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SCF pulls prospectus

Monday 21st June 2010

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South Canterbury Finance says it is “deeply shocked and surprised” that owner Allan Hubbard and some of his interests have been put in statutory management, and the firm 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 Commerce Minister Simon Power announced Hubbard, his wife, Aorangi Securities, and seven charitable trusts were placed under statutory management while the Serious Fraud Office investigates alleged irregularities over the lending of some $134 million. Hubbard stepped down from SCF’s board last month. 

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

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 October 12.

Maier said 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.

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