South Canterbury Finance appears to have altered its view on its relationships with Allan Hubbard's private company Aorangi Securities Ltd, saying now that "various arrangements" between the companies are "unclear at this stage".
After the Government placed Mr Hubbard's Aorangi Securities and seven trusts into statutory management on Sunday, South Canterbury Finance pulled its $1.25 billion prospectus for about 24 hours and amended it to include an update on the statutory management issue.
The prospectus was re-posted yesterday.
It was later taken down again to address a rating downgrade.
At the heart of the matter, is the affairs of Mr Hubbard's privately-owned Aorangi Investments, which has taken $134 million of investor funds; whether a prospectus or investment statement was provided to investors and where those funds have since been invested.
South Canterbury is not part of the statutory management order, but the fall-out is already reflecting negatively on the finance company, which is in the middle of a massive restructuring and recapitalisation push.
South Canterbury chief executive Sandy Maier told the Otago Daily Times on Sunday there had been a "complete separation" between the companies in question and neither Aorangi nor the trusts were part of any equity injection into South Canterbury.
Yesterday when contacted, Mr Maier said South Canterbury stated it was "unclear" because it was still "assessing the overall input" of various companies of Mr Hubbard's, but he remained adamant there was no recent financial links between Aorangi and South Canterbury.
There was evidence of "historical loans, back and forth between Aorangi and South Canterbury over the years", but South Canterbury "has no direct exposure at present" to Aorangi, he said.
Any "overlap" was geographical in nature only, as both companies operated as borrowers and lenders in the same regional area, he said.
"The implications of the statutory management for the various arrangements between the company [South Canterbury] and entities [Aorangi and the seven trusts] associated with Mr and Mrs Hubbard are unclear at this stage," Mr Maier said.
The prospectus was quickly amended and re-released as Mr Maier said it was being reported widely around the country that South Canterbury had ceased taking deposits, but this was a "technicality" when there was any withdrawal of a prospectus.
However, Craigs Investment Partners broker Peter McIntyre said it would be South Canterbury's benefit to "inform investors, as soon as possible" on its dealings with the Hubbard entities and whether any of the $134 million Aorangi cash was injected into the company.
Asked if any Aorangi funds were sent to South Canterbury, to maintain international rating agency Standard & Poor's rating, in order to be included in the extended Government's extended depositors guarantee scheme, Mr Maier said "chronologically" the S&P rating had been been updated before Mr Hubbard's $152 million equity injection in February.
That was a non-cash transaction, when South Canterbury acquired 100% of Helicopters (NZ) and 64% of Scales Corp from parent Southbury Corp, which weeks earlier injected $26.4 million in new equity capital following a private placement.
Mr McIntyre queried whether South Canterbury should have re-released its amended prospectus when it remained "unclear" what the business relationships were and what information was known about Aorangi by South Canterbury while it undertook a seven-centre roadshow around the country last week.
Mr Maier said the re-release of the prospectus had been "multi-legalled" and while South Canterbury "could have stayed out of the market 'til all this was cleared up, but we wouldn't have an offer", for investors, he said.
On the question of whether Mr Maier knew of the investigation under way into Aorangi while on the roadshow, he said "No".
"We were not aware of [the investigation into] Aorangi Securities, or the severity of its problems," he said.
In the amended prospectus released yesterday, Mr Maier said South Canterbury was working to identify "the consequences", both direct and indirect, for the finance company as a result of Sunday's statutory management appointments.
South Canterbury was not relying on further capital from the Hubbards and would otherwise continue with its $1.25 billion capital raising plans from investors, he said.
