Preference shareholders in collapsed South Canterbury Finance will get no payout, as the shares are not secured against any company assets.
Preference shares were never under the Government's retail deposit guarantee scheme, which is essentially an insurance policy.
South Canterbury Finance is understood to have paid about $20 million to be part of the Government's scheme.
In December 2006, South Canterbury Finance issued 100 million $1 preference shares to the public.
The payment of these dividends ranks above that due debenture holders.
A South Otago investor contacted the Otago Daily Times yesterday, concerned that as a preference shareholder there would be no payout.
Craigs Investment Partners broker Chris Timms said preference shares were unsecured - not secured against any asset.
They were treated as a "quasi form of equity".
"They aren't covered by the Government guarantee because the money raised from preference shares [at the time of issue] is used as floating equity," Mr Timms said.
The difference is, preference shares are money that is raised from investors by the company, and are a form of ownership, whereas money from bond and debenture holders is lent to the company, for interest to be paid and eventually returned.
The value of preference shares, which brought no voting rights, reflected investor sentiment on the wellbeing and performance of a company, and could be volatile in price, Mr Timms said.
In recent months, the South Canterbury Finance preference shares had dropped in value to a low of 9c a share last month, before all South Canterbury Finance securities were suspended on the morning of its receivership.
They closed at 15c, effectively valuing the original $100 million at $15 million.
From August 16 to 27, about 860,000 preference shares were traded, in a range of 14c to 20c a share, with a total value near $130,000.
South Canterbury chief executive Sandy Maier has noted in recent months, as South Canterbury Finance's preference share values dropped, many of the original buyers had long since sold out and speculators were still making some money from the shares.
Dividends had always been paid, he said.
When announcing the $1.7 billion receivership, Mr Maier said it was "clearly a bad day for Allan Hubbard and preference shareholders ... who were the big losers".
