South Canterbury Finance (SCF) CEO Sandy Maier has distanced himself from a suggestion by the company’s owner Allan Hubbard that confirmation of a large capital injection into SCF from an overseas company is likely by June 30.
Maier told interest.co.nz Hubbard’s comment, made in a statement he issued after the Government placed him, but not SCF, in statutory management, was “Allan’s comment” and not SCF’s.
“What we’ve said is that we’re looking for a major investor and we define major as NZ$180 million ish,” Maier said.
“We have indicated that there’s a process that has gone from a long list to short list and the trustee has given us to August 31.”
He said setting a date like Hubbard had empowered the buyer rather than seller.
“I don’t like to make those predictions. Allan did for whatever reason. That’s not a SCF view, (although) he (Hubbard) is involved in these discussions.”
Maier said, however, he could confirm SCF was in a “bonafide process” with a handful of parties. He added that they remained interested despite Hubbard being placed in statutory management and Standard & Poor’s downgrading SCF’s long-term credit rating by two notches to B-.
“Given time and support I think we could have a great outcome for the taxpayer,” Maier said.
Speaking after S&P’s downgrade, Maier said he was getting fairly used to “the glass half empty view of the world from that quarter.”
S&P said Hubbard being placed in statutory management by the Government and investigated by the Serious Fraud Office was likely to erode investor confidence in SCF. It also said the rating could be cut further, to CCC, if general debenture investor support were to materially weaken. Of the 44 financial institutions active in New Zealand rated by S&P only Geneva Finance and Vision Securities - which is in receivership - have lower long-term ratings with CCC and D respectively.
S&P also cut SCF's short-term rating to C from B.
Maier said S&P had decided SCF’s progress in tackling its liquidity and debenture reinvestment requirements could stop because of Hubbard’s statutory management and he couldn’t argue with that.
“(But) it’s aggravating to be meeting the targets and be downgraded because we might not continue to do so. They (S&P) are looking at their view of the world. If they went to the streets of Timaru and saw the support for Allan they might have a slightly different view.”
The NZ$950 million worth of SCF debentures due to mature between March and October had been reduced below NZ$500 million and this was still decreasing.
“Another way to look at it is the debenture book is NZ$1.3 billion in round numbers,” said Maier.
“Over NZ$800 million is now (invested for terms) way out again. Not only is it past October but it’s largely past May of 2011.”
SCF, which is covered by the initial Crown retail deposit guarantee scheme that expires on October 12, has also been accepted into the extended guarantee scheme which kicks in on October 12 and expires on December 31, 2011.
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