South Canterbury to get $25m boost

PGC's controlling shareholder George Kerr. Photo / Supplied

South Canterbury Finance has announced that Pyne Gould Corp's Torchlight Security Trustee had agreed to lend an extra NZ$25 million to South Canterbury Finance, increasing its total loan facility to the Timaru-based finance company to NZ$100 million and extending it to the end of November this year.

But Torchlight, which is run by PGC's controlling shareholder George Kerr, has also decided not to invest an extra NZ$37.5 million in equity in South Canterbury owner Allan Hubbard's personal company Southbury Holdings.

The deal means that Torchlight has a prior charge on up to NZ$151 million or 7.2% of South Canterbury's assets, which it is allowed to have under its current trust deed. This means that in the event of a South Canterbury receivership Torchlight will be first in line to collect any recoveries, ahead of the Government, which has extended its deposit guarantee for South Canterbury until the end of next year.

South Canterbury Chief Executive Sandy Maier said the new agreement provided increased cash through a simple structure.

"The willingness of existing debenture holders to extend the maturity dates of their investments is further underpinning liquidity by significantly reducing our forward funding requirements," Maier said.

"There is also widespread interest from new investors in the Company's 8% per annum offer which has the benefit of the Crown's extended retail deposit guarantee for eligible investors until 31 December 2011," he said.

More than 5000 debenture holders with investments of almost NZ$172 million had by June 3 rolled over investments maturing in the coming months, Maier said.

"This is excellent progress and indicates the competitive nature of the offer and the strong support amongst existing investors for South Canterbury Finance," he said.

The new agreement with Torchlight replaced a previous one where it agreed to invest equity in Southbury.

"The increase in the amount of the funding facility to NZ$100 million replaces the previous agreement between Southbury Corporation Limited and Torchlight Fund No 1 LP for an additional equity injection of up to NZ$37.5 million which is not now proceeding," South Canterbury said, adding that it received a waiver from its trustee over a clause relating to risk weighted assets.

The deal had also been approved by the Government.

- INTEREST.CO.NZ