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Southbury Group and South Canterbury Finance owner Allan Hubbard has appointed Sandy Maier, who worked as the statutory manager for the DFC in the early 1990s, as CEO for a year, replacing interim CEO Timaru accountant Nigel Gormack.

The Press reported that Maier was working on a ‘reasonably urgent’ turnaround of the Timaru-based finance company, which needs a capital injection and asset sales to bolster its balance sheet before the end of the current government guarantee in October 2010. The Press also reported that South Canterbury was close to raising NZ$25 million through a convertible note issue.

Changes at SCF have been slow and its recapitalisation plans are still unclear. Two months ago it received emergency funding of $75 million from Pyne Gould Corporation’s Torchlight Credit Fund, colloquially described as a vulture fund which lends to troubled entities.

SCF used that to repay US$50m to American investors and still has to pay them another US$50m in four instalments by the end of March. US$12.5m is due at the end of this week. Maier said there was a capital raising closing at the end of the week to raise $25 million through the issue of convertible notes to habitual investors. This is less than indicated in a debenture prospectus released in October which said $40m to $75m would be raised.

Here is the full South Canterbury release to the NZX on Tuesday.

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Standard and Poor’s has affirmed South Canterbury Finance’s BB+ long term credit rating, removing the Timaru-based finance company from its immediate CreditWatch Negative list. But Standard and Poor’s left the outlook for the rating as negative and said South Canterbury’s liquidity (cash position) and asset quality (loan quality) remained weak.

South Canterbury would need to find new sources of cash, deal with related party investments and rebuild its capital to keep the current rating, which is necessary for the Alan Hubbard-controlled firm to retain its government guarantee beyond October 2010.

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Bernard Hickey details the key news overnight in 90 seconds at 9am, including news that New Zealander Chris Liddell has been appointed chief financial officer at General Motors. He was CFO at Microsoft and has been Carter Holt Harvey CEO.

Meanwhile in Timaru, South Canterbury Finance Chief Financial Officer Graeme Brown has resigned and has been replaced by interim CFO David Jarmen, who was CFO at Provincial Finance. South Canterbury Finance now has an interim CEO and an interim CFO while it tries to recapitalise. It is still trying to raise capital through a private placement and a potential float on the stock market.

Meanwhile Dubai World has met with investors to discuss a standstill on US$22 bln of debt. It is also rumoured to be backing dairy farm purchases in Southland.

South Canterbury Finance Chairman Allan Hubbard has told the troubled finance company’s annual meeting in Timaru today that Chief Executive Lachie McLeod will leave the company to pursue farming interests and be replaced on an interim basis by Timaru chartered accountant Nigel Gormack. (Update 3 includes comments from McLeod).

South Canterbury said McLeod would finish on November 30 and be succeeded by Gormack (pictured left), who is a fellow director of Hubbard in Hubbard Churcher Trust Management Ltd, Companies Office records show. South Canterbury said it would look for a new permanent CEO to lead it next year when the group would be recapitalised, although it gave no new details of when that might be.

“The last 18 months have been particularly turbulent for the finance industry with pressures unleashed by the global financial crisis, new regulations and the difficult trading environment,” McLeod said in a statement released by South Canterbury.

“South Canterbury Finance is now on a more stable footing with a diversified portfolio of assets that will underpin its future. This is the right time to find and establish a new Chief Executive who can oversee the recapitalisation that will take place next year, position for the implementation of the new regulatory framework and meet the new challenges the industry will face.”

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