Allied’s Hanover deal better than receivership

Grant Samuel, in its independent report, has also said it is the best of all the options available, including receivership. It has also described the deal, which was initiated by Allied Farmers, as a "back door listing" of Hanover.

An explanatory memorandum and Notices of Meeting booklet is being sent to Hanover and United investors today.

The main points in the 88-page booklet are:

• 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.