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South Canterbury registers new prospectus, but Hubbard and non-core assets to go (Update 5)
October 20th, 2009South Canterbury Finance has registered a new prospectus, allowing it to start taking in money again from investors. But its prospectus discloses Allan Hubbard will step down as Chairman within 12 months and that will divest non core assets, including its major stake in New Zealand’s largest corporate dairy farmer Dairy Holdings and in South Island Farm Holdings, which has 20 dairy farms.
(Update 5 includes final prospectus, as initial document did not contain pages 44-74: ‘South Canterbury Finance and charging subsidiaries financial information’ and ‘auditor’s report’.)
The prospectus also details plans for South Canterbury to borrow up to NZ$75 million from an unidentified third party that would put a new prior ranking charge over its assets and this would be used to repay US lenders US$100 million over the next 6 months. It also disclosed South Canterbury had NZ$41.3 million of cash and NZ$47.6 million of realisable investments as at September 30.
More details and the full prospectus are below. We welcome comments and insights from readers on the prospectus below.
South Canterbury is offering 8% for debentures renewed up until October 11 next year when the current guarantee expires. It is offering 8% for two years and 8.5% for three years and longer. This is just 2% more than being offered by investment grade rated banks. See all bank and finance company deposit rates for 1 year and more here.
South Canterbury Finance chairman Allan Hubbard said South Canterbury would apply to be in the extended deposit guarantee scheme.
“We have had to attend to a number of matters in recent weeks which caused delays in the registration of the prospectus. We very much appreciate the patience of our loyal investors and customers and look forward to their continued support,” Hubbard said.
“Further announcements will be made as we evolve our restructuring and recapitalisation plans.”
The prospectus also includes many details about past deals with related parties, the state of the loan book and the plans to inject more equity into Southbury Group, the parent company of South Canterbury that is owned by Allan Hubbard.
These include:
* Southbury Group has agreed to pay the US private placement noteholders a refinancing fee of $US15 million by the end of March next year.
* The NZ$75 million that South Canterbury plans to borrow will be used to repay the US private placement holders
* As at September 30, South Canterbury had existing prior ranking charges of NZ$34.1 million and can borrow up to a further NZ$127 million by way of prior ranking charges.
* South Canterbury has been trading profitably since June 30
* South Canterbury has met its obligations to creditors since its stopped taking in new funds by selling assets and by collecting interest and repayments on its loans
* Southbury Group plans to raise NZ$40 million to NZ$75 million by raising “additional equity or convertible equity by way of a private placement to selected investors.”
*South Canterbury “understands that its parent also intends proceeding with a wider capital raising once the proposed private placement has been completed and that further additional equity is proposed to be injected into the Company following that wider capital raising.”
* South Canterbury plans to sell a range of non-core assets over the next 6-12 months.
* “The Dairy Holdings Limited shareholding is, in the Company’s view, a high quality asset and is expected to attract wide-spread interest should the Company decide to reduce, or sell all of, its shareholding in that company. South Island Farm Holdings Limited owns shareholdings in some twenty dairy and other farms across the South Island. In the medium term, the Company is likely to seek to divest its holding in South Island Farm Holdings Limited to ensure the Company is able to meet proposed Reserve Bank capital requirements for non-bank deposit takers.”
* South Canterbury plans to reduce its related party lending by up to NZ$50 million by end of June 2010
* South Canterbury plans to appoint new independent directors and an independent chairman within the next 12 months
* It will review its lending and credit approval processes and systems “in light of adverse market conditions”
* South Canterbury will not be “making any new capitalised lending in the property development sector other than in very exceptional circumstances and then only where the loan is extremely well secured.”
* South Canterbury “intends re-focusing its lending operations on its traditional business, plant and equipment, consumer and rural lending areas and winding down and, where possible, divesting its exposure to property development lending.”
* 79% of South Canterbury’s business loans (including manufacturing, professional services, fishing, tourism, hospitality and importing and exporting businesses) are interest-only loans.
* At June 30 impairment provisions for business lending represented 3.7% or NZ$21 million of the total NZ$618.8 million in business loans
* “Over the last 12 to 18 months, the Company has made a number of larger loans to corporate borrowers reflecting, to a large extent, the relative absence of liquidity in the mainstream banking sector.”
* “In the future, 90% of its business loans will be for amounts of less than $5 million with the bulk being below $1 million. The focus, in the sector, will be on loans in the provinces to well-secured, small businesses with loan exposures of less than $1 million.”
* 50% or NZ$310 million of South Canterbury’s business loans are secured by second ranking or subsequent charges
* South Canterbury had NZ$485.7 million of property loans as at June 30 with 12 loans in excess of NZ$10 million each, including the biggest loan being to a hotel business for NZ$44 million.
* Almost all the property loans are interest only and most of those are capitalising loans.
* About 10% of the property loans were impaired at June 30.
* 43% of its property loans are secured by second mortgages
* “The Company significantly reduced its lending of this nature in early 2008 but has been required to continue funding development costs for existing borrowers to enable the completion of projects. At the time of origination of those loans, there were clear exit strategies, mainly involving the sale of the project. However, in many cases the exit strategy has not eventuated for a variety of reasons such as defaults by purchasers and the failure of the developers to complete subdivisions in time.”
* 19% of South Canterbury’s NZ$178.2 million of rural loans are secured by second mortgages
* “The Company’s credit approval processes were reviewed and amended in July 2009 to provide for a more rigorous loan application and credit approval process than was the case previously.”
* South Canterbury has established a new independent credit committee
* South Canterbury had past due loans at June 30 of NZ$132.3 million or 8% of its NZ$1.63 billion of loans, while NZ$301.2 million or 18% of the loan book is impaired
* South Canterbury has shares and investments, including NZ$113.5 million invested in NZX listed companies.
* South Canterbury also has NZ$67.2 million invested in South Island Farm Holdings Ltd, “the latter being acquired by South Canterbury Finance as partial consideration for the purchase from the Company of non-performing property loans in October 2008 by Mr A.J. and Mrs M.J. Hubbard. All of those loans were purchased for their face value.”
* At June 30 South Canterbury had NZ$220.3 million or 14% of its loans being related party loans, including loans to entities related by directorships and those linked to Allan Hubbard’s Southbury Group.
* “The principal related party loans included a $39.1 million loan to Kelt Finance Limited (a 75% owned subsidiary of the Company that is not currently part of the Charging Group), a $75.1 million loan to South Canterbury Finance’s parent, Southbury Group Limited (which loan has subsequently been reduced to $65.2 million via a principal repayment of $9.9 million post balance date), and loans of $20.2 million, $15.3 million and $12.5 million to Helicopters (N.Z.) Limited, Plum Duff Limited and Commtest Instruments Limited, respectively.”
* The Company has borrowings of $919.2 million which are due to be repaid by 30 June 2010 and a further $255.4 million of borrowings which are due to be repaid prior to the expiry of the current Deposit Guarantee Scheme.”
* “The directors of the Company are of the view that the Company will, through the issue of Stock and Deposits under this Prospectus and the realisation of assets, be able to repay its borrowings as and when they fall due for repayment. The Company has a long and successful history of utilising the domestic debenture funding market to generate liquidity to meet its financial commitments.”
* South Canterbury’s reinvestment rate fell to 60% by the end of June from 72% at the end of December.
* “The Company attributes this fall in reinvestment rates principally to the interest rates it was offering compared to those offered by other entities which had the benefit of a guarantee under the Deposit Guarantee Scheme. The Company is confident that by offering competitive interest rates, it will be able to improve its reinvestment rates over time and, thereby, raise the funds required to enable it to meet its commitments through the issue of Stock and Deposits.”
* “If the Company is unable to realise assets (including loans) as and when required, or to raise sufficient funds from the issue of Stock and Deposits under this Prospectus, to enable it to repay its indebtedness as it becomes due during the term of the current Deposit Guarantee Scheme, then that will constitute a “Default Event” under the Crown guarantee with the result that, subject to the terms of the Deposit Guarantee Scheme, all eligible investors would be entitled to payment under the terms of the Crown guarantee irrespective of whether or not their Stock or Deposits were due to mature before or after the expiry of the Deposit Guarantee Scheme.”
* “South Canterbury Finance agreed on 9 November 2007 to sell its 12.75% shareholding in Dairy Holdings Limited to Southbury Group Limited with effect from 30 November 2007.
* “On 30 June 2009, the Company acquired a 33.6% interest in Dairy Holdings Limited from its parent company, Southbury Group Limited, for $75.73 million. The purchase price was met, in part, through the issue of 40 million new ordinary shares in the Company to Southbury Group Limited at an issue price of $1.00 each (which shares were credited as fully paid) with the balance of the purchase price being paid by the Company in cash. This transaction was reviewed by an independent expert approved by Treasury in accordance with the terms of the Company’s guarantee under the Deposit Guarantee Scheme. The independent expert confirmed that the transaction was on arm’s length terms and that the value paid by the Company for the interest in Dairy Holdings Limited represented fair value for the Company.”
* “The Company entered into a Deed of Underwrite and Guarantee with Mr A.J. and Mrs M.J. Hubbard, dated 14 August 2009, under which Mr A.J. and Mrs M.J. Hubbard agreed to underwrite losses which the Company may incur in respect of certain specified loans, up to a maximum aggregate amount of $25 million, by procuring the payment of that sum, or the transfer of assets of that value, to the Company. The obligations of Mr A.J. and Mrs M.J. Hubbard under the Deed of Underwrite and Guarantee are also limited to the value of the assets of North Wind Holdings (2009) Limited. Before entering the Deed of Underwrite and Guarantee, the Company satisfied itself as to the financial position of North Wind Holdings (2009) Limited and, therefore, the ability of Mr A.J. and Mrs M.J. Hubbard to meet their obligations under the underwrite and guarantee from the assets of North Wind Holdings (2009) Limited. Under these arrangements, the Company also entered into an Amending Deed of Underwrite and Guarantee providing for Subordination, dated 25 September 2009, under which the Company is able to ensure that North Wind Holdings (2009) Limited maintains sufficient net assets to enable Mr A.J. and Mrs M.J. Hubbard to meet their obligations under the Deed of Underwrite and Guarantee.”
* “In the Company’s view, if the credit rating is downgraded further, this may further impact the Company’s ability to raise funds from local and offshore institutions and investors under its offers of Stock and Deposits with the result that the Company may not be able to raise the funds it requires to fund its business activities and meet its payment obligations in respect of the Stock and Deposits offered under this Prospectus. A further downgrade may also impact on the Company’s eligibility to participate in the extended Deposit Guarantee Scheme (for further details refer to pages 31 to 32 of this Prospectus) and its ability to operate as a non-bank deposit taker under the Government’s proposed new regulatory regime for non-bank deposit takers.”
Here is the full updated prospectus:
Final South Canterbury Prospectus, Oct 20, 2009
Tags: Allan Hubbard, Deposit Guarantee Scheme, Lachie McLeod, South Canterbury Finance
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October 20th, 2009 at 4:50 pm
It would be far better for a big bank to take them over. People have very little confidence on Finance comapnies, especially without a government guarantee, as some are similar to ponzi schemes, where they need this constant flow of new money. Perhaps Rabobank would be a good match.
October 20th, 2009 at 5:34 pm
SCF have a mother Hubbard guarantee . Don’t you worry your sweet head about that , chitlin ! Us in provincial finance ( oops , sorry SIR COLIN , no inference intended ) have a symbiotic relationship with our kin folk in dairying .
October 20th, 2009 at 5:34 pm
As we have come to expect , yet another SCF announcement posing more questions than answers , along with the never ending promise of recap details ’sometime in the never-never’ , really who would invest at this point ? Apart from Chris Lee lol
October 21st, 2009 at 7:39 am
Interest.co.nz are listing the new SCF sub 1 year terms with interest of 4.5% and 6%. Yet from todays Herald:
”McLeod said South Canterbury was offering debenture investors 8 per cent for new money for terms of less than 12 months, which he believed was an attractive rate in the current market.
“That will get some interest over the next couple of days.”
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10604406
It will get some interest as it appears to be b*llocks
October 21st, 2009 at 7:45 am
Hi Andy, just done update 1.
That ‘8% for under a year’ rate matures on October 11, 2010
Cheers
Alex
October 21st, 2009 at 8:03 am
ah, ha Alex – then tis not b*llocks!!!
Cant see it listed in your tables though?
8% for a term of effectively 11.5 months with a govt gurantee? I suspect they will get takers.
Very much less keen on what they are offering 3,4, and 5 year out. Considering the big opposition (Rabo, ASB and BNZ) are offering 5.5-6.5% I dont think a premium of 2-2.5% is enough to compensate for the risk. The 2-2.5% margin is very much similar to what the ‘old time’ (ie now bust) finance companies used to offer pre-crash days. It wasn’t enough of a margin then and I certainly dont think its enough margin going forward for the risks entailed with holding a SCF debenture for 5 years. I suspect most will work this out – and as a consequence SCF will still have all the problems of borrowing short and lending long.
October 21st, 2009 at 8:25 am
Just put it in there now Andy,
We’ve also done update 2.
Cheers
October 21st, 2009 at 8:34 am
Andy,
I agree. 8.5% for terms beyond the current guarantee is not nearly enough to justify the risks.
cheers
Bernard
October 21st, 2009 at 8:51 am
Bernard – what do you think of them in a not so subtle way manipulating the govt guarantee? The SCF board have effectively nationalised themselves in all but name with this 8% to the date GG expires tactic. They are in effect holding a gun to the governments head on the following day when the GG expires and all that money raised rushes out. The gun effectively says – let us into the extended 2011 guarantee otherwise we go teats up on 12 Oct 2012.
I wonder whether the ‘unspecified’ lender that they need to tap $75m from is actually the ‘Debenture Holders Co of NZ’ ie this 8% offer pulls in the necessary wonga from debentures to keep the wolf from the door.
I imagine with your ‘investment advice to your mother in law’ hat on you’d have to say grab the 8% till Oct 11 2010 wouldnt you?
After all the government has already made the necessary provisions in its last accounts (of $800m) to rescue SCF debenture holders.
October 21st, 2009 at 8:51 am
Non-Core assets to go? Like the Dairy Farms they bought a few months back? Dump em on the market with Crafars lot … oh dear.
October 21st, 2009 at 8:59 am
One other point – that cash in hand figure ($41m) – its way down on previous months is it not?
October 21st, 2009 at 9:25 am
I really do wonder what propotion of the loan book is ‘capitalised interest’ i.e. non-cash producing and highly susceptible to default. I would suspect it is a surprisingly high % given the companies poor cash position just announced. Has this figure ever been disclosed??
October 21st, 2009 at 9:30 am
Disclosed!!!! you don’t really expect to get disclosure do you chip…just send them your money…it’s farming chip and there are capital gains to be produced, packaged and passed on to the vested interests with a slice for the politicial party making the rules and the rest off chasing more even bigger taxfree capital gains.
October 21st, 2009 at 10:15 am
Do we know who they will be dicesting their dairy farm holdings to?
October 21st, 2009 at 11:01 am
What a lot of grumps post here…..Seems you would all love to see this company fail….
October 21st, 2009 at 11:17 am
MariO
Have a read though the updated version of this article, detailing the related party dealings.
Allan Hubbard’s equity injection last year was paid for by….South Canterbury Finance.
cheers
Bernard
October 21st, 2009 at 11:25 am
This has shades of the Rothwells/Western Australia Govt. debacle of the ’80’s. Pass the parcel on a grand scale, and leave the govt. to pick up the pieces. At least Laurie Connell and Alan Bond went to jail, I suppose….
October 21st, 2009 at 11:29 am
I have to be honest..honest…I have lost track of how much has been paid by whom for what, to cover the loans taken out to pay back the investments owed to those who borrowed to buy into the capital raising to cover the losses on the original investments that went to the related parties which organised the money go round in the first place. Does MariO know?
October 21st, 2009 at 11:36 am
What an amazingly conservative loan book .. NOT! How did they ever qualify for the GG in the first place? No wonder Directors have resigned and new appointees are rather . errr , shy!
No one really wants to see SCF fail ,, but bloody hell , looks to me like the bulk of the book growth($1b) over the past 3 years has been to high risk ventures on 2nd mortgages , and at capitalised interest.
Surely the ‘feds’ will be taking a long look at this?
October 21st, 2009 at 11:39 am
@Wally – isn’t that the whole point? Obfuscation on a grand scale.
October 21st, 2009 at 11:47 am
Maybe….just maybe we are getting a little looksee into why John Key went to Timaru.
Anyone for a GG….just line up here chaps…let’s sort the line into school ties please…makes it much easier you know…oh and prospective knighthoods at the front thankyou…jolly good…
October 21st, 2009 at 11:49 am
obfuscation ! Word for the day ? ……… Got sick of ” symbiotic ” on a grand scale .
October 21st, 2009 at 11:51 am
Haha – I thought of you when I typed that RT.
You have to pay Theresa Gauting a royalty each time you use it.
October 21st, 2009 at 12:05 pm
Trev : You have to pay all Telecom shareholders a dividend if you ever use her name again ! Silly CEO crushed a mass of the balance sheet equity into the dust , with idiotic forays into Australia . And got bonuses on top of a generous salary , for so doing . Obfuscated the truth from the Mom&Pop investors .
October 21st, 2009 at 12:08 pm
Exactly, she’ll get an SOE to run next.
October 21st, 2009 at 12:11 pm
Now you really are scaring me ………. And scaring the tax-payer ! They are obfuscated from the truth ! …………. Gummys , need gummys ………….. Where’s me little bears……….ahhhhhhhhhh
October 21st, 2009 at 12:39 pm
If as I do you find anything published on scribd more trouble than it is worth (as per the SCF prospectus above) you can downolad the prospectus as a PDF:
http://www.scf.co.nz/investments/scf-prospectus.pdf
October 21st, 2009 at 1:20 pm
* 43% of its property loans are secured by second mortgages
* 50% or NZ$310 million of South Canterbury’s business loans are secured by second ranking or subsequent charges
* 19% of South Canterbury’s NZ$178.2 million of rural loans are secured by second mortgages
I would love to know the percentage of second mortgages across all finance companies that have actually been collected in the last couple of years. Bugger all, I expect.
October 21st, 2009 at 1:22 pm
“The principal related party loans included a $39.1 million loan to Kelt Finance Limited (a 75% owned subsidiary of the Company that is not currently part of the Charging Group), a $75.1 million loan to South Canterbury Finance’s parent, Southbury Group Limited (which loan has subsequently been reduced to $65.2 million via a principal repayment of $9.9 million post balance date), and loans of $20.2 million, $15.3 million and $12.5 million to Helicopters (N.Z.) Limited, Plum Duff Limited and Commtest Instruments Limited, respectively.”
Question: Why is the $15m loan to CEO Lachie McLeod not considered a ‘related party’? I assume it also has interest capitalised so perhaps is now more like $18m?
Further , how much of the Kelt loan has gone bad in Fiji?
Chip
October 21st, 2009 at 1:33 pm
Bruce/Chip
Rumors abound in HB about the plight of Kelt Capital. Is PGGW’s loan book in a similar state? Who is behind all the new conversions in the South Island with capitalised Interest. At present all the banks are saying ‘not me’ .Well it sure as hell isn’t me, so who the bloody hell is it.
October 21st, 2009 at 1:59 pm
The one you question is part of the answer
October 21st, 2009 at 2:27 pm
Well its time for some honesty and perhaps a statement to the NZX.
October 21st, 2009 at 2:44 pm
Pass the Parcel…and the BUCK.
Wonder where the BUCK stops.
October 21st, 2009 at 2:50 pm
I have just read Chris Lee’s take on the new SCF prospectus and he is gushing with his praise of AH. He says that everything is now hunky dory and you can fill your boots with SCF debentures.
October 21st, 2009 at 2:54 pm
Gotta line them leaky boots with something.
October 21st, 2009 at 3:08 pm
And yet the atricle indicates that whilst Lee doesn’t expect the Crown Guarantee to be called upon as ‘no loan book deterioration is anticipated’, it reiterates that “SCF discloses that if its loan book continued to deteriorate it could be forced to call upon the crown’s guarantee to investors.”
It’s the tense of “continued” that stands out?
October 21st, 2009 at 3:41 pm
A note to all,
We love robust debate on interest.co.nz, but we can’t tolerate anything that might be interpreted as abusive and/or defamatory.
cheers
Bernard
October 21st, 2009 at 4:18 pm
A beautifully crafted prospectus – just about everything is covered without giving anything away e.g. :
But there are some things that can’t be obscured:
As I work it out SCF has $1.3 billion to repay by October 2010. They have been getting 60% re-invested, so something over $500 million of new investment is needed to maintain the status quo with existing re-investment rates. But they also want another $500 million in additional investment. Are they going to get $1 billion of new money invested over the next year?
The nearly $500 million in property loans are almost all interest only, and $210 million is second mortgage or lower ranked.
The USD 15 million refinancing fee being paid by Southbury is not a liability for SCF, but it is an incredibly high cost to Southbury for delaying $50 million of repayments between 1 and 5 months. SCF clearly couldn’t repay that money, so Southbury effecively paid over 100% interest pa for the privilege. Things must have been desparate.
The two directors who resigned did so on the 27th of August. I would have thought that if SCF was solvent and going to recover there shouldn’t have been any problem recruiting good directors.
October 21st, 2009 at 4:51 pm
SCF says it had $220.3 million of related party loans at balance date, but the list it gives totals $162.2 million. That leaves $58m elsewhere in unspecified related-party loans. Why are they not detailed?
October 21st, 2009 at 4:59 pm
Well the prospectus shows the company’s management has not been making wise decisions, and that the company has more problems than it is likely to be able to fix.
It has got to the situation it is in today because, apparently, its shareholders have been short of cash and have proffered other assets instead. Meanwhile, instead of retrenching its lending activities in the last 12 months, it has been busy expanding them! What were they thinking? It appears that the news of adverse market conditions reached them in October 2009 instead of back in later 2007 or in 2008? It seems like they have been doing business as usual instead of changing to meet the new reality. Boundless optimism, anyone? The markets will bounce back and they’ll make back their losses many times over, right? It seems more like a gambler’s tactic than prudent management.
Vote on my poll for how long before the receivers are called in. It could be as early as next week, if they can’t screw debenture holders (and the government) by raising $75m in prior charge secured funds!
October 21st, 2009 at 4:59 pm
As per my question earlier Ruru .. $15~20m of it must be CEO McLoeds ‘loan for shares’ … the balance is possibly advances to Kelt Capital Ltd (as opposed to Kelt Finance Ltd). Perhaps Bernard can ferret out this info ,, ??
October 21st, 2009 at 7:54 pm
Government guarantee…8% short term….I’m in.
Who cares if they crash, I sure dont. The Government will pay me back with interest.
Beats an LAQC hands down. Pity it wasn’t a PIE account, then it would be icing on the PIE.
October 21st, 2009 at 8:25 pm
yes,greed is good but you were supposed to say something nasty about Allan Hubbard or SCF.didnt you get the clues from the previous posts?
October 21st, 2009 at 8:47 pm
We are Stuffed Says: “Who cares if they crash, I sure dont. The Government will pay me back with interest.”
If SCF did crash you will be paying yourself back with your own taxes. The Government’s only source of money is that which NZ’ers pay in taxes. I’m sorry to disappoint you but there is no free lunch here.
October 21st, 2009 at 9:16 pm
Pity it wasnt a PIE account?? Yes stranger than fiction…. CLOWNS and PIES usually travel together lol
October 21st, 2009 at 10:20 pm
alan stewart:
Don’t worry, JK has checked both out for us, and they have been given the nod/GG and a Securities Commission ‘get out of jail free’ card.
October 21st, 2009 at 10:50 pm
Ruru , this article from Financial ‘Laughing Stock’, Chris Lee , appears to account for $21m of the ‘missing’ $58m related party loans. FYI
http://www.chrislee.co.nz/index.php?page=south-canterbury-finance-update
October 22nd, 2009 at 7:36 am
chip:
http://www.chrislee.co.nz/index.php?page=south-canterbury-finance-update
Chris Lee certainly appears to have acces to much more information than is contained in SCF’s prospectus.
I would though question his analysis regards dairy industry assets.
How he expects SCF to be able to sell dairy farms at what must be approaching twice market value is not explained.
October 22nd, 2009 at 8:03 am
I think Lee has got his clients far too heavily exposed to SCF and is now seeking to justify his position. Didn’t he make the same mistake with Hannover? The debenture holders (at least those covered by the GG) will be safe enough but he has probably been getting folk into the longer term bonds and debentures as well (I think Forsyth Barr has been doing the same).
It seems he has been trying to wave a fist at the BNZ but judging from the response from both SCF and BNZ this sounds like sabre rattling:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10604631
October 22nd, 2009 at 8:23 am
“Andy Rodgers Says:
October 21st, 2009 at 8:47 pm
We are Stuffed Says: “Who cares if they crash, I sure dont. The Government will pay me back with interest.”
If SCF did crash you will be paying yourself back with your own taxes. The Government’s only source of money is that which NZ’ers pay in taxes. I’m sorry to disappoint you but there is no free lunch here.”
If in invest $200k at 8% and SCF crashes the Government pays me my $200k plus $16k interest. My tax on the interest is about $5k.
The rest comes from the total tax base of which I am but a small 1/3,000,000th. The other
2,000,000 (less the few who take up this gift from the taxpayers) will give me my money back.
Your argument is pathetic. I won’t be paying myself back anywhere near the full amount with my own taxes. Maybe a minute fraction.
Dig in….another opportunty from the GG.
October 22nd, 2009 at 8:43 am
The US depositors wanted their money out ASAP. BNZ wasn’t prepared to lend SCF more money even if it was to pay down debt. Two independent financial assessments from institutions with serious money involved telling us the obvious.
Chris Lee though is advising his clients to put their money where major financial players will not.
October 22nd, 2009 at 1:39 pm
Yes but the US and the financial players are not being offered a government guarantee.
Grab it while it is on offer 8 Percent…..mmmmm