Documents reveal why Treasury rejected $1.3bn SCF offer

Photo / Sarah Ivey

Duncan Saville's reportedly $1.3 billion offer for South Canterbury Finance timed to coincide with its receivership on August 31 appears to have been rejected after Treasury received advice that the deal was not necessarily the best one it could get, documents released this afternoon suggest.

The documents posted on Treasury's website also raised questions around the collateral put up by the would-be buyer, Saville's Permanent Investments Ltd.

A memo dated September 1 from advisors KordaMentha to manager of the Crown Retail Deposit Guarantee Scheme John Park reports on the key risks on an offer for South Canterbury Finance that appears to have been tabled at the time of the South Canterbury's receivership.

It is understood the offer was from Permanent and was worth $1.3 billion to $1.4 billion.

Without naming the bidder, KordaMentha says the offer was an amended version of one received as a result of a recapitalisation process conducted over several months by investment bank Forsyth Barr.

However, it also notes the amended offer relies on additional financial support for the company provided by the Crown in the form of its $1.7 billion payout to investors following the receivership. That included $1.6 billion under the Retail Deposit Guarantee.

KordaMentha says other parties may have submitted offers under the same set of conditions.

"Accordingly there can be no certainty that (the) offer is the best offer that could be obtained but it would be possible to find that out if a process were undertaken by Forsyth Barr or South Canterbury's receivers."

KordaMentha also raises concerns about the value of shares the bidder proposed offering as collateral for the money it would end up owing the Government as a result of the deal.

Rumoured as a potential buyer of South Canterbury Finance before its failure, Saville was identified as having ongoing interest in the company after its chief executive Sandy Maier was seen on a plane reading documents that named Permanent as a potential buyer on the day of its receivership.

Opposition finance spokesman David Cunliffe has this week called on Finance Minister Bill English to explain why the Government rejected Saville's August 31 offer and his subsequent September 13 bid which involved the NZ Superannuation Fund and Ngai Tahu Holdings.

Mr Cunliffe has said that at $1.3 to $1.4 billion, if Saville-led bids had been accepted, the eventual loss to the taxpayer from the affair would be $300 million to $500 million lower than what has now been forecast by the Government.