Sharebroker Chris Lee says troubled lender South Canterbury Finance needs something big to secure its future following concerns about the financial health from Standard and Poors.
The credit rating agency reduced the finance firm's long term rating from BB+ to BB and warned the chances of a further downgrade had risen if bad debt worsened, or its recapitalisation plans are unsuccessful.
The chief executive at South Canterbury, Sandy Maier, says the lender is working hard to ensure that does not happen.
Key investor Alan Hubbard shifted $162 million worth of assets from his investment vehicle, Southbury Corporation, into South Canterbury to shore up its financial position.
Sharebroker Chris Lee says at least another $100 million is needed, which could be achieved by bringing in a new shareholder, or having a transaction similar to the Allied Farmers deal with Hanover Finance.
However Mr Lee says its best bet may be a tie up with Pyne Gould Corporation's finance arm, Marac, and become a major South Island business lender.