McGrathNicol, the receiver of South Canterbury Finance (SCF), has reimbursed the government to the tune of NZ$395 million, or about a quarter of the taxpayers' NZ$1.58 billion outlay when the lender was tipped into receivership on August 31 last year.
In their latest receiver's report McGrathNicol's Kerryn Downey and William Black say they repaid NZ$345 million to the Crown in the six months from March to August, plus an additional NZ$50 million on October 7. That excludes a NZ$175 million loan that was provided by the government to repay SCF's prior charge holders, including George Kerr's Torchlight, which was repaid in February.
Loan book realisations during the six months from March to August totaled NZ$262.6 million, which comes on top of the NZ$238.7 million collected in the six months from their appointment last year to February 28 this year.
Total receipts in the six months to August were NZ$313.3 million and total payments were NZ$263.4 million. Payments included the receiver's own fees of NZ$3.5 million, fees paid to investment bankers of NZ$4.3 million, legal fees of NZ$3.2 million, and "other advisors fees" of NZ$271,964.
McGrathNicol has now sold a range of SCF's assets including Helicopters NZ, 79.7% of Scales Corporation, Face Finance's about NZ$100 million commercial loan book, and SCF's NZ$123 million "Good Bank" loan book.
'Bad Bank', Dairy Holdings, Belfast Park still on the block
Downey and Black say good progress is being made on realisation strategies for SCF's remaining unrealised loan book, investments and assets. These include the balance of the loan book (or the "Bad Bank" of about 300 non-performing loans) and property assets which they say have a book value of about NZ$470 million before provisions, SCF's 33.6% stake in Fonterra's biggest supplier Dairy Holdings, other equity investments, loans to subsidiaries, and related party loans including to SCF's parents Southbury Corporation and Southbury Group, the run-off administration of Southbury Insurance, and investigations of transactions pre-dating their appointment and potential litigation against various parties.
Another asset the receivers have on the block is Belfast Park, 64 hectares of land available for residential development on the outskirts of Christchurch.
The receivers say total cash receipts in the six months to August 31 were NZ$463.2 million and operating costs were NZ$39.3 million.
Meanwhile, Finance Minister Bill English said today the government is establishing a new company to manage the realisation of about NZ$350 million worth of assets in six failed finance companies, including SCF. English says the receiverships of these firms have reached the stage where all the readily marketable assets have been sold.
The previously Allan Hubbard controlled SCF collapsed into receivership on August 31 last year triggering a NZ$1.58 billion taxpayer funded payout to 35,000 of the company’s investors under the Crown retail deposit guarantee scheme. The Serious Fraud Office revealed in October last year it was investigating five SCF related party loans made between 2005 and 2009 for potential false statements or other fraudulent conduct.
SCF's demise is also being probed by the Financial Markets Authority with an outcome of the investigation likely before the end of 2011.
3 Comments
Taxpayers look likely to take a $1 billion bath on South Canterbury Finance, after figures released by receivers and the government yesterday indicated its latest financial position.
http://www.stuff.co.nz/business/5864950/Ugly-numbers-on-South-Canterbur…
A $1 billion taxpayer bath focuses the mind a little more sharply than stating the receiver has reimbursed the government to the tune of NZ$395 million.
What I want to know - and in a fully functioning democracy I believe the taxpayer is entitled to know, is:
a) Who were the major beneficiaries of the SCF bailout? To which individuals/companies did the government pay more than $5 million each?
b) Were those who were paid really entitled to the money, or were different rules applied to SCF because of its bondholders' connections?
And as long as a) & b) above are not answered and/or there is no public enquiry, the perception of NZ having a systemic lack of integrity/corruption will remain.
Colin, those are great questions, Im hoping Bernard will ask Bill English them in his next interview. They are questions I believe that all taxpayers deserve an answer to, especially now it looks like depositors are going to be exposed to the OBR in the new year, while those earning high interest at SCF get bailed out, as well as some holding bonds that were traded in the days before the announcement.
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