31 Aug 2010

Expect surprises in announcement - SCF

8:50 am on 31 August 2010

South Canterbury Finance says its announcement on Tuesday morning about the future of the company will contain some surprises.

The company will report to the Stock Exchange at around 9:30am on Tuesday following talks on a rescue package.

The trustees of the Timaru-based finance company have given until Tuesday to find new capital, to avoid the prospect of going into receivership.

SCF chief executive Sandy Maier told Morning Report the announcement should be seen as a progress report, not as the end of the process.

Mr Maier said the solution will have "both winners and losers" and he expected "some angst" in the response to the announcement.

Losses tipped

A prominent stockbroker says he expects the Government and investors to both lose money in South Canterbury Finance.

Chris Lee of Kapiti says the company's controlling shareholder and life president, Allan Hubbard, will lose the hundreds of millions of dollars he has invested in the company.

Mr Lee told Morning Report the taxpayer, investors and shareholders will also lose millions of dollars in the deal.

D-Day for Sth Canterbury Finance

The future of South Canterbury Finance hangs in the balance.

SCF owes about $1.7 billion to at least 30,000 investors. Its trustees have given it until Tuesday afternoon to find new capital and avoid the prospect of receivership.

Milford Asset Management executive director Brian Gaynor, says it's effectively D-Day for South Canterbury.

"It's going to be very difficult to get an outside investor without Government participation," he said.

SCF chief executive Sandy Maier says the company is still in discussions with at least three parties to inject capital into the business.

Prime Minister John Key says that if the company fails, investors will get their money back through the Government's retail deposit guarantee.

Mr Key says the Government's priorities are to keep any cost to taxpayers, and disruption to the wider economy, to a minimum.

He says the guarantee is flexible enough that the Government could assume a company's liabilities before it actually went into receivership.

Mr Key says any action the Government takes will be determined by how the company trustees decide to proceed.

Hubbard investigation to continue - SFO

Meanwhile, the Serious Fraud Office on Monday announced it will continue its investigation into Timaru businessman Allan Hubbard and his companies, after a preliminary report found further issues to consider.

The Government placed Mr Hubbard and his wife under statutory management on 20 June, along with seven charitable trusts, Aorangi Securities, and later, Hubbard Management Funds.

SFO chief executive Adam Feely says it's a major investigation into a very complex range of issues.

He says there are still several interviews and considerable financial analysis to be completed.