Hubbard says foreign firm may provide equity for South Canterbury

Monday 21st June 2010

South Canterbury Finance’s owner, Allan Hubbard, says he is hopeful of bringing a new overseas investor to the company who would provide enough fresh capital to secure its future.

The comments were in a statement released by the Timaru-based millionaire in response to bring placed in statutory management, along with his wife and related entities including Aorangi Securities and seven charitable trusts.

The move was announced by Commerce Minister Simon Power and relates alleged irregularities over the lending of some $134 million. Hubbard stepped down from SCF’s board last month.

The action doesn’t directly affect investors in SCF though the finance company has subsequently withdrawn its prospectus.

“In the past month I have been working on finding a solution to South Canterbury Finance’s affairs and hope to arrange an agreement with an overseas company, subject to confirmation by June 30, to inject a large amount of capital which would place SCF in a secure position for the future,” Hubbard’s statement says.

A clearly angered Hubbard said calling in statutory managers was the “misguided” action of a government official “with little consultation with myself.” Still, he said, “I extend my personal apology for what has happened.”

“I don’t believe in the history of New Zealand that any person has acted more honourably than myself,” he said.

He defended Aorangi’s track record, saying it had always met quarterly interest payments, and repaid capital promptly, and clients had never suffered a loss in its 30 years as a mortgage company. That company had mortgages and loans owing for $126 million and $2 million in cash, while client deposits were $88 million.

Aorangi has enough funds to meet its June 30 interest payment, he said.

SCF has been forced to temporarily withdraw its prospectus to raise new funds. The Timaru-based finance company has pulled its prospectus to rewrite any material changes to the business, after the actions taken against Hubbard.

Chief executive Sandy Maier said in a separate statement that the firm is “deeply shocked and surprised by the decision to put statutory managers in control of certain business interests” of SCF’s shareholder. “We will work with the statutory managers to complete the process as originally envisioned,” he said.

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.

Maier said he welcomed the clear statement from Power that SCF was specifically excluded from the statutory management, and said he will continue to “vigorously pursue the turnaround” of the company, with “thousands” of investors notifying the firm they will support it beyond the guarantee’s expiry date.

Maier has been rallying investors’ support in roadshows up and down the country as the October deadline approaches, beating the drum over the firm’s accelerating reinvestment rates.

Treasury confirmed the investigation will not impact on the government’s guarantee for eligible South Canterbury Finance investors, most of whom will still be covered by the extension to the scheme which cuts the maximum value covered to $250,000 from $1 million.

The Securities Commission recommended Hubbard and his interests be placed under statutory management after an investor in Aorangi lodged a complaint in February that they’d been shown neither an investment statement nor a prospectus before making a deposit.

Trevor Thornton and Richard Simpson of Grant Thornton were appointed as statutory managers.

Businesswire.co.nz

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