South Canterbury set for a shake-up

Sandy Maier. Photo / Supplied

Allan Hubbard's troubled South Canterbury Finance may announce measures to strengthen its capital structure next week, says corporate troubleshooter Sandy Maier, who was appointed chief executive last month.

Maier, who has spent the past three weeks interviewing key staff and familiarising himself with the company, told the Herald an announcement was due shortly.

"Because there were losses during the year we have to look ahead and say 'do we have the ideal capital structure?' and to the extent that we want to strengthen, improve and change that.

"We're into the new year and I'd like to do that as soon as possible and I'd like to do that as soon as next week."

However the sharemarket float that has been tipped for Hubbard's Southbury Group, the parent of South Canterbury Finance, New Zealand Helicopters, and apple industry company Scales, is not likely to be announced any time soon.

"We're not in a position to say yes or no but clearly we're putting ourselves in a position where it is a very real option.

"We don't have a timetable for it because it's not a firm decision but all the steps we've taken in terms of governance and my appointment and things that need to proceed towards a float are in train but we may yet do a series of things before that."

Maier said South Canterbury was mindful the market was impatient about gaining clarity about a potential float and the company's future generally, "but a number of deliberate steps have to be taken before we're ready and you also have to measure the market itself which hasn't been all that receptive for many other companies".

Maier, who will also be chief executive of newly registered Southbury Corporation, largely earned his reputation as a corporate fix-it man when he was appointed statutory manager of failed state-owned Development Finance Corporation in 1990.

This, and rumours that Treasury and the Government were growing increasingly nervous about potential losses incurred under the Retail Deposit Guarantee should South Canterbury fail to resolve its problems, has fuelled speculation Maier's appointment was Wellington-influenced.

"I never got that sense," he says.

"I came into the company as one of the steps of change at South Canterbury. A group of independent directors was appointed and it was another step in the improvement of governance to bring in a CEO who was fresh, objective and from the industry. I do know the finance industry, having over 35 years done a number of difficult assignments. That was the driver."

The eye-watering size of the provisions Treasury has set aside to cover potential losses under the guarantee suggests the Government expects future finance company failures will not be limited to the remaining small and mid-sized players. This again has had some market watchers eyeing South Canterbury with a degree of trepidation.

So is he convinced South Canterbury will survive?

"It's always very hard to read someone else's motivation," he said.

"Treasury has to speak for itself in terms of prudent provisioning and direction that they see going on and it's got to be quite a difficult exercise. We certainly are firmly committed to everything we can to get back on track. I'm personally very optimistic about it.

"There are never any guarantees. We've seen huge changes abroad and to an extent here. It's not been easy being in this sector, I'm conscious of that. It's a fairly humbling thing to look at, we're working through the issues but I'm thinking some of the worst pieces are behind us."

He cites the resolution of South Canterbury's issues with its US debt providers and its board rejig.

"That positions us fairly well and we're comfortable that we've got a strategy."