Attack on Hubbard may hinder SCF's fund raising

Tuesday 22nd June 2010

South Canterbury Finance Ltd. has reissued an amended prospectus to raise new funds, saying the ‘attack’ on owner Allan Hubbard’s character may dent its ability to tap the public for cash.

The Timaru-based finance company says the appointment of statutory managers in respect to Hubbard and some of his business interests over alleged lending irregularities “may adversely affect the ability of the company to raise funds from the public given the long-standing relationship that Mr and Mrs Hubbard have had with the company and the public perception likely to be created by the appointment of statutory managers.”

The firm flagged the issue as a liquidity risk and a threat to its continued supply of funding in its amended prospectus. South Canterbury had to pull withdraw and update its prospectus yesterday after the government placed Hubbard and some of his interests under statutory management.

Still, Commerce Minister Simon Power specifically excluded the finance company, and Treasury affirmed that its eligible investors were still covered by the retail deposit guarantee.

The move against Hubbard comes as a so-called “wall of maturities,” worth some $519 million, draws near when the initial government deposit guarantee expires on Oct. 12.

Yesterday, Hubbard criticised the government’s decision to put him and his investments under statutory management, calling it misguided and saying there had been little consultation with him.

Hubbard also flagged he was close to reaching agreement with an offshore investor to inject capital into South Canterbury and leave the firm “in a secure position for the future.

Businesswire.co.nz

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