TIM HUNTER
The sale of a 22-metre luxury motor launch by receivers for a sixth of its alleged value has cast doubt on other asset values reported by failed finance company Allied Nationwide.
The vessel, named Absolute, was sold in the last month for $220,000 after being listed in January last year for $1.3 million.
Marine broker Neil Gurran, appointed by Allied Nationwide to sell Absolute last January, said the company insisted it be listed for $1.3m despite being told it was worth less than half that sum.
”They said it had to be listed at $1.3m,” said Gurran. ”When I rang them and asked they said ‘you just have to understand that is what we have to have it at, bring us any offers you get’. I said it’s pretty hard when the boat’s probably only worth $300,000, because it needs a lot of work.”
After Allied Nationwide collapsed into receivership last August, pressure to realise assets mounted.
Taxpayers have paid out around $130 million to repay 4500 of Allied’s secured debenture holders covered by the retail deposit guarantee scheme. Perpetual bondholders owed $15.5m were not covered by the scheme.
Gurran said receivers were so desperate to raise cash they spurned a written offer from a client willing to pay $250,000 cash, or up to $332,500 if repairs were done, instead accepting just $220,000 through another broker.
”I think it’s disgraceful,” he said. ”They burned $100,000.”
Rob Alloway, CEO of the finance company’s parent Allied Farmers, said the huge discount showed Allied Nationwide had an unrealistic view of asset values.
”All finance companies had unrealistic views on values of assets inside their loan books – that’s what history’s proven hasn’t it,” he said.
”I do recall writing to the chairman on a number of occasions highlighting my concerns about the value of assets held for resale.”
While not involved directly in the finance company’s affairs – it was run by a separate board and CEO – ”it did form an important part of the assets of Allied Farmers and consequently from time to time I would cast my eye over assets that were held, hence why I took the time to get in the car and drive out to have a look at this boat,” said Alloway.
The vessel Absolute was just one example of assets held at excessive valuations.
”There are numerous stories like that,” he said.
”Another example was a yard at Penrose [in Auckland] out by the railway line. Same thing – trucks that hadn’t been sold and diggers locked up in yards around the place. This went on for a long time because sale prices were not going to reflect well on the balance sheet.”
Answering Gurran’s concerns about the final sale price, receiver Andrew Grenfell of McGrath Nicol said he was confident the deal was the best available.
”The receivers accepted an offer via Gulf Group Marine Brokers. However, it became a protracted and difficult negotiation in which the broker Neil Gurran’s client breached the terms and conditions of the sale.
”The receivers were subsequently presented with alternative offers. After considering the offers and providing Neil Gurran’s client a seven-day period to complete the sale which he failed to do, the receivers accepted the best alternative deal. The alternative deal accepted was an unconditional, ‘as is where is’, cash offer presented by another broker.”
– BusinessDay.co.nz
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