'No certainty' on restructure, Sth Canterbury tells NZX

The offices of South Canterbury Finance in Sophia Street, Timaru. Photo / Sarah Ivey

South Canterbury Finance is warning "there can be no certainty" recapitalisation and restructuring proposals it has been pursuing will be successfully implemented.

In an announcement to the NZX today, as speculation about SCF's future reaches fever pitch, SCF said it was still in discussions with interested parties to try to put together a recapitalisation and restructuring solution acceptable to all stakeholders.

SCF said it expected to be in a position to make an announcement to the market tomorrow.

SCF owes 20,000 investors about $1.7 billion, and is believed to be running out of cash to pay investors and meet statutory requirements.

It needs a new backer or a cash injection from the Government to avoid receivership.

The $1.7b debentures are covered by the government retail deposit guarantee scheme which means those investors would be paid out by the Government if South Canterbury failed.

Finance Minister Bill English was expected to brief Cabinet this afternoon about the situation.

Ahead of the Cabinet meeting, Prime Minister John Key was today refusing to speculate on whether the Government would bail out SCF.

SCF chief executive Sandy Maier is playing down speculation the beleaguered company is looking for a taxpayer funded rescue plan.

"It's a very long stretch to say ... that represents some kind of capital contribution or bail out or whatever, or that we're negotiating with Treasury for cash contributions or so on," Maier told Radio New Zealand.

"At present there isn't anything like that going on. The only live discussion at the moment is with private sector parties, and taking cognisance of the (retail deposit) guarantee."

SCF president for life, and chairman until March, Alan Hubbard said there was a deal on the table to help the firm but it would need government money too.

One of Hubbard's other companies, Hubbard Management Funds, seven charitable trusts, Hubbard himself and his wife Jean 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 percent on March 31, reporting non-existent investments and cash balances.

Hubbard disputes the figures.

-NZPA