South Canterbury Finance welcomes Crown guarantee

South Canterbury Finance Group welcomes Crown guarantee extension

South Canterbury Finance Group has welcomed the Government’s decision this week to extend the Crown deposit guarantee as it will remove a level of uncertainty from the future of the finance industry.

The Chairman of South Canterbury Finance Group Allan Hubbard says: “The business and rural sectors need a strong finance industry to provide the resources for growth and we are positioning, as one of the leading players, to fulfill that role.”

Mr Hubbard says that as the economy transitions from recession, there will inevitably be additional stress in some sectors.

To provide further for those events, the group has acted conservatively and increased the provision for non-performing assets in the financial year to 30 June 2009 and created a general collective provision. This has increased the unaudited net loss after tax for the financial year to $69 million.
South Canterbury Finance’s principal shareholder Allan Hubbard has executed a $25 million underwrite of specific non-performing loans at book value.
The loss for the year to 30 June 2009 caused the group to be in technical breach of the interest coverage covenants on its unused banking facilities.
“These facilities have never been utilised over the last three years,” Mr Hubbard says.

Talks are also underway with the five subscribers to the US$100 million private placement facility who are entitled to seek repayment within three months following the resetting of the group’s credit rating by Standard & Poor’s at BB+.

Mr Hubbard also announced changes to the board of directors following the retirement of Bob White and Stuart Nattrass.
“On behalf of the Company and my fellow directors, we thank Bob and Stuart for their contributions and wish them all the best with their plans for the future.” Mr Nattrass is retiring after six years as a director to pursue other business interests. After 19 years as a director, Mr White, a former partner of accounting firm Hubbard & Churcher, is taking the opportunity to retire prior to the restructuring of the group.

The board is in the process of finalising the appointment of new independent directors.

Looking forward, the group has been restructured throughout the country to align resources to the core activities which will remain funding business, plant, rural activities and consumer loans.

“As acknowledged by Standard and Poor’s in its recent report, South Canterbury is one of the stronger finance companies in New Zealand, underpinned by a sound business profile and broad geographic portfolio of diversified assets,” Mr Hubbard says.

South Canterbury Finance’s owner, the Southbury Group has appointed Forsyth Barr and Harmos Horton Lusk as advisers to assist in the capital restructuring of the group. A further announcement will be made in the next three weeks.

Financial summary
12 months to
30-06-09 12 months to
30-06-08
Net profit (loss) after tax ($69.0m) $68.9m
Total assets $2.31 billion $2.03 billion
Net loans and receivables $1.63 billion $1.46 billion
Cash in hand $123.3m $402.8m
Standard & Poor’s rating BB+

ENDS

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