Cabinet met yesterday, with the South Canterbury Finance issue on its agenda, but Prime Minister John Key remained tight-lipped before and after the meeting about speculation the Government may step in and offer a lifeline of up to $600 million.
He confirmed Finance Minister Bill English was postponing an overseas trip to deal with issues after an expected announcement today on the future of South Canterbury Finance.
Earlier yesterday, company chief executive Sandy Maier issued a brief statement through the stock exchange, saying while South Canterbury was still negotiating with "interested parties", seeking recapitalisation, there was "no certainty" of success.
Mr Maier said the company was endeavouring "to put together a recapitalisation and restructuring solution acceptable to all stakeholders".
He expected to make an announcement on the company's future today.
The company needs a new backer or a cash injection from the Government to avoid receivership.
Depositors are covered by the Government's extended deposit guarantee scheme, to a maximum of $250,000 per investor, but receivership could result in a "fire-sale" of assets, which could undermine the southern economy, where the majority of the company's loans lie.
One of South Canterbury's key challenges was a large amount of investor funds due for repayment before the end of October when the original guarantee expires, Mr Maier said.
The implications of that and how to address it would be part of the structure of any deal involving new investors.
Mr Maier has so far refused to identify the potential investors but it has been suggested they include Sydney-based Duncan Saville - a major shareholder in New Zealand's Infratil, as well as Australian credit fund Sheerwater and South Island businessman George Kerr, who has already invested in South Canterbury.
Following a scathing report by statutory managers on the Hubbard entities last week, yesterday's confirmation of the SFO's continued investigation is sure to further anger Hubbard supporters who are calling for an end to the scrutiny.
Two companies and seven trusts of Mr Hubbard (82) are under Government-appointed statutory management, which has frozen investor funds and interest payments.
This is separate from the SFO probe into the affairs of the same entities, including Aorangi Securities Ltd and Hubbard Management Funds.
South Canterbury Finance is neither under statutory management nor SFO investigation.
SFO chief executive Adam Feeley said yesterday the investigation was started because it was believed "offences involving serious or complex fraud may have been committed" and information subsequently acquired has prompted further investigation.
Mr Feeley said last week's report by the statutory managers had highlighted the range of issues which were emerging from inquiries into Aorangi Securities and Hubbard Management Funds.
- Additional reporting The New Zealand Herald and NZPA
