The mysterious case of the Allied Farmers' $7m guarantee which wasn't
The purchaser of the loan, whose identity ALF has agreed to keep confidential, is alleging ALF is in default of that guarantee and is refusing to pay for the loan.
ALF sold the loan so it could repay what it owed Westpac, which wanted to eliminate its exposure to ALF.
ALF's report for the six months ended December 31 clearly states the existence of a guarantee.
"The parent company has guaranteed to the purchaser of a loan from our asset management services division that $7 million of proceeds will be collected from the loan. Any forecast shortfall in proceeds the purchaser may claim under the guarantee is provided for in the financial statements and charged to the income statement," the report says.
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