Sth Canty release new prospectus

Sandy Maier, chief executive of South Canterbury Finance

South Canterbury Finance is getting "back in the market" with a new prospectus registered today after increasing the size of its reported interim loss.

The finance company's audited accounts for the six months to December 31 show a net loss after tax of $198.6 million, up from the $154.9m in preliminary accounts released on March 1.

It has been accepted into the Crown's Extended Retail Deposit Guarantee Scheme. Around $200m has been injected by owner into Southbury Corp, a company associated with Timaru businessman Allan Hubbard, and via a signalled investment in Southbury by Pyne Gould Corp's Torchlight Fund No 1.

South Canterbury Finance said today that the registration of the prospectus would be followed by a series of presentations around the country to assist existing and intended investors understand the implications of the extended Crown guarantee and provide an opportunity to meet the new management team.

Chairman Mr Hubbard said investors, the finance sector and the Government would benefit from the transition to an orderly market facilitated by the extended Crown guarantee.

"The silver lining from the global financial crisis will be a soundly based finance sector with integrity that supports economic growth and delivers reliable returns for investors from a competitive range of products. South Canterbury Finance has consistently done that for more than 85 years and I am confident that it will continue to do so," Mr Hubbard said.

South Canterbury Finance has been granted a waiver from March 31 to May 31 by its trustee for a breach of a financial covenant in its trust deed and said it was confident it would be compliant by May 31 after the capital injection involving Torchlight.

South Canterbury Finance chief executive Sandy Maier said there were "six or seven swings and roundabouts" of issues between the preliminary and final interim accounts. Provisions were just one element.

The underlying performance for the half-year was close to breakeven.

Last year the company had equity of about $265m. It sank to about $55m and was back to near where it started.

"Once you get past the headlines you find it was a terrible half and with that behind us, and with the fix of the equity situation we are looking pretty bullish," he said.

The company wanted to wean itself from the Crown's guarantee programme.

The company would organise its loan book into a "good bank" and "bad bank" and work on turning around the bad bank area.

The company was open to participating in a consolidation of the finance company sector but it had not found a partner "where it's all been right yet".

Standard & Poor's Ratings Services last week predicted more failures and consolidation in the New Zealand non-bank deposit taker sector, which includes finance companies.

The non-bank deposit takers most vulnerable to liquidity and refinancing risks were those not covered by the extended deposit guarantee scheme because they were not rated or they are rated below BB, the rating company said.

The scheme has been extended to December 31, 2011, with new eligibility criteria, including the need for a BB or above rating. While the sector's asset quality problems were showing signs of having peaked and regulatory oversight had improved, most non-bank deposit takers had limited back-up external liquidity in the form of committed bank or other funding lines, S&P said.

Mr Maier said barriers to new entrants were a lot higher and there were fewer finance companies to compete against.

"We figure the banks are going off in a direction and our traditional market is still there and there is less competition. It could be the beginning of a very good period for us," he said.

"It's been a hell of a time for the finance sector and it has clearly caught us and we need to work our way out of it," he said.

- NZPA