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South Canterbury foreshadows half year loss and plans new fundraising (Update 1)
February 3rd, 2010New South Canterbury Finance CEO Sandy Maier has completed a review of the Timaru based financier and announced to the NZX an expected loss for the six months to December 31, 2009, along with plans for Forsyth Barr to raise new funding. South Canterbury is also likely to restate its results for the year to June 30, 2009, and had applied for the extended government retail deposit guarantee, Maier said.
(Update 1 includes full statement.)
Here is the full release from South Canterbury:
Investor support lifts South Canterbury Finance
New South Canterbury Finance Limited Chief Executive Officer Sandy Maier has carried out a thorough review of the business and is confident the Company can meet current and future challenges.
The business of South Canterbury Finance is cash-flow positive and retains the confidence of its investors, financial intermediaries and its shareholder.
During January, historically a quiet month for the Company in terms of investor activity, South Canterbury Finance experienced an encouraging inflow of funds from investors. The Company has averaged in excess of $1.7 million of new investment money per day for January and its retention rate of existing investors lifted to more traditional levels.
South Canterbury Finance believes that this renewed confidence from its investors, and its large network of financial intermediaries, is due to a number of positive changes in recent months. These include, during December 2009, the successful capital raising by its parent company, Southbury Corporation Limited; the confirmation of the Company’s BB+/Negative outlook rating by Standard & Poor’s and its removal from CreditWatch Negative; and the appointment of Sandy Maier as Chief Executive Officer.
On 21 January 2010, South Canterbury Finance filed an application to participate in the Extended Crown Retail Deposit Guarantee scheme. The extended scheme commences on 12 October 2010, the expiry date of the current deposit guarantee scheme, and will provide eligible investors with a Crown guarantee on qualifying investments until 31 December 2011. If it is accepted into the extended scheme, South Canterbury Finance will be able to offer a greater range of investment options to investors.
South Canterbury Finance will announce its preliminary financial results for the six months to 31 December 2009 in coming weeks. It is now clear that further provisioning will be required in respect of assets previously identified as impaired. As well as fairly representing the Company’s current view of the value of these assets, the further provisioning will ensure, as far as possible, that the Company’s results for future periods are not distorted. In addition, the early redemption of derivative instruments associated with the United States Private Placement facility and the impact of fair value adjustments on investments will have a negative impact on South Canterbury Finance’s results for the half year.
As part of the half year accounts preparation, it has come to the Company’s attention that adjustments may be required to the valuation and reporting of certain items in the 30 June 2009 audited financial statements. The Company also recently became aware that the valuation used at 30 June 2009 for its preference share investment in South Island Farm Holdings Limited (SIFHL) should have been recorded at fair value rather than cost, under the applicable financial reporting standard. An independent valuation of the SIFHL preference shares at the date of their acquisition is currently being undertaken. It is noted that any difference in value arising will be reversed in the current financial year as the preference shares have since been redeemed for their issue price. The Company is currently reviewing the extent of potential prior period adjustments and at this stage believes that they may not have a material impact on the current position of the Company.
All the matters referred to above are being worked through with the Company’s new auditors and further information will be provided once the Company’s preliminary results are available. As a result of the further impairments and adjustments the Company anticipates it will report a loss for the six months to 31 December 2009.
Chief Executive Sandy Maier says: “The results for the first six months of the year will not be representative of the historical achievements of the Company’s business nor of the strength of its future performance.”
In a further development, the investment bank Forsyth Barr has been mandated to source funding to strengthen the balance sheet of South Canterbury Finance. Further announcements in this regard will be made by the Company when it is in a position to do so.
Tags: Deposit Guarantee Scheme, Sandy Maier, South Canterbury Finance
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February 3rd, 2010 at 3:21 pm
The current position of the company will not be changed by the past. Vow – sheer brilliance.
Classic doublespeak. And it is not the only example.
Sounds like the results are going to a real shocker.
It is going to need a government gurantee and even more money to survive.
February 3rd, 2010 at 3:31 pm
Any PPAs will likely have an impact on the current (6 months to 31 Dec 2009) results though.
Looks like they’ll get the extended guarantee to 31 Dec 2011 (gotta think that they wouldn’t have applied if they weren’t pretty sure of getting it).
February 3rd, 2010 at 4:57 pm
“These include…. the confirmation of the Company’s BB+/Negative outlook rating by Standard & Poor’s”
In financial parlance a BB+ credit rating is known as Junk! And they are proud of this? That is why they need to have a Government Guarantee, which they are currently getting for free, thanks to the NZ taxpayer.
How long before JK pays another visit to Timaru to see his mate AH?
February 3rd, 2010 at 5:24 pm
Ah…..another year getting taxpayer subsidized interest payments….bugger rentals:)
February 3rd, 2010 at 5:30 pm
No surprises here.
‘In a further development, the investment bank Forsyth Barr has been mandated to source funding to strengthen the balance sheet of South Canterbury Finance.’
I still have the same expectation about their capital raising plans, and it fits with the above statement too, see here for details:
http://www.lostsoulblog.com/2010/02/south-canterbury-finance-update.html
February 3rd, 2010 at 5:41 pm
Andy Rodgers,
It is not necessary, JK already has his man in charge as CEO.
February 3rd, 2010 at 6:44 pm
“In addition, the early redemption of derivative instruments associated with the United States Private Placement facility”
Can someone translate this for me?
February 3rd, 2010 at 7:10 pm
They borrowed heaps out of the State’s but the condition was that if they got in the sh*t they had to pay it back pronto. The pronto day has arrived and they want their money back now.
February 3rd, 2010 at 7:51 pm
shut them down.
February 3rd, 2010 at 8:45 pm
shutting them down would have consequences. If they start calling in debt they could cause Dairy land prices to plummet, which would flow on to other banks,these in turn would be forced to ‘mark to market’ the resultant book losses would get them out of paying tax for years. We need that tax. Lets just keep our heads in the sand for a bit longer.
February 3rd, 2010 at 9:12 pm
AndrewJ Says:
February 3rd, 2010 at 8:45 pm
Andrew, If they are failing even under Government aid then it must end. They are not ‘too big too fail’. Lets not have a ‘blackmail situation like they have over there in the US.
I know the consequences BUT we cannot get the NZ taxpayer put into a cash cow senario for private entities
February 3rd, 2010 at 9:17 pm
Don’t worry about SCF.
Its the PONZI scheme of the western world thats the worry, whose going to buy the assets, be they SCF or shares, it depends on never ending increasing consumption, pick the date of the tiping point, play the ponzi scheme but don’t get left holding the house, shares or other assets.
Its all speeding up, borrow, buy accumulate and then sell, rules are the same for every ponzi scheme.
February 4th, 2010 at 8:57 am
Maier is trying to prevent the end of the company which is in October……when the first tier of Govt Guaranteed bonds have to be paid back. Yes I have some SCF investments due then, now I am betting that repayment will be delayed with Government assistance.
Maier is looking for an investor with bigger balls than Mr Gould.
February 4th, 2010 at 9:21 am
Big balls and no Brains
February 4th, 2010 at 9:37 am
AJ can see through the smoke!…expect a backroom govt bailout designed to keep the rural property sector from imploding. The whole stinking economy is one giant load of BS and the pollies are right there in the middle of it all.