2 Oct 2009

South Canterbury Finance auditors raise concerns

7:39 am on 2 October 2009

The auditors of South Canterbury Finance are worried about the company's liquidity, if debt and funding issues are not resolved.

Standard and Poor's lowered the company's credit rating to BB+ in August, which entitled investors from a $US100 million private placement in 2008 to repayment after three months.

South Canterbury Finance's annual results, which show a $50.4 million dollar loss in the year to June, have been audited by chartered accountancy firm Woodnorth Myers and Co.

Woodnorth Myers has raised concerns about the fundamental uncertainty of South Canterbury Finance's status as a 'going concern'.

The auditors say the downgrade also means the firm's banking facility has been placed on a stop draw, and could be withdrawn entirely if the issues that led to the downgrade cannot be resolved satisfactorily.

They say future debenture funding depends on South Canterbury successfully registering a new prospectus, and the group's liquidity and the recoverable amount of assets could be significantly affected if matters are not resolved.

South Canterbury is looking at a major restructuring, under which new directors will be appointed and moves made to raise capital. It expects to make an announcement by the middle of the month.