Now that Fonterra has announced a higher payout, would Allan Crafar be in a position to comfortably service his debt.
To me, it looks like he may have been shafted by fair weather friends - the banks, taking a very short term view of a long term asset.
Not to mention the $30m or so of debt added to the bill by the recievership.
My Father in Law once offered me some sage advice
All bankers are *****'s.
I've experienced this first hand which is why there is a certain bank that I or my children will never step inside again, ever.
Cactus Kate on pay equity
17 minutes ago
8 comments:
He may well be but I suspect you will find his debt may well greatly exceed the prudential limit derived from the value of the assets.
Don't go moaning about banks when the real lesson which is ALWAYS forgotten is when you take on debt you loose control and you become vulnerable.
Debt should be a short term stepping stone to viability but with these people it becomes an addiction.
Geez Adolf, Crafar didn't go to the bank with a gun and steal the debt.
The banks would have been flat stick signing him up and talking about how smart they were at Friday afternoon drinks. While discussing what they were going to spend their bonuses on.
Lou, you lumox.
Crafar went to the bank and borrowed to the limit. His problem is that farm values have decline by 25% or so over the last couple of years and that put him outside the box.
He gambled. The banks didn't - they never do. And he lost.
Now get over it. That's part of commercial life.
Fact is, the industry is better off with him out on his arse.
Come now Lou, Adolf is correct - once indebted, someone else has control or leverage over your asset(s). Mr Crafar may have over extended himself somewhat. Mind you, you're right about the banks very keenly offering post-signing Friday drinkies, knowing full well that the they were always first creditor in line should such a venture go belly up. Such is the nature of debt, you lose control.
That's your opinion Adolf.
I'll stick to mine.
When life stops being a gamble then it will be a sad day for humanity.
The banks number one priority in the last couple of years would have been income.
All I was saying is that future income prospects and farm prices are now looking better.
The banks bailing out of their side of the deal has destroyed a lot of wealth and created more debt.
banks are fair weather friends, we all know that but need to be reminded
i recall a story about a property investor sho had 15 or so residential rentals in his portfolio when the 96 market correction happened, and despite the fact that he had never missed a payment on his interest only loans, the bank forclosed on him because he breached their newly formed debt equity ratio, thus enforcing the sale of assets in a depressed market place, destroying the previous 10 years worth of equity accumulation (as we all know, property prices pretty much trebled since 96).
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