South Canterbury Finance succession plan well underway, McLeod says

Thursday 30th July 2009

South Canterbury Finance, the finance company whose investment-grade credit is being supported by its biggest shareholder, has a succession plan underway which it expects to find shape before Christmas.

The company’s board is working on initiatives to replace major shareholder and chairman Alan Hubbard when he retires, and has kept ratings agency Standard & Poor’s abreast of the situation, chief executive Lachie McLeod told The Press newspaper.

Two weeks ago, S&P placed the South Island-based finance company on creditwatch negative, which gives SCF a one-in-two chance of losing its BBB- credit rating, due to its deteriorating credit profile.

The company posted a $37 million loss before tax after it announced a $58 million writedown on non-performing investments and doubtful property assets. Earlier this month, the ratings agency told BusinessWire that Hubbard’s backing helped underpin its investment grade ratings, and the Timaru millionaire injected NZ$40 million of new capital into SCF, as well as agreeing to underwrite any further impaired loans.

McLeod told the Press any credit rating downgrade wouldn’t force the company to pay back a private placement by U.S. investors worth some US$100 million, but would result in them having to renegotiate the arrangement.

Businesswire.co.nz

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