By Gareth Vaughan
South Canterbury Finance’s receiver hopes to appoint an adviser to assist with the sale of the failed finance company’s Helicopters NZ and Scales Corporation businesses this week and expects a “very competitive” sales process will lead to the two businesses fetching more than their book values.
McGrathNicol’s Kerryn Downey, appointed receiver alongside his colleague William Black on August 31 when South Canterbury Finance (SCF) was placed in receivership by trustee Trustees Executors triggering a NZ$1.6 billion payout under the Crown retail deposit guarantee scheme, told interest.co.nz that he didn’t expect yesterday’s news of a Serious Fraud Office investigation into SCF related party loans to spook potential buyers of the group’s assets.
“I don’t believe that at all,” Downey said. “If anything I believe they’re doing a little bit of advertising for us and we don’t have to pay for it, I say that a wee bit tongue in check.”
He said McGrathNicol would announce, within 24 to 36 hours, the appointment of an adviser to help sell SCF’s fully owned Helicopters NZ business and 80% stake in Scales. Separately he said McGrathNicol was a week to 10 days away from appointing an adviser to help sell SCF’s so-called “Good Bank” of performing loans and asset management operations, or “Bad Bank” of toxic loans.
SCF CEO Sandy Maier said at the time of the company's receivership that "Bad Bank” held about NZ$700 million worth of loans, and “Good Bank” about NZ$900 million of small ticket rural lending.
Firms thought to be keen to advise McGrathNicol, in some capacity, include UBS, Goldman Sachs, First NZ Capital, Macquarie, SCF’s long time adviser Forsyth Barr and PricewaterhouseCoopers.
Dairy Holdings stake sale further off
As for South Canterbury Finance’s 34% stake in New Zealand's biggest dairy farming group Dairy Holdings, which is thought to have high debt levels, Downey said any sale of that was further down the line.
“We’re working through certain issues regarding the nature of some of the statutory documentation, or the documentation regarding the various ownership interests,” he said.
“And till we’ve been through some of that documentation we’re not really quite ready to offer our shareholding.”
SCF owns 80% of Scales, which is the country’s biggest apple grower and exporter but also has shipping logistics and pet food ingredients businesses, coolstores, industrial parks, bulk liquid storage and processing, and insurance operations. According to its website, Scales has 554 shareholders.
Helicopters describes itself as New Zealand’s biggest helicopter company with more than 45 helicopters with extensive operational capability and experience, covering most facets of helicopter services.
Downey said he was confident of achieving sales prices better than book value for the Helicopters and Scales businesses. He declined to say what this was.
SCF-Southbury deal valued Helicopters at NZ$90 million
However, when owner Allan Hubbard, who is now in government enforced statutory management, tipped them into SCF earlier this year, SCF paid by issuing NZ$152.5 million of new shares to Hubbard’s Southbury Corporation and handing over NZ$10 million in cash.
A letter from SCF's lawyers Bell Gully, released as part of a Reserve Bank dump of its SCF related correspondence, shows the deal valued Helicopters at NZ$90 million and a 64% stake in Scales at NZ$72.25 million.
Downey said Helicopters and Scales well established businesses with “very strong” future prospects.
“We have a very competitive (sales) process coming because there has been a lot of interest in both Helicopters and Scales,” Downey said.
Interest in Helicopters in particular, had come from around the world. If a foreign buyer was lined up Downey said there was no guarantee of securing Overseas Investment Office (OIO) approval.
“My mandate is to get the best value, the best outcome transaction. So if a transaction which is top of the ladder value wise requires OIO approval, while I’ll obviously go seek it,” he said.
He also still remained open to talking to parties interested in buying SCF as a whole.
“My job as receiver is to get best value. And I’ll do whatever I need to in terms of how you parcel assets up to achieve that.”
Downey said he hoped to have indicative offers in for Helicopters and Scales by year's end. "We may even be closer on a transaction conclusion (by then)," he added.
The Government is hoping to recover about NZ$1 billion of the SCF deposit guarantee scheme payout from asset sales.
(Update adds detail from the Reserve Bank on prices SCF-Southbury deal valued Helicopters and Scales at).