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SCF eases liquidity concern in debenture roll-over

Tuesday 1st June 2010

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South Canterbury Finance, whose owner Allan Hubbard quit the board after 30 years as chairman, has rolled over $132.9 million worth of debentures and is looking to replace its $75 million funding facility with George Kerr’s New Zealand Credit Fund.  

Chief executive Sandy Maier said as of yesterday, the financier’s “maturity profile and reinvestment have been significantly improved” as the company looks to smooth over a billion dollar maturity bubble created by the government’s retail deposit guarantee initial expiry in October.

The company said it’s working to complete the $37.5 million equity injection from Kerr’s Torchlight Fund No 1 LP, via Southbury Corp., and is close to finalising a replacement facility with the NZ Credit Fund.  

“By rolling these maturities over early, refinancing with new funding from other sources is not required,” Maier said in a statement.  

South Canterbury Finance was downgraded two notches to B+ by Standard & Poor’s on Friday after the ratings agency complained about the pace and size of the finance company’s reduction in its refinancing risk.

Maier said the downgrade wouldn’t affect its position under the government’s extended deposit guarantee, nor would it breach the trust deed or other financial covenants.  

Hubbard stepped down from the board on Friday, taking on the title President for Life, and will focus on getting the firm through its short-term liquidity crisis and finding an equity partner for the finance company underpin its succession plan.

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