Deal could still save SCF - Hubbard

Photo / Dean Purcell.

A deal is on the table that could save South Canterbury Finance from receivership but government money might be needed as well, company founder Alan Hubbard says.

The ailing company is one of New Zealand's biggest non-banking institutions and it has waivers from breaches of its trust deed until the end of this month.

It needs a new backer or a government bail out to avoid receivership.

Mr Hubbard, the company's president for life and its chairman until March, indicated tonight it could need both.

"I know from my personal dealings there is an offer there that would probably save the company," Mr Hubbard said on TV3 News.

"It may need a bit of assistance from the Government to get it across the line."

South Canterbury Finance is reported to owe more than 20,000 investors about $1.7 billion in debentures, and earlier today Finance Minister Bill English acknowledged it was "dealing with a few challenges".

He said depositors were protected through the Government's Retail Deposit Guarantee Scheme but refused to say what steps might be considered to save the company.

"I really do not want to speculate about South Canterbury Finance," he said on TV One's Q&A programme.

Mr English confirmed the Cabinet would discuss the company's situation tomorrow and it faces a midnight deadline if it has to put up cash to save it.

The $2 billion company has widespread investments in the South Island's economy and is a lifeline for many farmers.

Federated Farmers president Don Nicolson said the impact of a collapse would be severe.

"The cascade of a meltdown will not only be felt inside the farm gate but outside the farm gate through the investors and the communities of the region," he said.

Labour's commerce spokeswoman, Lianne Dalziel, says the Government has refused to answer her questions about its intentions.

"I was told the Government does not comment on individual entities participating in the Retail Deposit Guarantee Scheme," she said.

"Although investors have the comfort of the government guarantee, the Government seems to have changed some of the rules of eligibility behind the scenes and the protection may not be there for some who think they can rely on it."

One of Mr Hubbard's other companies, Hubbard Management Funds, and seven charitable trusts, have been put under statutory management.

About 300 investors in Hubbard Management Funds have been told the company overstated its value by at least 25 per cent on March 31, reporting non-existent investments and cash balances.

Mr Hubbard disputes the figures from the statutory managers and his supporters have written to Prime Minister John Key urging him to reconsider the Government's approach to its inquiries.

- NZPA