I hope I am not the only one who found his eyes rolling round in his head trying to understand the ins and outs of what Allied Farmers are proposing for Hanover Finance.
Allied Farmers, a $12 million company that reported a $34 million loss back in June, wants to pay $400 million for Hanover assets. Hanover debenture holders will be able to swap their debentures for Allied shares. These shares will be worth 78 cents. The Hanover people, turned Allied people, will then be able to sell their shares for this heavenly price. Yeah, right! They will be 78 cents for about 12 hours, until the market is flooded with new Allied people cashing up, and the share price takes a sudden dive south.
Actually, to be frank, I have no idea what a debenture is. No idea. It could be a denture with a "b" as far as I'm concerned. And in the same way that one wants secure dentures, one would surely want a secure debenture. Whatever it is, if it is a Hanover one, it is a dud. Even the secure debentures in that Hanover outfit seem singularly insecure. I have never had to learn what a debenture is. I think it is a piece of paper, a certificate that says you've given Hotchin and Watson a hundred grand, and now that hundred grand has disappeared into Hotchin's Paritai Drive house all you've got left is the certificate.
I'm afraid debentures and that kind of stuff bores me witless. If I ever had to concentrate on that stuff, after a few minutes I wanted to stand on a table, pull my pants down and scream. I was always more interested in what was going on in the world and why. I paid people to know about debentures. These are the same kind of people who know what bonds are. Treasury bonds, I understand, are very good because Treasury never goes broke. But what a bond is, I could not tell you.
Anyway, I don't think I have any debentures. If I did, I'm sure my accountant would have told me. I've tried to call him but he's gone to Cap D'Antibes for three days by private jet. Just kidding.
I learnt, at great cost some years back, a golden rule. Never invest in anything you don't understand. And never put your money near someone you don't know. Keep it in the bank. I followed some seriously rich people into a deal a few years ago, and despite them being the kind of people who understood all of that complicated business stuff, the deal still went belly up. It was nothing to do with me. I didn't understand what was going on. The money disappeared into the ether. It ceased to exist.
In any case, why anyone thought there would be money in investing in Hanover, I've no idea. For a mere half a per cent or so, more interest than they would have got at a nice, secure Australian bank, people took their money across to Hanover, or one of all the other dumb ass, belly-up Flash Harry finance boys. It was greed. Greed on the part of the investors, and greed on the part of those taking the money. Those companies always exist for the principals. The principals are always going to be the people who make the money, live in the mansions, drive the Ferraris, sail the gin palaces and order cases of 1959 Cristal champagne at $2000 a bottle.
Source: nzherald
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