8/14/2019 Allied Farmers Announcement on Additional Info About
Bonus Shares
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Allied Farmers provides additional information on consideration
to be provided
under its proposal to Hanover and United investors
Full details of the proposal which Allied Farmers Limited has
agreed with Hanover FinanceLimited and United Finance Limited and
which is conditional on shareholder and investor votesare to be
contained in the Notice of Meeting that Allied expects to send to
its shareholders earlynext week.
However, in advance of that, Allied provides the following
matters of detail.
A. Consideration to be received by Hanover and United Investors
(per $ of originalinvestment)
Hanover and United investors holding secured deposits or secured
stock have already(under the DRP) received 6 cents per $1.
Under the Allied Proposal the remaining amount owed to them by
Hanover/United will bereduced so that it matches the amount set out
in the column 3 below (highlighted)
Allied will pay that consideration in the form of new Allied
shares. The number of shareswill vary depending on the issue price.
The issue price will be set at 5 day VWAP1 overthe 5 trading days
prior to the Hanover meeting which therefore means the price
willreflect the trading price on NZSX over that period.
Investors Amountalreadyreceivedunder DRP
Amount tobe receivedper $ inAlliedShares
Total valuereceived
No. of new ALFshares issued toinvestors (assumingissue price of
35 centsper share*)
HanoverSecureddepositors
6 c 72 c 78 c 2.06
United securedstockholders
6 c 84 c 90 c 2.40
Hanoversubordinatednoteholders
Nil 30 c 30 c 0.87
Hanover CapitalBondholders
Nil 30 c 30 c 0.87
1VWAP = Volume Weighted Average Price
8/14/2019 Allied Farmers Announcement on Additional Info About
Bonus Shares
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B. Potential scenarios for initial shareholdings
The relative initial shareholdings of existing shareholders and
investors will depend on the issueprice of the new shares (set as
described above). However, Allied has calculated the
followingexamples based on various possible2 outcomes:
Number of new shares issued and resulting capital structure
Issue Price per Share
(cents) 0.40 0.38 0.36 0.34 0.32 0.30
Existing Market Capital ofAllied Farmers 15,078,682 14,324,748
13,570,814 12,816,880 12,062,946 11,309,012
Value of assets acquired 396,177,220 396,177,220 396,177,220
396,177,220 396,177,220 396,177,220
Total Combined MarketCapital 411,255,902 410,501,967 409,748,033
408,994,099 408,240,165 407,486,231
Number of SharesExisting Allied Farmers
shareholders 37,696,705 37,696,705 37,696,705 37,696,705
37,696,705 37,696,705Number of Shares issued to
Holders 990,443,049 1,042,571,630 1,100,492,276 1,116,227,116
1,238,053,811 1,320,590,732Total of shares on issue afterCompletion
1,028,139,754 1,080,268,335 1,138,188,981 1,202,923,821
1,275,750,516 1,358,287,437
% Ownership
Existing Allied FarmersShareholders 3.7% 3.5% 3.3% 3.1% 3.0%
2.8%
New shareholders 96.3% 96.5% 96.7% 96.9% 97% 97.2%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
C. Explanation of the adjustment mechanism
As announced, the existing Allied shareholders will be issued
Bonus Securities for noconsideration which will ensure fair
treatment of the existing and new shareholders.
The adjustment works simply but the formula is complicated.
An example of the calculation that would occur if the Shortfall
was NZ$20 million is set outbelow but (using the same numbers) you
can describe the position as follows:
at Completion, existing shareholder will hold 13m/(13m + 396m)
percent of the company,where 13m is the then market cap of ALF and
396m is the value of the finance assets
if the assets end up being worth $376m then you need to end up
in the position wherethe existing shareholders own 13/(13 +
376)
to achieve this the existing shareholders have to end up with
more shares (which theydo not have to pay for)
every new share increases the number of shares on issue and
therefore getting thepercentage right is a bit of maths (but it
works)
the key is that the proportions are set by the value each group
(existing shareholdersand investors) bring to the deal
2 Allied cannot predict whether the applicable calculations
reflect the actual position that will apply as that is
dependent on future events.
