watson yet though). Now, I'm in. Not much to lose and loads to gain. I will happily eat my words if I have to. Time will tell (as it always does).
Watch this space.
Vaygor1.
All well and good,what us investors are looking for though is that they can start making a profit or at least have a decent chance of doing so. But to me that point looks about 2-3 years off,maybe, if they don't do anything stupid and if they can keep getting loans to support them. While the people doing the stupid things may be gone, the onus of proof of running their business well is on them after the complete idiocy of the past 5 years. At the moment 1 of their business units is making a profit while the others are losing a lot of cash. Hence their lacklustre SP.
Thanks again Blobbles... obviously ALF still way under the Radar in this forum. I will put some numbers down in the next week or so regarding my thoughts on Return on Investment into ALF.
In the meantime, take a look at this interview with Adam Feely on 4-Oct-2012, not long before he left his role as CEO of the Serious Fraud Office. Hanover is discussed.
http://tvnz.co.nz/breakfast-news/fin...-video-5114890
So on the assumption that Watson and Hotchin get their comeupance in the not-too-distant future, and assuming a fair amount of compensation is recovered from the (currently?) frozen assets, then who gets the money?
In my view, it's the debenture holders that lost out at the time... but what would the cut-off date be for determining who they are/were? And how would you allocate it out?
ALF inherited all the debentures with the debt-for-equity swap way back when.
Now CMAL is involved and when you read the press release about them buying the remainder of the Hanover assets from ALF https://www.nzx.com/companies/ALF/announcements/231570 ...then what's the deal now?
What intrigues me is the statement in the above press release:
"ALF will benefit from a new Funding Facility that CAML has agreed to provide contemporaneously with the purchase of the Transferred Assets, and CAML has signaled that it will consider further, more significant, funding support at the time other assets are sold."
If CAML have bought the Hanover assets, then I have trouble seeing what the connection is between the subsequent sale of those assets by CMAL and the impact that may have on CAML's future funding support for ALF.
All views welcome.
Just reviewing my last post in this forum. Looking at the NZX announcement wording
"ALF will benefit from a new Funding Facility that CAML has agreed to provide contemporaneously with the purchase of the Transferred Assets, and CAML has signaled that it will consider further, more significant, funding support at the time other assets are sold."
By 'other assets', ALF is probably referring to their assets other than those acquired through Hanover.
But the question still begs on who gets Watson's and/or Hotchin's liquidated assets assuming they are seized.
That aside, what's ALF's position now? And how many assets are there left to sell?
Using the figures and other information in the Presentation to Shareholders
https://www.nzx.com/companies/ALF/announcements/230270
and (primarily) Section 5 of the nzx release detailing the CMAL transaction.
https://www.nzx.com/companies/ALF/announcements/231572
and ALF's latest audited financial report, I get the following position as at 22-Dec-2012:
Assets ($000,000) Liabilities & Equity ($000,000) Receivables 5.8 Property Loans 3.6 Merchandise 0 Allied Nationwide 5.6 Loans & Advances 4.9 Other Incl Creditors 6.5 Properties 0 Equity & Capital Notes 0 Other Assets 5 Total 15.7 Total 15.7
There is a bit of guesswork here as to the likely shift in equity since their last Annual Report. This shift would be due to their ongoing business-as-usual, realisation of the full value of their NZ Livestock subsidiary, and what increase (if any) there may have been in the value of their rural assets. None of these are reflected in the table above.
Also, I have had to take a stab at which accounting ledgers the CAML (and other) transactions apply to.
So in summary:
- Assuming my figures above are right (and I have been wrong before), then all properties have been sold.
- They have a NZ$5.6M hangover from the Hanover rigmarole, not a big deal in my view compared to the crap they were in before.
- Not sure they have to sell any more assets at all. Their assets appear to now consist of cash, cash equivalents, property [sales yards, offices?], plant and equipment.
ALF should be able to operate as it did in the past with 3 notable exceptions:
1) Their merchandising division is gone.
2) The $5.6M debt.
3) They need to get more of their loyal (and not so loyal) customers back.
As before comments & feedback welcome.
More to come soon...
Is this a crazy question?
The difficulty in researching ALF is because over the last few years the real story on market cap, earnings ability, dividends, PE ratios etc etc has been totally warped by (a) their predicament and resulting loss reporting and (b) the concurrent massive amount of share issues/consolidations that took place over the period.
I have looked at it from various angles and have had trouble coming up with any numbers I can have any confidence in, so I decided to analyse ALF all the way from 2001 till the first signs they were falling off the rails (by buying sawmills etc) and finally got some pretty consistent results.
I will spare the detail for now and don't want to go too far into any assumptions made in arriving at the following (you can read my previous posts for some of that)...
Firstly, a million shares in ALF right now equates to 1.1% of the company.
To buy 1.1% of ALF over the last year or so would have cost an investor between NZ$20,000 to NZ$30,000.
In the years leading up to ALF's train wreck, the same 1.1% would have cost well in excess of NZ$20 million to buy.
In other words the market currently values ALF at around 1/1000 of what it used to.
Some things have changed now for ALF since their crash, some of which makes their future fundamentals and ability to earn more uncertain. But if ALF survives (and I most certainly think they will) then the chance exists for them to rise like the phoenix from the ashes.
What if, after all the dust has finally settled, they have only 1/10 of their historical earning capacity? That would make 1.1% of ALF worth NZ$2 million. Even if it takes them 13 years to get there, that would still represent a capital gain of 40% per annum compounding from a purchase price of NZ$25k. Dividends would be the cherry on top.
Using historical data and taking a pessimistic approach I broadly calculate that ALF's share price should be 11 cents for every $1million in equity it has.
I think there is a real possibility that ALF will have NZ$1M in equity by the end of this financial year. They might even have it now.
If ALF eventually get say $10M back from Watson/Hotchins if that is possible, then there's a nice bonus.
I would enjoy some devils advocate / independent calcs / different views etc feedback from those who read this.
After my previous posts on ALF, I'm not expecting much though.
Vaygor1.
With earthquakes and all I've had other things on my mind. The shame of it all is that as I pop back not much seems to have changed. We still have the spruikers and dreamers and those not prepared to do some elementary analysis. I’d just remind people if you chase a dog with fleas you’re bound to get bit – its just the size of the bite that’s yet to be determined.
Vaygor1, I have never held ALF but I write this as a long time PGW shareholder. ALF's sole remaining business is the Livestock trading arm - correct?
PGW are predicting a big drop in EBITDA from their Livestock division in FY2013. Not because they fear losing business to Allied Farmers. But because the price of stock units (sheep and cows) is expected to be much lower this financial year. One farmer shareholder who posts on this forum spoke of pulling his business from ALF in favour of PGW because of the fear of not getting paid at all in ALF went under.
I think ALF has an absolute mountain to climb to gain any creditability with rural NZ.
Your statement "Some things have changed now for ALF since their crash." is IMO the understatement of the year. Your guess that Allied Farmers might have 1/10 of their previous earning capacity is based on what? Personally I wouldn't base that on historical data, because the company is now so different history really is bunk in this case.
The stock and station business is I believe built on trust and personal relationships. If a few of those trusted employees decided to go it alone then I would say Allied Farmers is finished for good. I would estimate the chance of losing everything you put into this business is greater than 50%. And I can't see how the 50% 'success possibility' could deliver anything like the returns to mitigate the 50% bankruptcy risk.
SNOOPY
Hi Snoopy.
Thanks for your comments. I appreciate the feedback.
Allied Farmers have 2 business units now.
1) Their Livestock Division. Through MyLiveStock.
2) Their Real Estate Division. Through FirstNational Real Estate.
I too am aware of the comments and decisions made by ALFs shareholders/customers in this thread. I am very interested in their viewpoints on whether or not they would utilise Allied Farmers' services again if they thought (or knew) that ALF would not go broke while their buying/selling of livestock was in the 1 or 2 day transition phase, which is the only perceived risk that customers were exposed to.
This perceived risk is now almost non-existent due to CMAL's buying the remainder of the Hanover assets and the funding arrangements they have put in place with ALF. Even before this occurred, plenty of farmers have been more than happy to deal through ALF to buy/sell livestock and feed, take out insurance, and use as agents to buy/sell farm real estate. You can visit www.mylivestock.co.nz and see for yourself.
ALF never lost its credibility from a traditional customers viewpoint. The way it has conducted business over the last 120 years and is conducting business with its farmers now holds a reputation that remains intact. It is the Board that lost its credibility from a shareholders viewpoint because it got into businesses (like sawmilling and financing) that it knew nothing about.
Choosing 1/10th of their earning capacity is a hypothetical, but a very conservative one. Giving them 13 years to get there is more than feasible. 13 years is a long time.
I have performed a detailed analysis between ALF as it was reported in YE 30 June 2005 (1 month after it bought the sawmill disaster) and now. Based upon a lot of measures I should realistically have chosen 1/5th the earning capacity. 1/10th is pessimistic. i.e. Turnover now is 1/4th of 2005, Employed livestock agents (excluding independent contractors) is now a 1/3 of what it was.
With its merchandising division now gone and Hanover now essentially concluded, choosing 1/10th suggests that merchandising contributed 90% of it's historical earnings. It never got anywhere near that.
Apart from not merchandising, I would like to know in what way ALF's business is any different now from what it was in 2005. I would be more than happy to be enlightened.
At ALF's AGM on 27th November 2012 the Livestock division was looking very profitable compared to annual report YE 30 June 2012.
ALF's 6-month report to 31-Dec-2012 will be out in approx 1 month from today. It will make very interesting reading. I am craving for data.
Vaygor1.
" I would like to know in what way ALF's business is any different now from what it was in 2005. I would be more than happy to be enlightened."
They issued millions of shares , so I am not sure if your numbers stack up .You talk of 1/10 of the earnings but before they has the 10:1 reverse they literally issued millions and millions of shares.
Thanks for your comeback Vaygor.
I notice that nowhere on the www.mylivestock.co.nz website is any mention of it being owned by 'Allied farmers'. Instead the website says it is operated by NZ Farmers Ltd, an NZX listed company. Is this some attempt to try and unstick some of the Allied Farmers mud? It is only in the small print in the terms and conditions that 'Allied Farmers Rural Limited' are listed as the operators of the website.
SNOOPY
Vaygor, I was a PGW (or WRI as it was then) shareholder in 2005, the same time period you are assessing for ALF. That was the year that Rural Portfolio Investments took a controlling stake in WRI. Back in those days WRI was not as it is now (they had not yet merged with Pyne Gould Guinness and were in the throws of swallowing Willaims and Kettle). However the Grant Samuel compiled, Wrightson commissioned takeover report of the time does have some interesting comments on the outlook for trading livestock in FY2005. The report is dated September 2004 and I quote from page 9.
"Wrightson is New Zealand's largest and only nationwide livestock business serving the needs of farmers, meat processors and others in the livestock industry. The livestock operations include a core sale agency business, a live export operation, Wrightson Velvet and Integrated Livestock management. The business is primarily based on a sales margin/commission model, and accordingly when sales volumes or sales prices reduce income to Wrightson is also reduced. Given the heavy reliance on the agency business, profitability of the livestock division is impacted by the changing values and volumes of livestock being sold. Livestock prices peaked in 2002 and since then have progressively declined (Snoopy note: PGW EBIT for livestock subsequently rebounded in FY2005, but I don't know if this was a 'market effect' or a 'merger effect'). Accordingly the EBIT of Wrightson Livestock has reduced from $11.9m in 2002 to $4.2m in 2004. Livestock has a high fixed cost structure which further exacerbates the the variability in earnings."
"A relatively new initiative is for the Livestock business to procure specified live weight sheep for processors. Wrightson enters into agreements with farmers for the supply of product to very specific parameters through the season (Snoopys note: this sounds like a forerunner to the more recent Silver Fern farms supply agreement that went disasterously wrong for PGW - resulting in a multi million dollar contract write down- when they realized that would not be able to get the volume of stock they signed up to purchase for Silver Fern farms). As processors become more demanding in their requirements, this method of livestock procurement is expected to become more common. This method provides Wrightson with a more certain income stream (Snoopy adds: except when the shortage of supply of stock means an agreement like this causes a major default, with multi million dollar writedown implications)."
I realise that none of the above directly relates to ALF, but I do believe the comments are general enough to point to the same kind of market pressures that ALF woudl have been facing at the time, and indeed faces now.
SNOOPY
Didn't you just answer your own question above Vaygor? Employed Livestock agents are only 1/3 of what they were once (your figure). So in order to stand still in terms of dollars generated each remaining employee is going to have to generate three times the business they did in 2005, to get commission levels back up to 2005 levels. This should be easy to achieve. Instead of working 8 hours per day the emplyees could work 24 hours per day ;-P.
SNOOPY
Hi Stoploss.
Regarding massive share issues and the 100:1 consolidations (not 10:1), I have taken all that into account in my analysis.
Company earnings in terms of straight dollars/annum (as opposed to earnings measured in $/share) is unaffected by the number of shares issued. If someone owned 1% of ALF before and they own 1% of ALF now the number of shares on issue falls off.
Buying 1% in 2005 would have cost you over NZ$20MIllion. Buying 1% in 2012 would have cost you NZ$25k.
Their revenue is now only 1/4 as much as it was back then but that is only 1 small measure. It is equity and profit that counts and these numbers are a bit vague at the moment. Roll on their 1/2 year report in 30 days from now.
Hi Snoopy.
ALF have made no secret of this.
The reason for the different entity (NZFL) is to ensure that its affairs are immune to whatever was happening in ALF so Joe Farmer can trade through them in confidence.
Also, NZFL (at YE 30 June 2012) was 30% owned by Livestock Agents and Staff. This too was needed to retain their best staff, and along with it, the relationships and loyalties with their traditional customers... a very important aspect you pointed out below.
Vaygor1