Hubbard tips Helicopters, Scales into South Canty

Hubbard tips Helicopters, Scales into South Canterbury for $162.5M equity, cash

March 1 (BusinessWire) – Businessman Allan Hubbard has come to the aid of South Canterbury Finance again, agreeing to sell his profitable Helicopters (NZ) and a majority stake in Scales Corp. to the firm in exchange for shares and cash.

South Canterbury will pay for the assets by issuing $152.5 million of new shares to Hubbard’s Southbury Corp. and handing over $10 million in cash, the company said in a statement. The finance company has some $1.1 billion of debt to roll over this year and the new equity will bolster its balance sheet.

The unprofitable finance company has obtained a waiver from Trustees Executors for the transactions, which would have breached financial covenants on single party exposure and the level of total equity to shareholders funds. The waiver will be reviewed with South Canterbury’s full-year financial statements.

“The earnings contributions of these two successful companies are now part of South Canterbury Finance, which materially and substantially changes the earnings profile and prospects of the company,” Hubbard said in the statement.

The transactions will restore and then improve South Canterbury’s capital position, which has been weakened by a jump in provisions in the first half. They underpin Hubbard’s “absolute confidence” in the firm’s future.

South Canterbury today reported it net loss ballooned to $154.9 million in the six months ended Dec. 31, from a year-earlier profit of $28.6 million, reflecting a provision for losses on impaired or non-performing assets of $180.3 million.

In total, the first-half results incorporate $229 million of losses on asset realisations and impairments. Newly appointed chief executive Sandy Maier said that other than property, sectors the company is in “are largely performing satisfactorily” at an operating level.

The company is getting inflows of funds in excess of redemptions and is working with the Treasury on its application for acceptance into the extended retail deposit guarantee scheme.

Total revenue dropped to $130.8 million in the six months through December, from $200 million a year earlier, the company said today.

Helicopters (NZ) had net income of $16.2 million in the year ended June 30, 2009, while Scales had earnings of $29.8 million.

(BusinessWire)

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