South Canterbury chief executive Sandy Maier said in a statement a $75 million facility, initially from New Zealand Credit Fund Ltd last October, had been taken over by Torchlight Security Trustee Ltd, which will increase the facility by $25 million to $100 million, and extend the term of the loan until November 30 this year.
Yesterday's announcement of the further $25 million loan replaced a previous agreement between South Canterbury's parent Southbury Corp and Torchlight for a loan of $37.5 million, Mr Maier said.
Craigs Investment Partner broker Peter McIntyre said while the South Canterbury was attempting to raise more cash, in accepting the further $25 million from Torchlight it was getting $12.5 million less than the markets had been expecting, based on earlier announcements.
"It is less [$12.5 million] than expected.
"It's likely S&P will be looking at this and reviewing its rating; making an announcement," Mr McIntyre said.
S&P downgraded South Canterbury's rating late last month from BB to B+, with a credit watch outlook, but South Canterbury remains under the Crown extended deposit guarantee scheme until the end of next year.
Mr Maier yesterday said the increase in the amount of prior charges, to $151 million or 7.2% of South Canterbury's total assets, was approved by the Crown under the company's Crown guarantee deed.
Mr Maier said more than 5000 debenture holders, with investments totaling almost $172 million had, by Thursday agreed to roll over investments maturing in the coming months. "This is excellent progress and indicates the competitive nature of the offer and the strong support amongst existing investors for South Canterbury Finance," Mr Maier said.
However, Mr McIntyre cautioned "the wall of maturities" - a total $1.13 billion of bonds and debentures coming up for roll-over by the end of October - was still faced by South Canterbury and it still had "some way to go" to shore up its position.
Torchlight fund chairman George Kerr said in the joint statement the changed arrangements were "practical and signify the ongoing willingness of Torchlight to support the turnaround of South Canterbury Finance".
