South Canterbury Finance Limited

[Alan3285]

Hi Colin,

Alan: I covered this point in my post #387.

Apologies - I did actually read that post, but I did not really recognise the extent of the opportunity.

The situation defies logic.

The yield on the prefs is adjustable, of course, on the reset dates, and will move up with the expected general firming of interest rates, but this still does not explain the huge distortion, given the relative rankings of these securities.

My thinking exactly.

Yes - I agree that the prefs might see a higher yield on the next reset (1 Oct 2010 I believe), but you are still 'giving away' nearly 10% (roughly 20% minus 10%) of return in the meantime, so that cannot really explain it (at least in my opinion).

I am buying into the SCF010 bonds as they appear to be a bargain at current prices and I believe the chances of SCF defaulting on those is sufficiently low that the yield of 19.5% more than compensates for any risk and then some.


Alan.

[Misc]

Announced today. Along with seriously toxic company exposures over the last few weeks , and lack of go-forward annoncements , looking as sharp as a marble? M

[Steve]

So that makes it the CEO & CFO to resign in recent weeks? Possibly a result of the new independent directors tidying things up?

Could that suggest that there is some more bad news to come out before things start to improve at SCF?

[Alan3285]

Isn't the resignation of the CFO something that should be 'continuously disclosed'?

[Steve]

Isn't the resignation of the CFO something that should be 'continuously disclosed'?

What is stipulated under the listing rules as having to be continuously disclosed?

I will go investigate unless someone beats me to it...

[Steve]

What is stipulated under the listing rules as having to be continuously disclosed?

I will go investigate unless someone beats me to it...

From the listing rules:Continuous Disclosure

Examples of matters that may need to be disclosed

There can be no definitive list of all matters that may require disclosure. The best way for Issuers to ensure they comply with the Rules is to ensure that they have processes to continually review matters relevant to the
business and material changes in terms of the Rules.

While it would be a futile effort to attempt to list all possible matters that might give rise to requirements to disclose information under the Rules we have listed a number of matters that if they occurred are likely to
need consideration under the Rules, where material.
...
• Material senior staff changes.
...
In certain cases NZX will be prepared to work with Issuers to review information that should be released.
However we note that the obligations to disclose under the Rules remain with the Issuer. Any assistance from NZX should not be taken to constitute legal advice on the Issuer’s obligations.

[Alan3285]

Hi Steve,

From the listing rules:Continuous Disclosure

Examples of matters that may need to be disclosed

There can be no definitive list of all matters that may require disclosure. The best way for Issuers to ensure they comply with the Rules is to ensure that they have processes to continually review matters relevant to the
business and material changes in terms of the Rules.

While it would be a futile effort to attempt to list all possible matters that might give rise to requirements to disclose information under the Rules we have listed a number of matters that if they occurred are likely to
need consideration under the Rules, where material.
...
• Material senior staff changes.
...
In certain cases NZX will be prepared to work with Issuers to review information that should be released.
However we note that the obligations to disclose under the Rules remain with the Issuer. Any assistance from NZX should not be taken to constitute legal advice on the Issuer’s obligations.

Thanks for that - it certainly *seemed* like something price-sensitive to me.

Alan.

[Alan3285]

Hi All,

This just spotted on RNZ:

http://www.radionz.co.nz/news/storie...2/1245da281e27

South Canterbury Finance (SCF) has sold its entire stake in Pyne Gould Corporation. The sale, at 50c a share, netted the company more than $14 million.

SCF had a 4.5% stake in in the rural services firm, or 29.5 million shares.

Chief executive Nigel Gormack says the sale, which made a small profit, is part of a programme to sell off assets not related to the company's main lending business.

He says the money raised will be used to shore up the balance sheet by providing extra liquidity.

South Canterbury Finance will carry out a capital-raising early next year, and is considering floating on the sharemarket.

Looks like they are serious about fixing things up for a float.

I'm getting into those 2012 bonds (SCF010) further - the yield is looking fantastic at more than 20%.

Still can't understand why anyone would hold onto the preference shares (SCFHA) though -the price is still ridiculously high giving a yield around 11%.


Alan.

[temuk]

Hi All,

This just spotted on RNZ:

http://www.radionz.co.nz/news/storie...2/1245da281e27




Looks like they are serious about fixing things up for a float.

I'm getting into those 2012 bonds (SCF010) further - the yield is looking fantastic at more than 20%.

Still can't understand why anyone would hold onto the preference shares (SCFHA) though -the price is still ridiculously high giving a yield around 11%.


Alan.

Hi Alan.

what is the face value of SCF010?

can't seem to find it.

[GTM 3442]

Hi Temuk.


You could look under "Fixed Interest - NZDX Securities" on the Direct website


Face value is $1.00

Coupon rate is 10.43%
Maturity Date is 15/12/10012

Currently on offer at 18.5%

Pricing for 5000 at 18.5% as follows:


Principal $ 4096.51
Accrued Interest $ 23.18
Cost $ 4119.61

You get interest paid over the life of the bonds at 10.43% ($521.50 each year, $1564.50 in total)
At maturity, you get back $5000 of principal.

$5000 + $1564 = $6564.50 for an outlay of $4119.61 - better than 5% in the bank ?

Merry festive season. . . .