4 December 2009

Dear Investor

ALLIED FARMERS PROPOSAL

We are the trustee for the secured debenture stockholders in United Finance, the
subordinated unsecured noteholders in Hanover Finance, and the secured bond holders in
Hanover Capital. You have an investment in one or more of these companies.

We are writing to provide you with important information on the proposed transaction
between Allied Farmers, Hanover Finance, United Finance and Hanover Capital. You
should have already received a notice of meeting in relation to this transaction, together with
an Explanatory Memorandum, Grant Samuel independent report and Allied Farmers
prospectus.

This proposed transaction is a significant departure from what you initially put your money
into and a shift away from the debt restructuring plan investors voted in favour of in
December last year. We have not had any involvement in developing the proposed
transaction; however one of our roles is to seek to ensure that you have sufficient
information to make a fully informed decision in respect of the transaction. It is not our role
to recommend to you what decision you should make. That is a question for you based on
your individual circumstances.

This is a complex decision. There is no easy answer as to which way you should vote.
Because of this, you should:

• take the time to read all of the information that has been provided;
• seek advice from a financial adviser or other suitable professional whom you trust;
and
• whether you are in favour of, or against the transaction, make sure you vote either at
the meeting at the Ellerslie Event Centre in Auckland at 10.30am on Wednesday 16
December 2009 or by sending your proxy vote so that it is received by 10.30am on
Tuesday 15 December 2009. Delivery details for proxy votes are set out at the end
of the notices of meeting.

Attached to this letter is some additional information to help you understand the implications
of the proposed Allied Farmers’ transaction:

• Appendix A – Background and summary of the proposed transaction

• Appendix B – Overview of the Grant Samuel Report
• Appendix C – What are the Trustee’s areas of concern?
• Appendix D – What should I take into account when making my decision?

If you have any questions of Perpetual Trust as trustee, we welcome those questions. To
speak to us please call 0800 737 738.

Yours sincerely

Louise Edwards
Chief Executive
 APPENDIX A

Background and summary of the proposed transaction

1. We have endeavoured to set out below a simple summary of the transaction.

2. If the transaction proceeds, all investors will become shareholders of Allied Farmers
(whether or not they vote in favour of the transaction) and will cease to have any
claim on Hanover Finance, United Finance or Hanover Capital. There are a number
of important differences between holding shares and holding a debt claim. These
are discussed in more detail in "Appendix C - What are the Trustee's areas of
concern?"

Background

3. Currently the Hanover group of companies have issued the following four types of
securities. You will hold one or more of these securities.

• Hanover Secured Deposits;

• United Secured Stock;

• Hanover Finance Subordinated Notes; and

• Hanover Capital Bonds,

(together the "Hanover Group Securities").

4. Investors agreed in December 2008 that no interest will be payable on the Hanover
Group Securities and that repayment was to occur over a period of time until 31
December 2013. In addition the holders of the Hanover Finance Subordinated
Notes and the holders of the Hanover Capital Bonds agreed that half of their
investments would not be repaid to them. Recently Hanover Finance and United
Finance have announced that it is unlikely that the Hanover Group Securities will be
able to be repaid in full. The revised forecasted repayments are as follows:

• In respect of each $1 of Hanover Secured Deposits: 70 cents (inclusive of the 6

cents per $1.00 paid to 30 September 2009).

• In respect of each $1 of United Secured Stock: 90 cents (inclusive of the 6

cents per $1.00 paid to 30 September 2009).

• In respect of each $1 of Hanover Finance Subordinated Notes: Nil.

• In respect of each $1 of Hanover Capital Bonds: Nil.

There has been no independent verification of these forecasts. No assurances are

given that the forecast numbers are achievable.

Proposed Transaction

5. The proposed transaction comprises, in essence, the following steps:

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 (a) Step 1: Allied Farmers issues ordinary shares in Allied Farmers to each
investor. In exchange, each investor transfers all the Hanover Group
Securities they hold to Allied Farmers. Investors do not receive any cash
payment from Allied Farmers (or from any of the Hanover group entities).

Allied Farmers has agreed to issue shares with an issue price equal to
$396.177 million, which is the assessed value of the loan assets Allied
Farmers is to acquire from Hanover Finance and United Finance at Step 2
(see (b) below). The "issue price" of the Allied Farmers’ shares will be
determined by reference to the prevailing trading price of Allied Farmers
shares on the stock exchange in the period immediately prior to the
investor meeting on 16 December 2009. The "value" of the shares to be
received by each investor is (subject to rounding) as follows:

(i) United Secured Stock: In respect of each $1.00 originally

invested, 84 cents (investors have already received payments of 6
cents from United Finance).

(ii) Hanover Subordinated Notes: In respect of each $1.00 originally

invested, 30 cents.

(iii) Hanover Capital Bonds: In respect of each $1.00 originally invested,

30 cents.

Please note that you will not receive these amounts as a cash payment.
Instead you will receive Allied Farmers ordinary shares. For example if
you had invested $10,000 in say United Secured Stock, you are to receive
$8,400 in value from Allied Farmers. If the assessed issue price of an Allied
Farmers share is $0.251, you would receive 8,400 ÷ 0.25 = 33,600 shares in
Allied Farmers.

Grant Samuel state in their report at page 35 that "there is no certainty

regarding the price at which Allied Farmers shares will trade and it is
possible that investors may experience a significant decline in the value of
their Allied Farmers shares, at least initially, as large volumes of shares are
placed on the market by investors wishing to liquidate their investment and
realise cash albeit at a discount."

The transaction gives rise to different considerations for different investors:

United Secured Stock

• United investors are asked to give up some value which they have
(approximately 1.5 cents/$1.00), which is in effect being given to holders of
the Hanover Subordinated Notes and Hanover Capital Bonds.

• The realisable "value" of the Allied Farmers shares (see the discussion in
paragraph 6.4 on page 34 of the Grant Samuel report) to be received (and
the potential risks and rewards associated with holding shares) should be
compared to the possible returns if the debt restructuring continues or if a
receiver is appointed in the future (see pages 36 and 37 of the Grant
Samuel report). Copies of the audited financial statements of United
Finance for the year ended 30 June 2009 are available at
www.hanoverfinance.co.nz (Financial Statements).

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Allied Farmers ordinary shares were quoted on the NZSX at 25 cents on 1 December 2009.
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 Hanover Subordinated Notes

In respect of holders of the Hanover Subordinated Notes the Allied Farmers

shares they would receive are likely to provide more value to them than the
amount forecast by Hanover to be available to pay to them should the debt
restructuring continue (see paragraph 4 above).

Hanover Capital Bonds

In respect of holders of the Hanover Capital Bonds the Allied Farmers shares
they would receive are likely to provide more value to them than the amount
forecast by Hanover to be available to pay to them should the debt
restructuring continue (see paragraph 4 above).

(b) Step 2: Allied Farmers will purchase substantially all of the assets of
Hanover Finance and United Finance.

(c) Step 3: If in June 2011 Allied Farmers determines that the value of the
loan assets acquired is less than $396.177 million, the shareholders of
Allied Farmers prior to the transaction will receive more ordinary shares to
compensate them for Allied Farmers having issued too many shares when
purchasing the Hanover Group Securities. Such an issue is likely to lower
the value of the shares held by the existing shareholders as more shares
are being issued without Allied Farmers receiving anything for those
shares.

6. Implementation of the transaction is subject to a number of conditions which must

be fulfilled before the transaction occurs. The transaction can only proceed if it is
approved by all four classes of Hanover Finance, United Finance and Hanover
Capital Investors. Each approval requires at least 50% of the securities to be voted
and at least 75% of those votes to be in support of the transaction.

7. The transaction is not free from risk. Identified risk factors are discussed in the
Explanatory Memorandum and Grant Samuel report (see also paragraphs 4 and 5
of Appendix B and Appendix C attached).

8. A fuller description of the transaction is set out in the Explanatory Memorandum.

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 APPENDIX B

Overview of the Grant Samuel Report

1. The Grant Samuel report is an independent report which has been obtained by the
directors of Hanover Finance and United Finance for the benefit of the Investors to
explain the merits of the proposed transaction to assist you in making an informed
decision.

2. Grant Samuel has not independently verified the forecasts of Hanover Finance or
United Finance in relation to the recovery for investors should the debt restructuring
continue in effect. When the debt restructuring was approved in December 2008
PricewaterhouseCoopers undertook a detailed assessment of the possible range of
recoveries for investors. The nature of the reports differs in this respect.

3. It is important that you read section 7.2 of the Grant Samuel report (which is on
page 40) to understand fully the qualifications to which the report is subject.

4. We have summarised the following conclusions from the Grant Samuel report (with
page numbers referring to where in the Grant Samuel report such observations can
be found). It is important that you read the Grant Samuel report in it entirety as
Grant Samuel’s opinion is to be considered as a whole and selecting portions of the
analyses or factors considered by it, without considering all the factors and
analyses together, could create a misleading view of the process underlying Grant
Samuel’s opinion.

In relation to the transaction:

(a) The consideration being offered by Allied Farmers is considered fair. (Page
9)

(b) It is Grant Samuel's opinion that the Proposal is superior to the status quo
(and the prospect of potential receivership) and that an alternative offer is
unlikely. (Page 9)

(c) The transaction has the advantage of providing immediate liquidity,

however, the value at which the investors will be able to realise this liquidity
is uncertain both initially and over time. (Page 37)

(d) The transaction is effectively a ‘back-door’ listing of the Hanover/United

businesses, with investors exchanging their investments for shares in
Allied Farmers (which will then largely hold only the underlying assets of
Hanover/United). (Page 28)

(e) It is arguable that part of Mark Hotchin's and Eric Watson's (the current
ultimate shareholders of Hanover Finance and United Finance) motivation
for advocating the transaction is to avoid their obligation to provide up to
$20 million of support (supported by a personal guarantee from each of
them of up to $10 million each) to the Hanover Secured Deposits and
United Secured Stock which is available in the event there is a shortfall of
funds to meet repayment obligations to the investors holding these
investments. The guarantees fall away if the transaction goes ahead.
However, it is important to note that the personal guarantees also fall away
in the event of receivership which is an increasingly likely scenario (unless
the receivership is caused by the shareholders defaulting on the
guarantees)… In Grant Samuel's opinion the proposed transaction has
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 little impact on the $20 million support provided by the shareholders, as it is
considered to have little value under the proposed transaction or the likely
alternative, a receivership. (Page 28)

(f) The consideration being offered is shares in Allied Farmers. Investors are
receiving shares in proportion to the assessed value of the underlying
assets being transferred to Allied Farmers. In other words following the
issue of the new shares the investors will own almost exactly the same
proportionate share of the recapitalised Allied Farmers as they currently
own of Hanover/United (prior to the impact, if any, of the bonus share
mechanism). The issue price of the shares is arguably more important to
the existing shareholders of Allied Farmers who are being severely diluted,
albeit that they do have benefit of the bonus share adjustment mechanism.
(Page 29) (In relation to the "bonus share mechanism", see paragraph
5(c) of Appendix A above and the appendix to the Explanatory
Memorandum.)

(g) In Grant Samuel's opinion the total of $7.9 million being attributed to the
Subordinated Notes and Capital Bonds is reasonable and does not unfairly
prejudice or favour any one group of investors. (Page 30).

(h) Although the investors would, after the transaction, unquestionably have
control over Allied Farmers (through holding approximately 97% of its
issued ordinary shares), individual investors will have only minor influence
in a shareholder vote, as they are unlikely to act jointly or in concert. (Page
31)

(i) It is reasonable to assume that in the current market, if another party was
willing to offer a superior price to acquire the Hanover assets, that party
would have emerged. (Page 35)

In relation to the position if the transaction is not approved:

(j) The repayment plan outlined under the Debt Restructure is unlikely to be
realised given the continued decline in asset prices and the recent further
impairment of the underlying assets of Hanover/United. On 10 November
2009, the Directors stated that they believe the return for holders of
Hanover Secured Depositors will be approximately 70 cents in the dollar
with the return for holders of United Secured Stock estimated at
approximately 90 cents in the dollar. Holders of Hanover Subordinated
Note or Hanover Capital Bonds may not receive any return of principal
invested. The ultimate result of failing to meet its obligations under the
Debt Restructure (an event of default) would be receivership. (Page 36)

(k) It is uncertain how much will be realised from the underlying assets of
Hanover/United and if or to what extent the holders of the Hanover
Secured Deposits or United Secured Stock would be reliant on calling on
the personal guarantees provided by the shareholders. If the shareholders
were unable to honour their obligations under the guarantees, bankruptcy
proceedings would likely be initiated, an event of default under the
Hanover Secured Deposit Trust Deed and the United Secured Stock Trust
Deed would occur and the trustee may elect to appoint a receiver. (Page
36)

(l) Liquidity in the New Zealand debt market has declined significantly since
late 2008 and it is very uncertain when a recovery in the finance and
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 property market will occur. As such there is no guarantee that the
underlying assets of Hanover Finance and United Finance will not
deteriorate further. Conversely, it is possible that a recovery in these
markets could result in a write back of impairment provisions accrued to
date. In Grant Samuel's opinion this is a remote possibility in the short to
medium term. (Page 36)

We have the following observation on the Grant Samuel report. A number of

references are made in the Grant Samuel report to the likelihood of receivership
should the transaction not be approved. Receivership is one possibility if
Hanover/United default on their obligations. The other possibility is that the debt
restructuring continues on its current terms.

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 APPENDIX C

What are the Trustee’s areas of concern?

1. When considering whether or not to vote in favour of the transaction, investors

should take into account the information listed under "Appendix D - What should I
take into account when making my decision?" In addition, we believe that investors
should also consider the following matters:

Financial Position of Allied Farmers

2. Allied Farmers is a company listed on the New Zealand Stock Exchange and as
such has obligations in terms of public disclosure. Information can be found on the
Allied Farmers website and in its published Annual Report. Allied Farmers has
issued a prospectus ("Prospectus") in respect of the shares being offered in
accordance with the relevant legislation relying on the fact that it is subject to
"continuous disclosure". Information can be cross-referenced without being
included in the Prospectus itself. Page 16 of the Prospectus provides details of
where investors can obtain such further information.

3. Information on the outlook for the Allied Farmers Group, if the transaction is
approved, and the risks relating to the Allied Farmers Group can be found on pages
7 and 8 of the Prospectus. You have also been provided with a pro-forma balance
sheet of Allied Farmers as if this transaction had taken place at 30 June 2009 (see
page 11 of the Prospectus).

You should read and carefully consider the notes to this balance sheet which state:

“This pro-forma consolidated statement of financial position is unaudited and may

not reflect the actual position that will apply when audited financial statements are
completed and all requisite intra-group and fair value adjustments are made. It is
provided for the purpose of providing investors with an approximated view of the
consolidated financial position of the pro-forma Allied Group at the time of
completion of the proposal. In addition to any adjustments as noted, the actual
financial position will be affected by the trading performance of the Allied Group
from 1 July 2009 to the Completion Date”.

Specifically you need to understand that:

(a) The pro-forma balance sheet takes no account of trading results since 30
June 2009.

(b) The value ascribed to the assets to be acquired has not been subject to
any independent valuation or audit.

(c) The value at which the assets have been incorporated into the pro-forma
balance sheet makes no adjustments for the fair value of the assets as
required by accounting standards nor for any goodwill which relates to the
assets which may need to be written down at some future date.

We do not know the materiality (if any) of these items.

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 Shares v Debt

4. Investors will not be receiving cash, but shares in Allied Farmers.

5. As stated in the Grant Samuel report (see pages 34-35):

(a) “A holder of shares is not entitled to regular income or principal payments

of any kind. In general, listed entities endeavour to generate sufficient net
cash flows to pay shareholders semi-annual dividends, however, such
payments may be more or less frequent and the company is under no
obligation to pay dividends. Decisions regarding the future direction and
management of the business, including the payment of any dividends, are
made by the Board of Directors of the listed entity. Grant Samuel
understands that Allied Farmers intends to pay dividends out of its retained
earnings. That is, no dividends will be paid from the capital realised from
the Hanover and United assets, but rather, Investors will be reliant on the
underlying earnings of Allied Farmers for the receipt of dividends. Over the
longer term the significant injection of capital should improve both earnings
and the price at which Allied Farmers' shares trade. It is important that
investors consider the dividend yield and the potential capital value change
(i.e. increase/decrease in the share price) of the shares together rather
than either aspect in isolation.

(b) A share in a listed entity represents a minority interest in the equity of the
underlying business. As such, shares in listed entities normally trade at a
discount (attributable to the lack of control each parcel of shares has over
the company as a whole) of 15% - 25% to the full underlying value of the
company as a whole, but the extent of the discount (if any) depends on the
specific circumstances of each company.

(c) The price at which shares trade is dictated by market forces and
significantly influenced by the underlying performance of the business and
expectations of future performance as well as demand and supply
dynamics. There is no certainty regarding the price at which Allied
Farmers shares will trade and it is possible (and in the short term very
likely) that the shares will exhibit a material discount to the price at which
Allied Farmers shares are transferred to investors.

(d) In the event of a liquidation holders of equity have the lowest priority over
available funds from which to recoup their initial investment. Equity is the
highest risk instrument an entity can issue and is therefore expected to
realise the greatest reward in the long-term in terms of the potential
dividend stream, in the event significant profits are generated.
Shareholders also participate in any increase in the value of the underlying
business, which is generally reflected in an uplift in the share price of the
entity. Allied Farmers will be predominately owned by Hanover and United
investors and accordingly the investors will bear almost all of the risks and
receive almost all of the benefits associated with the underlying business.

(e) Listed companies are regulated by the rules of the exchange on which they
trade. Shares in Allied Farmers are regulated by the Listing Rules.
Although listed entities do not have the oversight of a trustee, in Grant
Samuel's opinion this is unlikely to have any noticeable impact on either
the operation or the security of the underlying business. In terms of
financial information the disclosure requirements under the Trust Deeds
will be similar to those required under the Listing Rules. However, under
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 the Listing Rules any information of a material nature will be required to be
disclosed to the market as soon as practicable, providing shareholders with
an additional level of transparency regarding their investment.

(f) Shares in listed entities are significantly more liquid than any of the existing
securities held by the investors. In theory, providing there is sufficient
market depth (i.e.: an adequate number of buyers and sellers for the
stock), a shareholder in a listed entity may buy and sell their shares as and
when they please, during the trading hours of the relevant exchange.
There are costs associated with buying and selling shares through share
brokers (share broking costs). These costs will apply to the acquisition and
sale of Allied Farmers shares (excluding the initial acquisition by the
Investors) and are usually in the order of 0.5% to 1.0%”.

6. If investors seek to sell Allied Farmers’ shares in the short term they will very likely
receive a materially lower sum (and from which sum they will be required to pay the
costs of that sale, such as brokerage), primarily because there are likely to be more
sellers of the shares than buyers. Neither Allied Farmers nor any member of the
Hanover group provides any assurance that the Allied Farmers shares to be issued
will be able to be sold at any time at a level at or above their issue price. Those
investors who elect to retain their Allied Farmers shares can participate in any
upside that may eventually be realised.

7. Allied Farmers announced to the New Zealand Stock Exchange on 24 November

2009 (ie, after the date of the Prospectus) that RESIMAC Limited, Australia's largest
non-bank issuer of mortgage backed securities, will participate in a $7 million capital
raising by Allied Farmers. The capital raised will be represented by a combination
of convertible notes, perpetual bonds and warrants issued by Allied Farmers and
Allied Nationwide Finance Limited. The Trustee has not been advised if these
matters would have any impact on investors should they approve the transaction.

Other Risks

8. The manner of calculation of the additional shares to which the existing

shareholders of Allied Farmers will be entitled is complex. (A detailed summary is
set out in the appendix to the Explanatory Memorandum.) Investors should note
that, for example, all expenses associated with the disposal of any assets as well as
holding costs incurred in respect of those assets are deducted from the proceeds
when determining the value of the assets.

Overseas Investors

9. Overseas investors who are prohibited from receiving the Allied Farmers shares will
have their share entitlement sold and will be paid the net cash sum (after deduction
of brokerage costs). Given Grant Samuel's view that the shares will, initially at
least, trade at a material discount to their issue price, those persons are being
prejudiced by this sale when compared to other investors. For this reason,
overseas holders have been encouraged to arrange for a New Zealand resident
holder for their investment ahead of the meeting.

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 APPENDIX D

What should I take into account when making my decision?

All the information which has been sent to you for the purposes of the extraordinary
meeting is important and should be read carefully. Please pay particular attention
to the Notice of Meeting, the Explanatory Memorandum, the Grant Samuel
independent report and the Allied Farmers’ prospectus.

The proposed transaction gives you many issues to weigh up. The following is not
an exhaustive list but might help you in your thinking:

• The Hanover Group debt restructure or any subsequent receivership provides

cash as assets are realized. The Allied Farmers transaction provides cash if
dividends are paid or if you sell your Allied Farmers shares. The timing and
amounts in both cases are uncertain.

• Below “debt restructure” refers to the debt restructure plan voted on by you in
December 2008 and “the transaction” refers to the proposal currently in front of
you.

• The directors have advised that full repayment under the debt restructure is
unlikely. There has been a significant write down in asset values and the forecast
payout has been reduced. It is possible that further write downs will occur. The
timing of recoveries is uncertain. The recent financial performance and financial
position of Allied Farmers has been varied and the outlook for Allied Farmers is
not certain, despite the benefits of the transaction identified by Grant Samuel,
including increased equity.

• Under the debt restructure results are in the hands of Hanover Group
management monitored by PricewaterhouseCoopers and supervised by us as
trustee. Under the proposed transaction the results will be in the hands of Allied
Farmers management under the governance of its board of directors.

• Under the debt restructure the focus is on realisation of assets and scheduled
payments to investors. Under the proposed transaction the former Hanover
Group assets will be managed within the Allied Farmers group together with the
other Allied businesses and without any of the current restructure constraints, in
particular the obligation to make payments to investors at fixed times. That is
seen by Allied Farmers as providing more flexibility to deal with the assets to best
advantage of shareholders.

• Under the debt restructure your claim on the assets of (as the context requires)
Hanover Finance, United Finance or Hanover Capital in an insolvency ranks
ahead of any right of the shareholders of those companies to receive any
payment. If the transaction is approved you will hold shares and (if you continue
to hold your shares) will only, in an insolvency, be paid a return once all creditors
have been repaid in full.

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