Hubbard cupboard looks bare

The receivers opted to allow parts of Allan Hubbard's South Canterbury Finance to continue to trade. Photo / Sarah Ivey

South Canterbury Finance's receivers said yesterday that they had sold the last remaining part of the failed finance company's quality loan book for an undisclosed sum to Japanese investment banking giant Nomura.

Before South Canterbury went into receivership last year, the company's financing activities were separated, with quality lending parked in a "good" bank and so-called toxic debt quarantined in a "bad" bank.

The sale process attracted 90 interested parties, leading to 12 indicative offers and five final offers.

Yesterday's sale, which follows the sale of Helicopters NZ, Scales and Face Finance, represents the final part of the receiver's disposal process for the "good" bank assets.

Receivers McGrathNicol are now left with recovering money for the bad bank, which is expected to take two to three years, assuming there are no buyers for this part of the business.

They are yet to divest a 33.6 per cent stake in dairy farm owner Dairy Holdings.

Allan Hubbard's South Canterbury Finance was tipped into receivership last year, prompting a $1.7 billion call on the Government's deposit guarantee scheme.

Receiver William Black said the sale was another important step in maximising the return for the Government when combined with the other sale processes completed to date and loan recoveries made during the receivership.

"It really wraps up the 'good bank' side of South Canterbury Finance," Black told the Herald. He said he would not comment on the price gained for the loan book but said one estimate of $78 million was "definitely not an accurate figure".

The receivers, upon taking control of South Canterbury Finance 12 months ago, opted to allow parts of the business to continue to trade, so the "good" bank continued to lend right up until a fortnight ago, when the sale to Nomura was being finalised.

"That was quite an important decision because that has enabled us to achieve the realisations that we have achieved," he said.

"In other words you get a better price for a 'going concern' sale than you would for a completely distressed sale," Black said.

"Had we shut everything down on day one, our realisations would have been far more down the 'distressed sale avenue' compared to a going concern."

The receivers will file their next statutory report towards the end of October, when taxpayers will get a clearer picture as to how much they will get back from the process.

In its last report, the receivers said there had been $240 million of loan book realisations.

Nomura said the loans would continue to be managed from Christchurch.

The bank said the acquisition would provide it with a platform for additional lending opportunities in New Zealand.

Deutsche Bank's New Zealand branch is acting as sole financial adviser to the receivers.

SOLD TO DATE
* A $123 million consumer, business and rural loan portfolio.
* A 79.7 per cent shareholding in Scales for $44 million.
* Helicopters (NZ) for $154 million.
* Face Finance's $100 million loan book.