SFC assets may be sold as going concerns

Photo / Sarah Ivey.

Government signals it does not want to drag out receivership.

The Government favours selling South Canterbury Finance assets as going concerns rather than a long, costly receivership.

A spokesman for Finance Minister Bill English said potential investors who had approached South Canterbury "should now make their interest known to the receiver".

"At this stage the Government has an open mind about what shape those bids might take - but we would prefer that the assets are sold as going concerns. The Government is looking to further set out its thinking around the receivership next week."

The receivers Kerryn Downey and William Black of McGrathNicol are expected to make their initial report to the Government early next week.

On Tuesday, Mr English said the Government expected to recoup about $1.2 billion of the $1.78 billion it paid to investors through an orderly receivership over three or four years, leaving it with a net loss of $600 million.

However, the same day South Canterbury chief executive Sandy Maier warned against that course of action, saying it would prove to be "fantastically expensive" and recommended a quick sale as a going concern.

South Canterbury's assets comprise "toxic loans" with a face value of about $700 million, which have been quarantined in a "bad bank", and about $900 million in good loans, which are earning interest of 14 per cent or more.

It also owns just under 80 per cent of apple exporter Scales Corporation, all of Helicopters NZ, and 30 per cent of Dairy Holdings, which in turn owns about 25 dairy farms.

South Canterbury's former chairman Allan Hubbard sold Scales and Helicopters NZ to South Canterbury this year for $162 million in a bid to prop up the finance company. In exchange, he received $10 million cash and South Canterbury shares which are now worthless.