South Canterbury Finance Limited at BB level

2 March 2010

South Canterbury Finance Limited at BB level after credit rating lowered one notch

South Canterbury Finance Limited reported today that it remains at the important BB level after rating agency Standard & Poor’s re-rated by one notch the Company’s long term debt. Standard & Poor’s lowered the rating to BB from BB+ and changed the outlook to Creditwatch Negative from Negative Outlook, indicating the possibility of a further review.

Chief Executive Officer Sandy Maier says: “A BB rating is the hurdle relevant for the Crown’s Extended Retail Deposit Guarantee scheme effective from 12 October 2010. South Canterbury Finance passes cleanly over that hurdle. For our eligible investors the Company continues to be a viable investment with the benefit of the Crown’s existing retail deposit guarantee until 11 October 2010.”

Mr Maier says Standard & Poor’s had correctly noted that the Company continued to enjoy strong shareholder support, evidenced by yesterday’s significant capital injection of $152.5 million of new equity, and benefited from the loyalty of debenture investors.

“Standard & Poor’s has not given the same weight as the Company’s Board of Directors to recent positive changes. These included a new management team, a group restructuring and private placement raising $26.4 million of new equity, an improvement in the liquidity position sufficient to have allowed the early repayment of the noteholders in the $US100 million US Private Placement facility, and a substantive and complete review of assets with an additional $180 million of provisions taken (which removes ongoing speculation and guesswork about asset carrying values). The Company has also acquired two very long-established companies in Helicopters (NZ) Limited and Scales Corporation Limited that last year combined generated over $65 million in operating earnings and contribute to an overall improvement in asset quality.”

“These are tangible and real improvements to the Company’s financial position. South Canterbury Finance today has $253 million of shareholders’ funds and an equity ratio of 11.8 per cent,” Mr Maier says.

“A huge effort has already been put in to address the issues confronting the Company and we acknowledge there are further matters that our investors and Standard & Poor’s would like to see improved. The Board believes we are as well placed as we have been for many months to undertake the work necessary to reposition the Company back to its historic long-term position of success as a quality non-bank lending business, and we are confident that we will achieve this outcome.”

“Eligible investors can still enjoy the benefit of the Crown’s current Retail Deposit Guarantee Scheme until 11 October 2010 and the continuation of a BB rating qualifies the Company for acceptance into the Crown’s Extended Retail Deposit Guarantee from 12 October 2010. If it is accepted into the extended scheme, the Company will transition seamlessly for the benefit of investors.”

Ends

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