Receivership for SCF

SCF CEO Sandy Maier fought hard.

South Canterbury Finance has today asked to be placed in receivership having failed to produce a rabbit from the hat in the form of a rescuer willing to take on the business.

South Canterbury Finance Ltd has requested Trustees Executors to appoint a receiver in respect of the whole of its undertaking and assets.

The Finance Minister Bill English cancelled a trip to South East Asia to deal with the fall-out.

The country’s 2^nd biggest finance company owes around $1.7bn to 35,000 depositors and debenture holders. Of that around $1.5bn may be covered by the government’s guarantee scheme. But some $700m are stuck in stressed loans

Throughout 2010 the chief executive Sandy Maier has led a non-stop campaign to right the company and he has given all in the fight to save the historic company led by its famous elderly millionaire Allan Hubbard whose Southbury Corporation is the sole, 100%, shareholder.

Maier has tried to sell the entire company as a parcel with its good and bad loans and there was speculation of an overseas investor interested in the ‘good’ loans which represent about $700m.

.SCF conceded this morning it had been unable to complete a recapitalisation and restructure and thus could not confirm to its trustee, Trustees Executors, in accordance with the terms of its debenture trust deed, that it was compliant with various financial covenants under the debenture trust deed.

The trustee’s role is to act on behalf of more than 35,000 debenture holders with $1.2 billion of debentures invested in the big lender.

RECEIVER APPOINTED

The Trustee has appointed Kerryn Downey and William Black of McGrathNicol as receivers of the South Canterbury Finance charging group.

Sandy Maier says the appointment was inevitable when it became clear that negotiations to inject fresh capital into the business could not be completed by the 31 August 2010 deadline.

“Receivership is disappointing – and we were working very hard up to the last minute to avoid that outcome.

“At the heart of South Canterbury Finance there is a sound business supporting many successful small and medium sized enterprises. That is the core business of South Canterbury Finance and a real contributor to the economic well being of that sector of the economy.”

Maier says much of the focus in the last nine months has been on re-establishing that element of the business as the “good bank”, with an appropriate capital structure and focused management team.”

“We had largely achieved that goal as well as taking the decisions to deal with the other elements of the business that are non-performing. Since December last year the company has appointed a new independent chairman and directors and a new senior management team to take the business forward.

“Non-core and non-performing assets have been identified and an active recovery programme has made considerable progress in realising those assets corralled in the ‘bad bank’.”

New equity had been introduced in December and March to enable the restructuring of the company to proceed.

“In spite of the enormity of the issues to be dealt with, the company continued to honour its obligations to depositors up until it made the decision to request the appointment of a receiver.”

“South Canterbury Finance has enjoyed the support of its many loyal depositors and new depositors who have taken advantage of the attractive deposit rates offered by the Company.

“We welcome the steps by the Trustee and The Treasury to put in place an arrangement for debenture, deposit and bond holders to be paid their full entitlement to principal and interest regardless of their eligibility under the Crown Retail Deposit Guarantee Scheme.

“This is a very satisfactory arrangement for those investors and is recognition of their support for the Company.”

Maier says he was aware of the enormous challenge that lay ahead when he accepted the appointment of Chief Executive Officer.

“It was always going to be a big task. I knew that, and the directors did too. But we thought that at the heart of the Company there was an established business with a proud heritage that was worth saving and we have combined our skills with those of the Company’s dedicated staff in an endeavour to achieve that goal.”

Maier says he, the directors, management and staff of South Canterbury Finance will be working closely with the receivers to help achieve the best possible outcome from the receivership.

“There are many people who have gone far beyond what might be expected to create a future for South Canterbury Finance. I thank them all for their contributions and, like them, will look back on our achievements accomplished in a very difficult environment for the finance sector and the economy.”

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