South Canterbury inflows, outflows, `holding even'

South Canterbury chief executive Sandy Maier
South Canterbury chief executive Sandy Maier
South Canterbury Finance's inflows of investments and loan repayments versus outflows are "holding even" and roll-over rates are within a historical range, SCF's chief executive Sandy Maier says.

It is a month since SCF announced it was formally in due diligence with several parties to become equity partners, a move estimated by some analysts to inject $300 million to $400 million into the company, which would be crucial to its recovery and future.

Mr Maier said negotiations were still under way "with a handful" of would-be equity partners for a cornerstone investment.

"We're still proceeding apace with a handful of interested parties."

There had been no negative impact after the private business interests of SCF president for life, Allan Hubbard and his wife Jean, were placed in statutory management, he said.

It is understood Mr and Mrs Hubbard will be taken out of statutory management this week but his business interests would remain under management.

The other major issue at hand for the 84-year-old company was a wall of debenture and bond investments maturing between late June and October, valued at $1.13 billion, including $491 million to the end of June.

Mr Maier said those levels of repayments, spread over January to October, "had not moved down" and he was "otherwise comfortable" with meeting repayments.

When asked if SCF was making material gains on the difference between inflows and outflows of cash, Mr Maier said the business was "about holding even".

He emphasised assets were being sold as it was SCF's intention with restructuring to shrink the asset portfolio.

There were great days when new money came in, including days when a $20 million loan was repaid, Mr Maier said.

So far, the roll-over rate of existing investments had been 45%-65% - at or near historical levels, he said.

SCF's level of working capital has concerned international rating agency Standard & Poor's and was partially responsible for triggering downgrades in past months.

During the past six months, the working balance had been anywhere from $10 million to $120 million held, and at present was about $40 million.

Mr Maier did not work on using averages because of the large sums which could be repaid on any given day.

The working balance was not always at levels S&P wanted, Mr Maier, who has been critical of the ratings agency in the past, said.

SCF is due to release its preliminary full-year results, for the year ending June, late next month, before its fully-audited results.

"Don't go expecting a perfect result; we're not out of the woods yet," Mr Maier said.

Asset sales and repaid loans were up to $256 million, from SCF's self-styled restructuring into a three-division "good" and "bad" banks and investment arm.

Assets to date had been sold "pro-rata across the board", with all three divisions contributing to the $256 million.

"All interested parties are looking at all three [divisions' assets] together," he said.

The sudden placing of eight business entities of founder Allan Hubbard into statutory management by the Government on a Sunday almost three weeks ago, took a new twist on Friday.

The weekly National Business Review reported Mr Hubbard had engaged the high-profile law firm Russell McVeagh, possibly to seek a judicial review of the management order.

That order had angered many of Mr Hubbard's loyal supporters.

Mr Maier said investor interest "had slowed down in the aftermath" of the shock announcement that Mr Hubbard's interests were under management and he faced a Serious Fraud Office investigation.

However, it had been difficult to gauge the extent of the fall out of investor sentiment, he said.

 

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