Speculation taxpayers may have to fund recapitalising of South Canterbury Finance, is just that.
The New Zealand Herald reported yesterday that taxpayers may have to invest $750 million to recapitalise the finance company, which was also involved in negotiations with overseas investors.
Sources say this was not the case, however the speculation was enough to see South Canterbury Finance preference shares rise nearly 19% yesterday, from 14.75c to 17.5c.
Craigs Investment Partners broker Peter McIntyre attributed the increase in value to that speculation, as there had been no announcement or sign it was talking to the Government.
The preference shares listed in December 2006 at $1 and were used to raise $100 million in new capital.
Preference shares were a key indicator of the financial health of the company, said Mr McIntyre, because it was at-risk capital not covered by the Crown Deposit Guarantee scheme.
South Canterbury Finance has a waiver from its trustee until August 31 to either get new equity funding or sell assets, otherwise the trustee may not renew its prospectus, preventing the raising of new capital.
This would leave it facing the prospect of being placed in receivership, but Mr McIntyre said the trustee had the option of extending the waiver if it thought it was capable of securing new equity.
The Otago Daily Times reported yesterday that a letter from the Serious Fraud Office to investors in one of Allan Hubbard's companies indicated it appeared to be backing away from an investigation into the companies associated with Mr Hubbard.
