South Canterbury Finance Limited

[fungus pudding]

Hi Hamdrew,
Interesting article - are they 'softening up' the media for a potential back down? Alan.

I note some subscriber only comment in todays NBR. www.nbr.co.nz/ I'm not a suscriber so not aware of the details, but I doubt that it will reveal much.

[Newman]

I note some subscriber only comment in todays NBR. www.nbr.co.nz/ I'm not a suscriber so not aware of the details, but I doubt that it will reveal much.

Below are some key content in the NBR article:

"In a reserved decision just released from the High Court at Auckland, Associate Judge David Abbott said ASB received $540,000 more than it was entitled to under a $3.5 million mortgage priority linked to a multi-million dollar “farm park” development known as Serenity Cove."

"The judge found in SCF’s favour for the $540,000."

[fungus pudding]

Below are some key content in the NBR article:

"In a reserved decision just released from the High Court at Auckland, Associate Judge David Abbott said ASB received $540,000 more than it was entitled to under a $3.5 million mortgage priority linked to a multi-million dollar “farm park” development known as Serenity Cove."

"The judge found in SCF’s favour for the $540,000."

..which may ior may not be significant, depending on the size of the puddle you're pissing into.

[Danthetitan]

Below are some key content in the NBR article:

"In a reserved decision just released from the High Court at Auckland, Associate Judge David Abbott said ASB received $540,000 more than it was entitled to under a $3.5 million mortgage priority linked to a multi-million dollar “farm park” development known as Serenity Cove."

"The judge found in SCF’s favour for the $540,000."

Great news, that almost fixes them up for the loss they took on the pea trader

[peat]

this article by Fran Sullivan about the notion of placing Allied into Statutory Management makes comments about Alan Hubbard
Fran says
"But the only player put in statutory management by the state is Allan Hubbard - a businessman who has not defaulted on his investors and in my opinion is not going to go down (I doubt if he will be charged with criminal fraud) as a result of the Serious Fraud Office's subsequent investigations.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10665123

[Beagle]

Great news, that almost fixes them up for the loss they took on the pea trader

Some perspective:- If SCF are looking at posting a loss for the six months ended 30 June 2010 of around $100m as Michael Warrinton estimated the other day, $100m/183 days = a loss per day of $546,000, so after deducting lawyers fees they might have recovered about one afternoon's operational losses.....

[winner69]

wonder a low ball heavily discounted offer for SCFHA is?

This is a serious matter .... so seek professional advice

http://www.stocknessmonster.com/news-item?S=SCF&E=NZSE&N=198209

[CJ]

wonder a low ball heavily discounted offer for SCFHA is?

This is a serious matter .... so seek professional advice

http://www.stocknessmonster.com/news-item?S=SCF&E=NZSE&N=198209I wonder how low he will offer. Surely they cant go much lower without people just throwing them into the bottom draw and forgetting about them.

[Alan3285]

this article by Fran Sullivan about the notion of placing Allied into Statutory Management makes comments about Alan Hubbard
Fran says
"But the only player put in statutory management by the state is Allan Hubbard - a businessman who has not defaulted on his investors and in my opinion is not going to go down (I doubt if he will be charged with criminal fraud) as a result of the Serious Fraud Office's subsequent investigations.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10665123

Fran Sullivan is one of the few truly professional journalists in NZ.

I don't actually agree with her that ALF should be in Stat Mgt, but you have to respect her opinions.

Alan.

[Balance]

Fran Sullivan is one of the few truly professional journalists in NZ.

I don't actually agree with her that ALF should be in Stat Mgt, but you have to respect her opinions.

Alan.

She completely misses the point about Stat Mgmt - action is taken before the company defaults.

What's the point of doing anything after the company defaults - as has been the case with Hanover, C&M, Bridgecorp, Blue Chip etc.

[Beagle]

She completely misses the point about Stat Mgmt - action is taken before the company defaults.

What's the point of doing anything after the company defaults - as has been the case with Hanover, C&M, Bridgecorp, Blue Chip etc.

On the subject of the press release by Diplock contained in brief within the article, it occurrs to me that she's had an awful lot to say, after the fact...

More action and less talk is what I believe most investors expect from the Securities Commission.

[mccollr]

Cabinet is bracing itself for the possibility that the Serious Fraud Office's investigation into the affairs of South Canterbury Finance founder Allan Hubbard will not find any evidence of complex fraud.
Political sources told the Business Herald that Cabinet ministers were briefed this week in broad terms on the investigation's progress.
The Government seized control of the South Island millionaire's finances on June 20 after a recommendation from the Securities Commission.
At the time of the appointment of the statutory managers Commerce Minister Simon Power said the main reasons for applying statutory management were "to prevent fraud and reckless company management, to protect investors and to enable the orderly administration of a company's affairs".
SFO director Adam Feeley would not comment last night on the outcome of his office's investigations.
"I expected a preliminary report will be with me by next week, and I stress preliminary report," said Feeley.

[Dr_Who]

Cabinet is bracing itself for the possibility that the Serious Fraud Office's investigation into the affairs of South Canterbury Finance founder Allan Hubbard will not find any evidence of complex fraud.
Political sources told the Business Herald that Cabinet ministers were briefed this week in broad terms on the investigation's progress.
The Government seized control of the South Island millionaire's finances on June 20 after a recommendation from the Securities Commission.
At the time of the appointment of the statutory managers Commerce Minister Simon Power said the main reasons for applying statutory management were "to prevent fraud and reckless company management, to protect investors and to enable the orderly administration of a company's affairs".
SFO director Adam Feeley would not comment last night on the outcome of his office's investigations.
"I expected a preliminary report will be with me by next week, and I stress preliminary report," said Feeley.

Very interesting. Look forward to reading the report.

[minimoke]

Very interesting. Look forward to reading the report.
Perhaps we should also recap on what Feely has said previously. Early on he has said that there are three options: (1) Discontinue the investigation, (2) continue the investigation and build a case, or (3) lay criminal charges.

Yesterday he denied briefing Cabinet but was silent on whether he has had a conversation with a Minister. It does appear though that an Interim / Preliminary report is likely next week. He has also suggested that it is likely the SFO would want to talk to Mr Hubbard at some point. So if they want to talk to AH which option do we think the SFO is pursuing? Given the SFO is now tied up also with the $18m Ponzi by the Bradleys (jeez - where do these "investors" come from?) I doubt they have time to be chatting to people unless there was a need.

[Balance]

Perhaps we should also recap on what Feely has said previously. Early on he has said that there are three options: (1) Discontinue the investigation, (2) continue the investigation and build a case, or (3) lay criminal charges.

Yesterday he denied briefing Cabinet but was silent on whether he has had a conversation with a Minister. It does appear though that an Interim / Preliminary report is likely next week. He has also suggested that it is likely the SFO would want to talk to Mr Hubbard at some point. So if they want to talk to AH which option do we think the SFO is pursuing? Given the SFO is now tied up also with the $18m Ponzi by the Bradleys (jeez - where do these "investors" come from?) I doubt they have time to be chatting to people unless there was a need.

Feely saying that SFO is yet to charge the Bradleys give you an idea of the time-frame and burden of proof they work to. As blatant a fraud case as can be ascertained!

[sharer]

... [re Feely]
Yesterday he denied briefing Cabinet but was silent on whether he has had a conversation with a Minister. It does appear though that an Interim / Preliminary report is likely next week. He has also suggested that it is likely the SFO would want to talk to Mr Hubbard at some point. So if they want to talk to AH which option do we think the SFO is pursuing? ...

Some very careful weasels are dropping word clues along this trail.
Reading the rehash in DomPost this morning it seems that he might have 'admitted' having spoken to Crusher Collins, in her capacity as Minister in charge of the SFO - which presumably would be perfectly proper even in the middle of an investigation & before any conclusion is even drafted. Or, it could be proper - how could we know?
Exactly what could they properly discuss at this juncture - purely administrative departmental details of some sort? Completely unrelated to AH's affairs?
Could this be the perfect channel to inform the Cabinet without actually telling the Cabinet anything? Or to receive further guidance from above when the original marching plan has run out too close to a cliff edge?

How all this can happen without Mr F's minions talking with AH boggles the mind altogether.

[Balance]

Some very careful weasels are dropping word clues along this trail.
Reading the rehash in DomPost this morning it seems that he might have 'admitted' having spoken to Crusher Collins, in her capacity as Minister in charge of the SFO - which presumably would be perfectly proper even in the middle of an investigation & before any conclusion is even drafted. Or, it could be proper - how could we know?
Exactly what could they properly discuss at this juncture - purely administrative departmental details of some sort? Completely unrelated to AH's affairs?
Could this be the perfect channel to inform the Cabinet without actually telling the Cabinet anything? Or to receive further guidance from above when the original marching plan has run out too close to a cliff edge?

How all this can happen without Mr F's minions talking with AH boggles the mind altogether.

Well, here's someone sticking his neck out a mile and calling AH to account. The clock is ticking.

http://www.lostsoulblog.com/2010/08/hubbard-saint-or-sinner.html

Excerpt : "The third theory is that Mr Hubbard is not a good man, and that he is some kind of financial psychopath, appearing to be a good man on the outside, even building an aura of benevolence, generosity, confidence and modesty. This theory would be that he's been robbing Peter to pay Paul all of his life, and getting away with it until now. He doesn't believe, according to this theory, that it is wrong to misappropriate funds so long as they're going to a good cause.

I believe that the end is near for SCF, Southbury Corp, Southbury Group, Dairy Holdings, North Wind Holdings (2009), South Island Farm Holdings, Commtest Instruments, and the whole Hubbard empire. The SFO is due to report next week, and I wouldn't be surprised if theory three turns out to be painfully close to the truth. The trustee appears to be reading SCF its last rites, with financials due and waivers expiring at the end of this month. The criticism of the government and the authorities for putting Mr Hubbard into Statutory Management and having the Serious Fraud Office investigate him will probably pale into the background of the eruption of finger pointing at everyone involved in the Hubbard empire. The house of cards is beginning to sway."

[Enumerate]

Here I thought that the weight of evidence that SCF is in no where near as bad shape as interest.co.nz reports, was beginning to dawn on even the village idiots ... I regret we have more lostsoulblog drivel to endure. Fortunately, we do not have much longer to wait. Final accounts are due on the 31st of August - if I am right, then they will be much healthier than the half year.

Factors to consider are:

- Profitability will be weighed by legal costs and the retail deposit guarantee margin. However, I do not expect significant additional loan impairments - indeed I expect what further impairments are recorded will be more than compensated for by loan recoveries.

- Equity levels will prove to be appropriate for the smaller business target (about $1billion loan receivables). However, the type of equity (equity assets such as Scales, Helicopters and Dairy) is likely to remain an issue.

- I do not expect a "deal" by the 31st. How the Trustee reacts will be a major imponderable. However, I do believe that the improving accounts will give SCF room to maneuver.

In terms of the SCFHA ... I believe there might be pressures to deliver a "haircut" to holders, as part of a reconstruction package. However, I believe that AH will hold fast - while I expect there will be some lean years of zero dividend, I do believe the SCFHA will be fully restored in value following the completion of the reconstruction. I am happy to play my part in this.

[Balance]

Allied Farmers/Hanover latest write-downs highlight what has been happening with valuations and loan recoveries since beginning of the year in the commercial and development property sector.

SCF's accounts coming out in better shape will be wonderful and all credit then to Sandy Maier and his new team. I doubt so, unfortunately - SCF carries too much baggage and the new auditors are going to be tough as Waikato shank beef cooked in Rotorua mud in requiring realistic and conservative provisionings.

Previous auditor had no idea what they were doing - as long as AH said so, it was all kosher.

[fungus pudding]

Well, here's someone sticking his neck out a mile and calling AH to account. The clock is ticking.

http://www.lostsoulblog.com/2010/08/hubbard-saint-or-sinner.html

Excerpt : "The third theory is that Mr Hubbard is not a good man, and that he is some kind of financial psychopath, appearing to be a good man on the outside, even building an aura of benevolence, generosity, confidence and modesty. This theory would be that he's been robbing Peter to pay Paul all of his life, and getting away with it until now. He doesn't believe, according to this theory, that it is wrong to misappropriate funds so long as they're going to a good cause.

I believe that the end is near for SCF, Southbury Corp, Southbury Group, Dairy Holdings, North Wind Holdings (2009), South Island Farm Holdings, Commtest Instruments, and the whole Hubbard empire. The SFO is due to report next week, and I wouldn't be surprised if theory three turns out to be painfully close to the truth. The trustee appears to be reading SCF its last rites, with financials due and waivers expiring at the end of this month. The criticism of the government and the authorities for putting Mr Hubbard into Statutory Management and having the Serious Fraud Office investigate him will probably pale into the background of the eruption of finger pointing at everyone involved in the Hubbard empire. The house of cards is beginning to sway."

I know little about this, but am quite bemused by the street march and other support for the Hubbards. I am sure most of the public outcry is based on nothing more than the fact that he has given much to charities. In other words, I doubt that these backers know anymore than I do. It could come as a rude shock to some of his supporters, and more-so to the investors, when it is revealed just whose money it was that he donated to the various causes! For their sake - I hope their optimism and faith in AH proves justified.

[Beagle]

Allied Farmers/Hanover latest write-downs highlight what has been happening with valuations and loan recoveries since beginning of the year in the commercial and development property sector.

SCF's accounts coming out in better shape will be wonderful and all credit then to Sandy Maier and his new team. I doubt so, unfortunately - SCF carries too much baggage and the new auditors are going to be tough as Waikato shank beef cooked in Rotorua mud in requiring realistic and conservative provisionings.

Previous auditor had no idea what they were doing - as long as AH said so, it was all kosher.

LOL too funny !! Of course those on here with their heads in the sand can't see the wood for the trees.

[minimoke]

Factors to consider are:

- Profitability ...

- Equity levels will prove to be appropriate for the smaller business target (about $1billion loan receivables). However, the type of equity (equity assets such as Scales, Helicopters and Dairy) is likely to remain an issue.

- I do not expect a "deal" by the 31st. How the Trustee reacts will be a major imponderable. However, I do believe that the improving accounts will give SCF room to maneuver.
.
Enumerate.

How do you get "profitability"? We know at half year there was a $198.6m net loss (up from a preliminary announcement of $154.9m). We know for Q3 SCF "broke even" with a $1.2m loss. So surely its not a question of "profit" but more one of just how big the loss will be?

It looks like loans are being repaid but new money flowing in is being used to pay the "wall of Debt" so the Deposit Guarantee fee (and the higher interest rates payable) has to be hurting.

SCF reckon their impairments were pretty well covered (but due to be reassessed) - I can't see how those levels of impairment can be maintained - I'm picking a worsening. We know, for example, they will take a $14m hit on the low quality frozen pea asset backing.

SCF reckoned the economic environment was improving leading to more lending opportunities. I reckon the environment down south has worsened. As a lender I don't see that SCF would be first cab off the rank with their higher loan interest rates. Banks are very nervous about lending (indeed I am not sure they are lending at all at the moment) so any money lent by SCF may be going into high risk ventures - if SCF is actually lending.

I don't see a "deal" being done by 31 August. If this was likely we would have had news (probably leaked from the overseas investment office) by now but there has been none.

We know that the AH Stat Man has hurt cash inflows. We know Standard and Poors has reduced their credit rating to Short term C on negative credit watch. They were going to review the negative credit watch by mid July but haven't.

We have had no news that Scales or Helicopters are doing any better than planned - so they are either doing either Ok or not as well as expected.

The Stat man is releasing cash to distressed AH / Aorangi Investors with more news out this week. If they were going to discontinue their investigations I don't see that they would be going to the trouble of finding a way of looking after distressed investor - so I'm not expecting positive news there.

We know Sandy has just taken up a Directorship with Ngai Tahu - I'm interpreting that as an income generating backup plan.

The year end accounts may be healthier than half year - but will they be healthy enough? Will they be better than last years? (we know S&P rating has gone from BB+ to C) Will they need revisions (like last year) before we see the final version.

[Beagle]

And we know Sandy's contract is up in December. I think Chris Lee and co are about on the money with another $100m in losses for the six months ended 30 June for a total for the year or circa $300m, but it could be much worse than that going by write-downs in ALF's loan book.

Of course I expect the usual "corporate spin" that most of the losses pertain to SCF's so called "bad bank" and the so called core operation is close to breaking even, e.t.c. e.t.c. and anyone who continues to believe that drivel is "at best", in complete denial.

[Enumerate]

Roger, you have built castles in the air. Inside those castles, you have built dungeons, within which you have consigned AH and all his investments.

You cite every source, including flotsam and jetsam, but you never piece together your own position, from first principles.

As the level of hysteria rises, so you are emboldened in your views. Are you waging some vendetta against Forsyth Barr - well known to be the AH in house broker. Is this some kind of "professional" jealousy?

It all counts for nothing ... we will have the facts, soon enough.

Your position is clear enough - you are out. I am in.

I must admit, on the SCFHA register, the top 100 changes for July make interesting reading.

[Alan3285]

I must admit, on the SCFHA register, the top 100 changes for July make interesting reading.

Is the SCFHA register online somewhere?

Thanks,

Alan.

[Enumerate]

Is the SCFHA register online somewhere?


Tried to PM it to you ... with formatting, it is 90k - exceeds the 5k char limit set by sharetrader.co.nz (and not sure the formatting would survive)

PM me with an address ... I will forward.

[Beagle]

The one thing you are correct about is we will know the result soon enough and we will see who's credibility goes up and who's goes through the bottom of the floor.

Regarding the Forsyth Barr matter, let me just put it this way and a quote from the movie Wall St says it best, "their analysts wouldn't know preferred stock from livestock" Feltex, Credit Sails, SCF, anyone care to expand upon the wonderful list of stocks that Forbar have sold their clients down the river on ? By the way Enumerate, it looks like I'm not the only one on here that's stopped taking their so called "professional advice.

[Danthetitan]

The SCFHAs are hadly live anymore. Chances are holders won't get anymore dividends ever, and will be told 'payment to preferred shareholders is unlikely' by the receivers in a few months time.

When SCF eventually reports (not likely to be at the stated 31 Aug date):
1. The deferred tax and prepaid tax assets will be gone (about $100m)
2. The loan to Southbury Corp will be written off entirely ($15.6m)
3. The loan to Southbury Group will be written down to a few cents in the dollar or written off entirely(about $100m)
4. Dairy Holdings and Commtest Instruments will be written down severly or written off (about $50m-$80m)
5. The business and property loan books will book big losses (perhaps $100m)
6. The rural lending book could sustain some big losses (South Island Farm Holdings Limited, especially, and I bet the other 'first ranking' secured loans are first ranking GSAs actually ranking after mortgages over their land (perhaps another $50m-$100m).

Meanwhile, in the last 6 months the company has been selling its good loans and using the cash to pay off debentures, so expect SCF's assets and debenture liabilities to be significantly reduced. SCF is a corpse with mostly unquitable rubbish loans, $300m+ of related party loans, Helicopters, Scales, Dairy Holdings, Commtest Instruments and other bits and bobs.

There's a $500m hole in SCF that is so big Enumerate is the only one who can't see it.

[minimoke]

If Torchlight has made $4m more than forecast (PGC profit announcement today) does this mean SCF have paid $4m more than the market has been told?

[Beagle]

The SCFHAs are hadly live anymore. Chances are holders won't get anymore dividends ever, and will be told 'payment to preferred shareholders is unlikely' by the receivers in a few months time.

When SCF eventually reports (not likely to be at the stated 31 Aug date):
1. The deferred tax and prepaid tax assets will be gone (about $100m)
2. The loan to Southbury Corp will be written off entirely ($15.6m)
3. The loan to Southbury Group will be written down to a few cents in the dollar or written off entirely(about $100m)
4. Dairy Holdings and Commtest Instruments will be written down severly or written off (about $50m-$80m)
5. The business and property loan books will book big losses (perhaps $100m)
6. The rural lending book could sustain some big losses (South Island Farm Holdings Limited, especially, and I bet the other 'first ranking' secured loans are first ranking GSAs actually ranking after mortgages over their land (perhaps another $50m-$100m).

Meanwhile, in the last 6 months the company has been selling its good loans and using the cash to pay off debentures, so expect SCF's assets and debenture liabilities to be significantly reduced. SCF is a corpse with mostly unquitable rubbish loans, $300m+ of related party loans, Helicopters, Scales, Dairy Holdings, Commtest Instruments and other bits and bobs.

There's a $500m hole in SCF that is so big Enumerate is the only one who can't see it.

Quite right, brings to mind the old saying "there's none so blind as those that don't want to see"

[Alan3285]

"there's none so blind as those that don't want to see"

I think you'll find that it is actually:

"There's none so blind as those who will not see."

Alan.

[Balance]

Fascinating - so who is to be blamed? more to the point, who to believe?

http://www.listener.co.nz/issue/3657/letters/15565.html;jsessionid=5BFC94193293E64130781088583E A656

SETTING A COURSE
The article on Allan Hubbard (“A South Canterbury tale”, May 22) contained many inaccuracies about South Canterbury Finance (SCF) and me.
Any loan I may have had to SCF has been fully repaid. I have no liability to SCF. The comments that I owe loans and interest were totally inaccurate and damaging to me and my family.
The finance industry has been in its worst crisis since the 1920s Depression. The chairman and board were fully involved in the running of the company and received remuneration accordingly.
Senior management and I were employed by the chairman and the board to carry out policy, governance, strategy and direction – which were all set by the chairman and board. The board monitored this direction regularly and at all board meetings. Property loans have been a large portion on SCF’s loan book for over 20 years. The board approved all major property loans under the SCF credit process and in many cases introduced them to SCF.
Management team, general managers and all staff worked extremely hard over a difficult two-year period. For this team to have been implicated by the chairman and outside commentators is unfair and inaccurate. This team was one of which any finance company would be proud.
Lachie McLeod
CEO, South Canterbury Finance, 2003-09

I reject the allegation that my article contained “many inaccuracies”. It referred to a 2008 loan from SCF to McLeod for $15.4 million. I reported that this loan had not been repaid and that interest was not currently being paid. I based this information on interviews with Allan Hubbard and SCF director Stuart McLauchlan. Since receiving McLeod’s letter this week, I have checked with McLauchlan as to the status of the loan and again been told that it remains unpaid and that no interest is being paid.
McLeod says “property loans have been a large portion on SCF’s loan book for over 20 years”. In my article I described property lending as a “small” portion of SCF’s loan book prior to its period of rapid growth over recent years. In 2000, for instance, the “property and business” category of loans accounted for about 11% of the total book, and in 2001, 15%. By 2008, property was over 25% of the book. – Rebecca Macfie

[minimoke]

Fascinating - so who is to be blamed? more to the point, who to believe?
If I recall correctly Lachie was said to have "settled" his $15m loan from SCF - at the time (November 2009). It was never suggested he had "repaid" it. It might be conjecture that Lachies obligations to repay the loan were written into a severance deal and remain confidential. So from his perspective he no longer owes SCF $15m.

The "no interest paid" aspect is consistent with AH's approach to giving loans with no interest due - so no surprise there.

However SCF, presumably still has a $15m loan on its books. I don't recall any mention that this is one of the impaired loans - so it looks like we can add another $15m into the pot of impairments. Unless of course SCF are using new depositor money against that loan and if SCF go under the tax payer will repay the depositors who repaid Alan who forgave Lachie his loan obligations.

[J R Ewing]

Unless of course SCF are using new depositor money against that loan and if SCF go under the tax payer will repay the depositors who repaid Alan who forgave Lachie his loan obligations.

Not quite what was envisaged for the deposit guarantee scheme, but there were bound to be unintended consequences when the scheme was rushed in (though I'm not saying that the alternative would have been better).

[Balance]

If I recall correctly Lachie was said to have "settled" his $15m loan from SCF - at the time (November 2009). It was never suggested he had "repaid" it. It might be conjecture that Lachies obligations to repay the loan were written into a severance deal and remain confidential. So from his perspective he no longer owes SCF $15m.

The "no interest paid" aspect is consistent with AH's approach to giving loans with no interest due - so no surprise there.

However SCF, presumably still has a $15m loan on its books. I don't recall any mention that this is one of the impaired loans - so it looks like we can add another $15m into the pot of impairments. Unless of course SCF are using new depositor money against that loan and if SCF go under the tax payer will repay the depositors who repaid Alan who forgave Lachie his loan obligations.

Let me try and get what you are saying in another way :

Farmer sold land to developer = big profit.
Developer borrowed money from SCF and paid himself big salary = big profit.
SCF borrowed money from public at higher interest rates = better than in the bank for depositor due to govt guarantee.
SCF goes broke = taxpayers suck the lemon.

Farmer, developer, AH and depositors = all very happy.
Taxpayers = bewildered.

[minimoke]

Let me try and get what you are saying in another way :


Or does it go something like this.

Lend Pea Trader $15m = "good loan" book improves in value by $15m.
In recognition for improving Good Loan book, lend CEO $15m to buy shares in Co. = $15m more added to "Good loan" book.
Tell punters there is $30m in Good Loans and $15m in equity has been put into Co. = good news
Punters deposit $45m = $45m churned through related party loans etc
Related party loans enable second mortgage lending on depreciating assets = "good loan" book improves 10 fold.
Frozen peas don't sell = bewildered tax payers

[Danthetitan]

If I recall correctly Lachie was said to have "settled" his $15m loan from SCF - at the time (November 2009). It was never suggested he had "repaid" it. It might be conjecture that Lachies obligations to repay the loan were written into a severance deal and remain confidential. So from his perspective he no longer owes SCF $15m.

The "no interest paid" aspect is consistent with AH's approach to giving loans with no interest due - so no surprise there.

However SCF, presumably still has a $15m loan on its books. I don't recall any mention that this is one of the impaired loans - so it looks like we can add another $15m into the pot of impairments. Unless of course SCF are using new depositor money against that loan and if SCF go under the tax payer will repay the depositors who repaid Alan who forgave Lachie his loan obligations.

SCF booked a $14.8m impairment on what appears to be this loan in their 31 Dec 2009 accounts.

[minimoke]

SCF booked a $14.8m impairment on what appears to be this loan in their 31 Dec 2009 accounts.
Unless $13.9m is against the Pea Trader it might not have taken them long to recognize there ain't much loot in frozen manky peas.

[minimoke]

Aorangi's preliminary report is now written and in front of the SFO and we should know the outcome within the next few weeks.

I'm picking it will show that there is insufficient evidence an offence has occurred because AH relied on the expert advice of his Accountants.

[Enumerate]

There's a $500m hole in SCF that is so big Enumerate is the only one who can't see it.


There you are ... your credibility rests on there being a $500m hole in primary equity - which would mean SCF are currently insolvent.

My view is that reconstruction capital of the order of $100m-$150m would be nice to replace the equity assets (Scales, Helicopters, Dairy) as tier-1 equity (thus healing the current covenant breach). Another way of dealing with this is either the sale of the "Bad Bank" loan book or sale of some of the equity assets.

[Danthetitan]

I'd say a $500m hole compared to the $200m they claimed to have 31 March 2010, so minus $300m

[CJ]

This suggested $750m needed:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10666868

Take it with a grain of salt however as all unsubstantiated.

The interesting bit was this "He (Sandy) said talk of Government involvement in any deal was "an interesting rumour" but there had been no negotiations to that end."

Under continuous disclosure, stating there had been no negotiations would be misleading if proved incorrect. Bill English gave the appropriate comment of "no comment".

[Beagle]

This suggested $750m needed:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10666868

Take it with a grain of salt however as all unsubstantiated.

The interesting bit was this "He (Sandy) said talk of Government involvement in any deal was "an interesting rumour" but there had been no negotiations to that end."

Under continuous disclosure, stating there had been no negotiations would be misleading if proved incorrect. Bill English gave the appropriate comment of "no comment".

Who to believe ? Let me see, first of all do we trust Lachie Mcleod or the Listener journalist, as the main source of information for the listener article is AH, clearly the question becomes who do you prefer to trust AH or Lachie Mcleod, answer, neither.

Today's speculative article in the Herald is clearly of far more interest as the above mentioned matter of $15m is clearly almost completly irrelevant in the context of the circumstances.

I am picking this speculative Herald article will have this blog very active today and some people may even be bold enough to take a new or addittional positon in one or more of the SCF securities. It will be interesting to see how the market reacts today as clearly if there really had been material discussions with the Govt regarding their participation in a recapitalisation, with Sandy's denial that would amount to deliberatly misleading the market and would leave him personally wide open to legal action.

I will await people's personal views on this matter and the market reaction with considerable interest today.
It almost goes without saying the Govt are incredibly motivated to find a solution for SCF, quite how they propose to do this will be very interesting. Maybe they will buy the bad bank at current written down value and inject say $200 million with another party injecting a similar amount of capital ?

[minimoke]

What do we make of the article. Hmmm

Chris Lee, as I recall has been quite bullish with SCF so how reliable source is he? I think I should be able to rely on the ongoing disclosure obligations that SCF has so prefer their statements.

Will the Govt bail out SCF? In a sense it could via the Deposit Guarantee scheme. Once this is called on the Govt can do what it likes to recover whatever it pays out to depositors. Alternatively it could bring in the Stat Managers- it has proven it has a bit of an eye on AH and his interests and did this to PSIS. So there are two options there already.

If the Govt was to bail out SCF, what makes it so special. The Govt was steadfast in its refusal to bail out Fisher and Paykel - an iconic NZ brand and innovator; indeed a company that represented what NZ stands for (John Jeys words). It has also refused to bail out other companies harmed by the GFC. So why would it want to bail out a privately held company with lots of related party loans. If it bails out SCF why would it not bail out Hanover, Bridgecorp, Blue Chip et al (in the past) and ALF now? SCF isn't really an iconic national operator like Air NZ nor a national bank like BNZ

If the Govt does bail out SCF, I'm reminded of this advertisement: http://www.youtube.com/watch?v=qDC0qcf0kzE&feature=player_embedded.

Why would AH trade his company for the dropping of potential fraud charges. Lets face it - its pretty unlikely he'll face any charges and if he does, and is found guilty, the worst he could expect is Home D. Doesn't seem like a fair trade to me.

The good news for SCF is that they have had so many interested equity propositions they have had to take it to a shortlist stage. That suggests a deal is done - its just a matter of which option is better. The market should respond positively to Sandys words.

I think we still need to wait till the end of August - there is still so much speculation and we don't have the accounts. Its only 10 working days to wait - not long now. In the meantime we can rely on Sandy to keep the market appropriately informed.

[minimoke]

.... if there really had been material discussions with the Govt regarding their participation in a recapitalisation, ...?
I wonder if the source/s have overheard conversations regarding KiwiBank - it seems the Gov is prepared to provide them with a capital facility so they can prop up their AA- credit rating. Why would the govt want to prop up SCF C negative watch credit rating

[Beagle]

In the meantime we can rely on Sandy to keep the market appropriately informed. Minimoke

I'm not so sure I'd bet significant money on that. He's shown himself to have a fair bit of "creative licence" with the truth.

[fungus pudding]

Why would AH trade his company for the dropping of potential fraud charges. Lets face it - its pretty unlikely he'll face any charges and if he does, and is found guilty, the worst he could expect is Home D.

And a huge fall in pride. :(

[Alan3285]

Hey Enumerate,

Not sure if you bought (more) SCFHA at 9c or 10c, but looks like if you liquidate today you could almost double your money (17.5c bids to buy on the board right now).

Perhaps take some profits, and put some of the rest up on offer at 19.9c and see what happens?

I love it when I am already cash positive on a security and still have quite a few left in my hands.

Well done sir!

Alan.

[Beagle]

Hey Enumerate,

Not sure if you bought (more) SCFHA at 9c or 10c, but looks like if you liquidate today you could almost double your money (17.5c bids to buy on the board right now).

Perhaps take some profits, and put some of the rest up on offer at 19.9c and see what happens?

I love it when I am already cash positive on a security and still have quite a few left in my hands.

Well done sir!

Alan.

Good stuff indeed...right up to the point where they announce recivership and you get wiped out !!

[Alan3285]

Good stuff indeed...right up to the point where they announce recivership and you get wiped out !!

How can he get wiped out in that scenario?

If he is cash positive already, then he wins. It is only a matter of how much he wins.

Alan.

[Beagle]

How can he get wiped out in that scenario?

If he is cash positive already, then he wins. It is only a matter of how much he wins.

Alan.

I predict he won't liquidate today or any other day as he's been saying for ages they'll come right and thinks the pref shares are worth the full $1.00, LOL and there's no saying he bought at 9 or 10 cents that's pure conjecture.

I conceed if he did buy at 9 cents and sold today there is a possibility he could have "theoretically" doubled his money, but I think you're very premature congratulating him seeing as you're not aware of when he bought and at what price and if he's sold, don't you ?

Best to wait till 31 August before congratulating anyone wouldn't you say ?

[Alan3285]

I predict he won't liquidate today or any other day as he's been saying for ages they'll come right and thinks the pref shares are worth the full $1.00, LOL and there's no saying he bought at 9 or 10 cents that's pure conjecture.

I conceed if he did buy at 9 cents and sold today there is a possibility he could have "theoretically" doubled his money, but I think you're very premature congratulating him seeing as you're not aware of when he bought and at what price and if he's sold, don't you ?

Best to wait till 31 August before congratulating anyone wouldn't you say ?

Do we detect the prescence of the green eyed monster Roger?

You might consider being a little more gracious.

Alan.

[minimoke]

Do we detect the prescence of the green eyed monster Roger?

You might consider being a little more gracious.

Alan.
No green idea monster at all. How can you congratulate someone when you don't know that there is something to congratulate.

For a start I'm not sure that anyone bought at 9 cents - isn't the lowest it went to about 10.5 and there weren't to many substantial buyers art that level. And even if Enumerate had sold today there are only $6k worth of sales - so he's hardly going to retire on that sale.

If has bough low and sold high, good on him and anyone else who was prepared to catch the falling knife. It might be a different story if he'd bought at 15 cents and watch the fall and then sold at 17.5 today - hardly life changing.

But then its always easy to gloat in hindsight and without the benefit of declaring buy / sells.

[Beagle]

No green idea monster at all. How can you congratulate someone when you don't know that there is something to congratulate.

For a start I'm not sure that anyone bought at 9 cents - isn't the lowest it went to about 10.5 and there weren't to many substantial buyers art that level. And even if Enumerate had sold today there are only $6k worth of sales - so he's hardly going to retire on that sale.

If has bough low and sold high, good on him and anyone else who was prepared to catch the falling knife. It might be a different story if he'd bought at 15 cents and watch the fall and then sold at 17.5 today - hardly life changing.

But then its always easy to gloat in hindsight and without the benefit of declaring buy / sells.

Cheers for that Minimoke.

Alan, whilst we are on the subject of giving each other suggestions on blog conduct, perhaps you might like to have a wee think about how insensitive it is to so brazenly gloat about your profits, when so many others have taken an absolute bath on SCF pref shares, especially all the poor old unfortunates who subscribed at the full $1.00 on Forsyth Barr's advice.

[Alan3285]

Cheers for that Minimoke.

Alan, whilst we are on the subject of giving each other suggestions on blog conduct, perhaps you might like to have a wee think about how insensitive it is to so brazenly gloat about your profits, when so many others have taken an absolute bath on SCF pref shares, especially all the poor old unfortunates who subscribed at the full $1.00 on Forsyth Barr's advice.

Roger,

Who lost out when I bought the SCFHAs?

Alan.

[Beagle]

Roger,

Who lost out when I bought the SCFHAs?

Alan.

*sigh*.......Perhaps a retired pensioner who originally invested at $1.00, those things are a zero sum game, someone, wins, someone loses and in the case of this security the vast majority of people have taken an absolute beating, hence my comment about you perhaps reconsidering the merits of gloating, (generally), and especially in this case.

[Alan3285]

*sigh*.......Perhaps a retired pensioner who originally invested at $1.00, those things are a zero sum game, someone, wins, someone loses and in the case of this security the vast majority of people have taken an absolute beating, hence my comment about you perhaps reconsidering the merits of gloating, (generally), and especially in this case.

When I purchased my SCFHAs I paid more than anyone else was willing to pay at the time.

Now, call me a kind fool for paying so much, but if I hadn't bought them then the seller would have either gotten a lesser amount from someone else, or they wouldn't have been able to sell at all.

The other party was better off due to my prescence in the market.

Alan.

[Enumerate]

Being long SCFHA has just got interesting.

It is the measure of market sentiment to survival of SCF. There are no government guarantees - you are second "to the wall", behind equity holders, if it turns to custard.

Don't you think these rumours of an imminent transaction are interesting? From an economic development perspective - survival and reestablishment of SCF in the rural/regional commercial space does make a compelling argument. The Herald ran a very interesting and detailed story on this ... this must be more substantial than idle rumour.

Pity the poor Chis Lee following investors who have been paniced into selling at much too low a price by Michael Warrington's rather naive assessment of the situation. (BTW 9cents was the lowest price SCFHA traded at - after the Warrington letter was circulated).

[Enumerate]

Aorangi investors to request statutory management termination


http://www.stuff.co.nz/business/industries/banking-finance/4042322/Aorangi-investors-to-request-statutory-management-termination

Aorangi Securities Ltd (ASL) investors are being urged to write to Commerce Minister Simon Power requesting statutory management of the company be terminated.

[Enumerate]

Hubbard backers call for sackings at commission

http://www.stuff.co.nz/business/personal-finance/4041421/Hubbard-backers-call-for-sackings-at-commission

The letter calls for the sacking of Securities Commission member Simon Botherway, who was part of the four-member division of the commission which recommended the statutory management to the Government. Mr Botherway did not declare a potential conflict of interest after his brother's companies were placed into liquidation by South Canterbury Finance (SCF) last year.

[minimoke]

From an economic development perspective - survival and reestablishment of SCF in the rural/regional commercial space does make a compelling argument. The Herald ran a very interesting and detailed story on this ... this must be more substantial than idle rumour.
.

Yes - Agreed this is an interesting thing to look at.

At the moment it appears that new money flowing into SCF is being used to pay off the wall of maturities" so it seems SCF probably aren't contributing , in a meaningful way to the new development of an economic south.

If we put all the AH, SCF, Sandy, Stat Man noise aside a moment we have a finance company with a C negative watch rating a person with money looking for a safe deposit haven might be well advised to look at finance companies other than SCF. Even if, say, today the Stat Man pulls out and there are no investigations / charges against AH; if Sandy announces a $700m equity injection; if someone buys the "bad loan" book, if every thing turns rosy, its going to take a while to lift that Credit Rating so depositors would still be taking a punt based on hope rather than track record if they choose to deposit with SCF.

If SCF do default what happens. Well clearly all depositors get their money - so no loss their. They can then take their loot and deposit it with someone who can make economic use of the cash. All borrowers still have their loans - so no immediate impact there so they can keep on running their business for a time. Someone will walk into SCF (possibly Sandy since he knows the business and has experience of Stat mans and receiverships) on behalf of the government and will be asked to extract as much value as possible from the business to refund the tax payer. The good loan book will be sold so all is well there. The bad book will get written off, Helicopter and scales will get sold at market value so business as usual there. The major loosers will be holders of SCFHA etc as there may not be enough in the pot to repay them.

If SCGHA holders don't get there money back should we have sympathy - from an economic development perspective. No. They would have perhaps been well advised to sell, take their loss and place the left over funds into a company that can make better use of them from an economic perspective. At the moment the only people benefiting from SCFHA are the punters and speculators who are playing the market rather than adding economic value.


Oh well, if Chris Lee is to be believed we'll know the Govts news today.

[Enumerate]

At the moment it appears that new money flowing into SCF is being used to pay off the wall of maturities" so it seems SCF probably aren't contributing , in a meaningful way to the new development of an economic south.


With a $1billion loan book - I am not sure their effective contribution is insignificant.

SCF are down sizing (from about $1.9b to about $1b). This will put pressure on business development - the difference between these two amounts is no longer available to fund productive enterprise. However, imagine if SCF were to collapse - the loss of the remaining $1b would be crippling. SCF have made very tidy profits on their historical core lending - an orderly return to this state creates no losers - a disorderly collapse would set rural NZ back 10 years.

[minimoke]

SCF are down sizing (from about $1.9b to about $1b).
Can we presume investors have $1.9b and they are choosing to give $1b to SCF leaving the other $.9b to go elsewhere. We might presume it could go to other finance companies (perhaps even a south island based one) who will invest, into bank deposits who will loan on houses and boats (just like SCF) or place it as direct capital into companies. Alternatively they may (as treasury has speculated) just stuff the cash under the mattress - but since this is already being done due to a lack of confidence perhaps its better to wipe the slate clean, set up a regulatory environment which has teeth and gives investors confidence so they get their cash back into circulation again.

[Beagle]

Ahhhhhh, a regulator with real teeth, wouldn't that be nice.

I am sure we are all aware of the forthcoming so called "super regulator" and I'm aware that the Securities Act is being re-written this year. Does anyone know how the Govt are getting on with the review of the Securities Act ?

Until this Act is thoroughly updated with proper and appropriate penalties, I think the Judges are hamstrung by such pathetic contraints as a maximum of 5 years imprisonment and a $300,000 fine, which will inevitably result in home D and a pathetic fine.

What we need to see is a maximum term of imprisonment of 20 years and a maximum fine of $100m, only then will their be a sufficient deterrant to serious Securities Fraud.

[minimoke]

Just wehn things were looking up!


SCF
20/08/2010
CREDIT

REL: 1729 HRS South Canterbury Finance Ltd

CREDIT: SCF: Lowered credit rating for South Canterbury Finance

20 August 2010

Lowered credit rating for South Canterbury Finance

South Canterbury Finance Limited acknowledged today that Standard & Poor's
has revised the Company's long term credit rating to CC, maintained the short
term rating at C and the outlook for both the long and short term credit
rating as Negative.

South Canterbury Finance Chief Executive Officer Sandy Maier says good
progress is now being made on the recapitalisation of the business with the
target of making an announcement on 31 August 2010.

"This will be of far more significance for all stakeholders and we would
anticipate that Standard & Poor's will want to undertake a review of the
Company's credit rating soon after."

"There is confidence amongst all parties involved in the recapitalisation
process that a favourable outcome can be achieved and that, following the
completion of that process South Canterbury Finance can continue to operate
as an active supporter of small and medium business enterprises."

"In the meantime, South Canterbury Finance is comfortable with its liquidity
position and continues to meet all obligations as they fall due."

South Canterbury Finance continues to enjoy the Crown's extended retail
deposit guarantee scheme which remains in place through to 31 December 2011.

"Nothing has, or will change, to alter the protection that eligible investors
enjoy under that scheme," Mr Maier says.

As a consequence of the change in credit rating, a memorandum amending the
Company's current prospectus will be registered as soon as possible.

Ends

Contact

Sandy Maier 021 163 3806
Chief Executive Officer
South Canterbury Finance Limited
End CA:00198649 For:SCF Type:CREDIT Time:2010-08-20:17:29:12

[Balance]

The downgrade effectively means SCF is a goner - unless it gets recapitalized next week.

[Beagle]

Just wehn things were looking up!


SCF
20/08/2010
CREDIT

REL: 1729 HRS South Canterbury Finance Ltd

CREDIT: SCF: Lowered credit rating for South Canterbury Finance

20 August 2010

Lowered credit rating for South Canterbury Finance

South Canterbury Finance Limited acknowledged today that Standard & Poor's
has revised the Company's long term credit rating to CC, maintained the short
term rating at C and the outlook for both the long and short term credit
rating as Negative.

South Canterbury Finance Chief Executive Officer Sandy Maier says good
progress is now being made on the recapitalisation of the business with the
target of making an announcement on 31 August 2010.

"This will be of far more significance for all stakeholders and we would
anticipate that Standard & Poor's will want to undertake a review of the
Company's credit rating soon after."

"There is confidence amongst all parties involved in the recapitalisation
process that a favourable outcome can be achieved and that, following the
completion of that process South Canterbury Finance can continue to operate
as an active supporter of small and medium business enterprises."

"In the meantime, South Canterbury Finance is comfortable with its liquidity
position and continues to meet all obligations as they fall due."

South Canterbury Finance continues to enjoy the Crown's extended retail
deposit guarantee scheme which remains in place through to 31 December 2011.

"Nothing has, or will change, to alter the protection that eligible investors
enjoy under that scheme," Mr Maier says.

As a consequence of the change in credit rating, a memorandum amending the
Company's current prospectus will be registered as soon as possible.

Ends

Contact

Sandy Maier 021 163 3806
Chief Executive Officer
South Canterbury Finance Limited
End CA:00198649 For:SCF Type:CREDIT Time:2010-08-20:17:29:12

They need not bother amending the prospectus, the fat lady is due imminently, Sandy won't get his $5m bonus and all his eloquent talk will amount to nought.

[Beagle]

Standard and Poor's has slashed South Canterbury Finance's credit rating by 5 notches to CC and has warned the Timaru-based finance company faces a default within 10 days because its cash balances have substantially diminished in recent weeks.
From another business website. Its almost always interesting to compare what S & P actually say with the "spin" Sandy puts on it. Here's the full text:-What S&P says


Standard & Poor's Ratings Services said today that it has lowered its long-term issuer credit rating on New Zealand finance company, South Canterbury Finance Ltd. (SCF) to 'CC' from 'B-'. The short-term issuer credit rating has been affirmed at ‘C'. At the same time, the issuer credit ratings remain on CreditWatch Negative where they were placed on June 21, 2010.

"The rating action reflects a material weakening of SCF's liquidity and cash position beyond what we anticipated when we lowered the issuer credit ratings to 'B-/C' and placed the ratings on CreditWatch Negative on June 21, 2010," Standard & Poor's credit analyst Peter Sikora said. "SCF's substantially diminished cash balance--which is now at a level that in our view may see the company seek additional liquidity support--reflects a combination of loan repayment delays and weaker-than-anticipated reinvestment experience and new debenture inflows. This rating action is despite SCF having some success in managing forward maturities over the past few months."

We noted on June 21, 2010, that the rating could be lowered if the likelihood of success in recapitalization efforts was materially delayed or compromised or if new credit concerns emerged. The weaker-than-expected cash and liquidity position and the lack of progress in recapitalization efforts--as the Aug. 31, 2010, covenant breach waiver deadline approaches--has compromised SCF's business viability without the successful progression of recapitalization plans over the next few weeks. Even if recapitalization plans are progressed, we understand that SCF will also require trustee approval and support to progress and execute recapitalization plans after Aug. 31, 2010, while it is still in breach of trust deed covenants. While the company is pursuing a range of recapitalization options, benefits from these initiatives would only be recognized in the company's ratings once they were sufficiently progressed and a comprehensive assessment was done.

A CreditWatch Negative listing by Standard & Poor's implies a one-in-two likelihood that the rating may be lowered within the next three months. The rating will be lowered to 'D' if SCF does not meet any of its repayment obligations in full and on time. The 'CC/C' ratings recognize that there is a strong possibility that SCF could default on its obligations within six months. The most likely scenario for default for SCF is an inability to progress recapitalization plans before the expiry of its trust deed waiver on Aug. 31, 2010.

We may stabilize SCF's rating and review the CreditWatch if the company successfully executes the recapitalization of its operations and receives the necessary support from all stakeholders implicated in any such recapitalization. This would help remedy SCF's trust deed breach and help strengthen the company's current weak liquidity position.

[Alan3285]

From another business website. Its almost always interesting to compare what S & P actually say with the "spin" Sandy puts on it. Here's the full text:-What S&P says

Where are you quoting from?

Alan.

[Romulus]

Alan,

Interest.co.nz is probably your best bet

Regards

[Beagle]

Where are you quoting from?

Alan.

Confirmed, the first quote was from interest.co.nz and was an extract from their article.

Here's a link to the second quote

http://www.depositrates.co.nz/news/976497166/south-canterbury-rating-cut-to-cc.html

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10668178

[Alan3285]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10668178



Another source said last week the deal could involve South Canterbury founder Allan Hubbard being required to relinquish all ownership of South Canterbury and associated companies.

The source understood in return Hubbard would not face any charges that may arise from the Serious Fraud Office investigation into his affairs initiated two months ago.


The Timuru Players present a Fictional Account of Events Moste Foul

{Enter Stage Left - Man in Dark Suit to sound of maniacal laughter}

{Present - Mr & Mrs H - Sitting alone in front of a small fire}

Man In Dark Suit:

'We can't find that you've done anything very wrong, although using paper rather than computers is not on, but we can't just back down, else Mr Min will look foolish.

So, if you want us to rescue the mill and actually keep it going, rather than letting it sink and having us bail out the cotton (holders), you have to let it be sold out from under you, and at the same time we'll drop the {cough} MANAGEMENT {cough}.

That way, it will *look* like we did a deal with you, dropped the investigation, and you agreed to give up mill in return, and we will be exonerated.'

{Family cat wanders in from stage right, and jumps up on Mrs H's knee}


"Sign here Mr H, or the cat gets it!"

{Maniacal laughter}

{Crash of thunder} {Flash of lightning}

{Curtain falls}

{End of Act 1}

[Danthetitan]

"South Canterbury Finance's substantially diminished cash balance - which is now at a level that in our view may see the company seek additional liquidity support - reflects a combination of loan repayment delays and weaker-than-anticipated reinvestment experience and new debenture inflows."
additional liquidity support = selling more loans at discounts?

[minimoke]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10668178

But waht does the first paragraph say

South Canterbury Finance chief executive Sandy Maier South Canterbury Finance chief executive Sandy Maier has reassured investors the business is on track to make an announcement about its recapitalisation by its August 31 deadline after a credit rating downgrade over its worsening cash position.

Its not hard to make an announcement - its the content of that announcement which will be important.

[winner69]

The Timuru Players present a Fictional Account of Events Moste Foul

{Enter Stage Left - Man in Dark Suit to sound of maniacal laughter}

{Present - Mr & Mrs H - Sitting alone in front of a small fire}

Man In Dark Suit:

'We can't find that you've done anything very wrong, although using paper rather than computers is not on, but we can't just back down, else Mr Min will look foolish.

So, if you want us to rescue the mill and actually keep it going, rather than letting it sink and having us bail out the cotton (holders), you have to let it be sold out from under you, and at the same time we'll drop the {cough} MANAGEMENT {cough}.

That way, it will *look* like we did a deal with you, dropped the investigation, and you agreed to give up mill in return, and we will be exonerated.'

{Family cat wanders in from stage right, and jumps up on Mrs H's knee}


"Sign here Mr H, or the cat gets it!"

{Maniacal laughter}

{Crash of thunder} {Flash of lightning}

{Curtain falls}

{End of Act 1}

Nice one Alan ..... but in your words a bit 'irresponsible' to get the cat involved

[Alan3285]

Nice one Alan ..... but in your words a bit 'irresponsible' to get the cat involved

Ah, but notee thee that myne was fictionale.

Catee is moste unhappy methinks.

Alan.

[minimoke]

Catee is moste unhappy methinks.


Its a Cat - not a dog. It'll be fine!

[Alan3285]

Its a Cat - not a dog. It'll be fine!

Thisee true methinks.

Yonder cat is a superior being, twilst dog is but a pathetic pooping contrivance.

[fungus pudding]

Its a Cat - not a dog. It'll be fine!


Ah, but you can turn a cat intgo a dog. Simply douse it with petrol - chuck a match at it - and it goes 'woof'! :D

[minimoke]

Ah, but you can turn a cat intgo a dog. Simply douse it with petrol - chuck a match at it - and it goes 'woof'! :D
This thread is clearly getting too long. We're all going barking mad!

[Beagle]

Ah, but you can turn a cat intgo a dog. Simply douse it with petrol - chuck a match at it - and it goes 'woof'! :D

LOL That's a terrible thing to say. One supposes that we are all impatient to hear the final outcome....

[fungus pudding]

LOL That's a terrible thing to say. One supposes that we are all impatient to hear the final outcome....

Also you can turn your dog into a cat - pop it into the freezer for a month or two. Pull it out and run it through a band saw and it goes'meeyow'.

[Danthetitan]

Also you can turn your dog into a cat - pop it into the freezer for a month or two. Pull it out and run it through a band saw and it goes'meeyow'.

I see how you get to 'Senior Member' status

[Beagle]

Also you can turn your dog into a cat - pop it into the freezer for a month or two. Pull it out and run it through a band saw and it goes'meeyow'.

Ha. ha, ha, that's funny and terrible all at the same time, especially as I have three dogs !...One suspects we are all bored....

[Beagle]

South Canterbury Finance Doubts it will meet NBDT Requirements
http://www.depositrates.co.nz/news/976497184/scf-doubts-it-will-meet-nbdt-requirements.html

Looks like SCF will need more special treatment on an on-going basis in the future, if they have one...

Disclosure of Interest. I have no financial interest in the above securities whatsoever and for that matter I'm very bearish on the market as a whole.

[westerly]

NZ Credit Securities are offering 20cents a share for $6m shares. They must have more confidence than
most on this thread ? (have a few)

Westerly

[Beagle]

Care to copy and paste their offer Westerly so we can have a look at the long list of terms and conditions.....

[Danthetitan]

NZ Credit Securities are offering 20cents a share for $6m shares. They must have more confidence than
most on this thread ? (have a few)

Westerly

Don't you know how they work? They offer a reasonable price, and buy a nominal amount, then send out a second offer that is much lower, to try to panic investors into accepting the second offer

[Danthetitan]

South Canterbury Finance Doubts it will meet NBDT Requirements
http://www.depositrates.co.nz/news/976497184/scf-doubts-it-will-meet-nbdt-requirements.html

Looks like SCF will need more special treatment on an on-going basis in the future, if they have one...

Disclosure of Interest. I have no financial interest in the above securities whatsoever and for that matter I'm very bearish on the market as a whole.

There we go, directors providing assumptions (presumptions) that they will raise capital, sell assets, get extensions, extensions, bail outs and concessions. How can those directors reasonably believe that the company will be able to perform its obligations when required to do so?

[Beagle]

There we go, directors providing assumptions (presumptions) that they will raise capital, sell assets, get extensions, extensions, bail outs and concessions. How can those directors reasonably believe that the company will be able to perform its obligations when required to do so?

LOL...because they believe they are "special" and too big to fail. There's little doubt they received special treatment when they gained access to the extended GG scheme, (the audited accounts for the six months ended 31 December 2009 wern't even out when the Govt gave them entry) so clearly they believe a precedent has been set for future "kid glove" treatment.

Either that or they are AWOL from normal commercial relality...which to be fair I doubt due to the calibre of the Directors, so clearly they've been told by the Govt wink, wink, we will do everything possible in our "POWER" to look after you if you can please, please, please organise a racapitalization.

[winner69]

LOL...because they believe they are "special" and too big to fail. There's little doubt they received special treatment when they gained access to the extended GG scheme, (the audited accounts for the six months ended 31 December 2009 wern't even out when the Govt gave them entry) so clearly they believe a precedent has been set for future "kid glove" treatment.

Either that or they are AWOL from normal commercial relality...which to be fair I doubt due to the calibre of the Directors, so clearly they've been told by the Govt wink, wink, we will do everything possible in our "POWER" to look after you if you can please, please, please organise a racapitalization.

and POWER helped the cause with the Stat Man saga as well

[minimoke]

LOL...because they believe they are "special" and too big to fail.

Once again the devil is in the detail of the media release
If an exemption is not granted, it may not be able to continue its current business activities..
Clearly so special they cannot function without a Deposit Guarantee, without a trust deed waiver and now an RB extension.

[Beagle]

Once again the devil is in the detail of the media release .
Clearly so special they cannot function without a Deposit Guarantee, without a trust deed waiver and now an RB extension.

And I believe if they are still in existence this time next week, (yes folks that's right, less than a week to go), it will only be because of yet another extension by the Trustee and / or a direct Govt capital introduction in one form or another...anyone betting on the Govt buying the so called bad bank as part of a proposed deal ? assuming there is one, which I seriously doubt.

SCF are "very very special" there's no doubt about that.

[Lizard]

Weird, I had just got a letter in the mail offering to buy SCFHA at 20cps... thought it was one of those scams... thought it would be 2cps... they only want 6,000,000... would have thought they'd have got them on market for average that over a few days....

Since it doesn't have a date deadline, I imagine it will still be legally binding if sent in after 31 August (provided the securities are able to be transferred)?

[Beagle]

Weird, I had just got a letter in the mail offering to buy SCFHA at 20cps... thought it was one of those scams... thought it would be 2cps... they only want 6,000,000... would have thought they'd have got them on market for average that over a few days....

Since it doesn't have a date deadline, I imagine it will still be legally binding if sent in after 31 August (provided the securities are able to be transferred)?

Hey Lizard, what are the conditions ?

[Balance]

Hey Lizard, what are the conditions ?

Heads they win, tails you lose?

If SCF gets recapitalised, they pay you 20c. Otherwise, the agreement is void.

[Lizard]

Actually, it only says they can withdraw the offer by notice printed in the public notices of the New Zealand Herald...

Though not sure if that means there is an obligation on them to actually accept any shares that are offered before the date on which such a notice is published. And, since the amounts involved are probably too big for disputes and too small to pay lawyers, would be a tough argument. So perhaps Balance is right - if things go well for SCF, the shares will be purchased... if not, an ad will probably appear in the Herald next week and any queries will be brushed off.

[Beagle]

Actually, it only says they can withdraw the offer by notice printed in the public notices of the New Zealand Herald...

Though not sure if that means there is an obligation on them to actually accept any shares that are offered before the date on which such a notice is published. And, since the amounts involved are probably too big for disputes and too small to pay lawyers, would be a tough argument. So perhaps Balance is right - if things go well for SCF, the shares will be purchased... if not, an ad will probably appear in the Herald next week and any queries will be brushed off.

In other words its blatent theft...if they're sucessfully recapitalised the pref shares will be worth way more than 20 cents, perhaps as much as 50 cents...just another scum bag parasite trying to steal shares off unsuspecting, ill-informed or misguided victims, as if they havn't sufferred enough allready....

[Lizard]

Yes, might be interesting to get a legal opinion on that clause... time to call a friend? :)

[Beagle]

Heads they win, tails you lose?

If SCF gets recapitalised, they pay you 20c. Otherwise, the agreement is void.

On another subject....I hope you don't mind, the 3 guard dogs were getting tired and I had to give them a rest. I was scared of the Piker lynch mob attacking and i'd heard a rumour that the stoats in the mine were helping by chewing off peices of coal, so I thought if you can't beat em.....

[minimoke]

Weird, I had just got a letter in the mail offering to buy SCFHA at 20cps...
Is that the one from Bernard Whimp?

[Beagle]

Is that the one from Bernard Whimp?
Yeah. Chris Lee said in his weekly online newsletter today that he wouldn't sell an applecore to that guy, or words almost to that effect.

Only 3 business days to go before the next financial nuke goes off...tick tock.
Anyone noticed Enumerate has been very quiet lately..perhaps he's exaughsted from trying to talk the market in pref shares up and been too busy selling before the bomb drops ?

[Enumerate]

Roger repeats his uniformed drivel and has now decided to extend his repertoire to accuse me of a crime - ramping.

[minimoke]

Only 3 business days to go before the next financial nuke goes off...tick tock.

Actually one - and not a nuke but a potential shell all teh same. we should here from the Stat Man on Friday a bit more about Aorangi.

[minimoke]

Just out:
"About 300 investors in Hubbard Management Funds (HMF) have been told by statutory managers that the reported value of their investments at March 31 was overstated by at least 25 percent.

In their second report, statutory managers Richard Simpson and Trevor Thornton of Grant Thornton New Zealand also warned today that investors in another company operated by Timaru businessman Allan Hubbard, Aorangi Securities Ltd, may suffer a loss in their investments."

[Alan3285]

Just out:
"About 300 investors in Hubbard Management Funds (HMF) have been told by statutory managers that the reported value of their investments at March 31 was overstated by at least 25 percent.

In their second report, statutory managers Richard Simpson and Trevor Thornton of Grant Thornton New Zealand also warned today that investors in another company operated by Timaru businessman Allan Hubbard, Aorangi Securities Ltd, may suffer a loss in their investments."

Hi MiniMoke,

Is the report online somewhere?

Where are you getting that from?

Thanks,

Alan.

[GTM 3442]

Try the NZ Herald:

"In the case of Aorangi, an underlying problem we are dealing with is that Mr Hubbard has allowed Aorangi to accept deposits of about $96 million from investors on call, but he invested those funds in investments or loans which are nearly all long term in nature."

[fungus pudding]

Hi MiniMoke,

Is the report online somewhere?

Where are you getting that from?

Thanks,

Alan.

http://www.sharechat.co.nz/article/d9dd3e0c/hubbard-funds-over-valued-by-25-report.html

[minimoke]

Hi MiniMoke,

Is the report online somewhere?

Where are you getting that from?

Thanks,

Alan.
The news will come out more during the day as analysts get their hands on the report. But heres the next update:
Serious Fraud Office boss Adam Feeley expects to reveal next week the next step in his investigation of Allan Hubbard’s Aorangi Securities and a group of trusts associated with the Timaru businessman and his wife Jean.

Feeley has received a report, including complex wiring diagrams constructed by the SFO’s investigators from Companies Office records and other public documents, which analyses Hubbard’s 400 interwoven directorships.

"It is an extremely challenging case in terms of the range of issues we are looking at. It’s public knowledge that Mr Hubbard wasn’t one for technology so most of this stuff has had to be reconstructed from source documentation,” he says.

"The idea we are looking at one company which currently has two directors and two shareholders is just so far removed from reality. This is a case that is so complex that the perspective on it changes every time we get new information."

The government seized control of Aorangi on 20 June and appointed accounting firm Grant Thornton as statutory manager. At the same time, the SFO began its own investigation. Aorangi had collected $98 million from about 400 investors, largely from Otago and Canterbury. Cash-strapped South Canterbury Finance, in which Hubbard is the major shareholder, is not included in the statutory management.

The investigations have created a public outcry among Hubbard’s supporters, who see no good coming from a probe into a sick, elderly man who, so far, does not appear to have lost a cent of investors’ funds.

"That’s unsurprising and understandable but we’ve got to deal in facts," Feeley says.

"We went in there on the basis that there was a reasonable belief that offences of serious and complex fraud may have been committed. We are looking at potential Crimes Act offence.

"That’s a far cry from saying there is sufficient evidence of a crime which would justify charges being laid. But, equally, we’re not going in on a whim. There have been a lot of comments in the media that all we are looking at is whether the paperwork is there and whether the Securities Act and the Securities Regulations are being complied with.

"Those are not the things we look at. That’s not fraud. If they were the only issues, we wouldn’t be there. Other regulators would be dealing with this."

[Alan3285]

http://www.sharechat.co.nz/article/d9dd3e0c/hubbard-funds-over-valued-by-25-report.html

Sounds like ING!

Alan.

[fungus pudding]

Sounds like ING!

Alan.

Or Madoff junior ?

[minimoke]

http://www.sharechat.co.nz/article/d9dd3e0c/hubbard-funds-over-valued-by-25-report.html

Oh dear - that makes tragic reading. Those poor investors who rely on AH have been duped. How could you in good conscience put Grannies on-call cash into a long term farm mortgage with no income to pay the interests. And what about "those statements included investments and cash balances, which did not exist." Money going into venture capital, unlisted companies and trusts that don't pay interest - your sophisticated Timaru investor had no idea!

So where to from here. That is a huge dent in the SCF brand. Today Sandy needs to cut all ties with AH. The "President for Life" has to go. The controlling shareholding has to change. Any mention of AH involved in negotiations with new equity need to go. The cat is back on Jelly meat.

[CJ]

Or Madoff junior ?


"HMF has deposits of about $82 million and is invested in public company shares, venture capital funds and unlisted companies. The total value of HMF is at least 25 per cent less than reported by Mr Hubbard to investors in the March 31 statements this year.

"The reason for this is that some of those statements included investments and cash balances, which did not exist."

The value of the fund was likely to have suffered further losses since the end of March, from a the weakness in markets, the managers said.

"The investment profile is not consistent with what would be appropriate for a typical investor in HMF. There is a lack of blue chip investments and the composition of the fund's portfolio generally means that the fund is high risk in nature."
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10669199

This does not look good.

edit: i just read the report. AS is riddled with related party loans. Loans to farms seem questionable and the loan to the charitable trust of $24m appears to be secured over interest free loans which need to be written down to $9m.

From reading the report, I think it is fair to say AH equity in both of these entities has been wiped out.

[fungus pudding]

This does not look good.



http://www.nbr.co.nz/files/Aorangi%20and%20Hubbard%20Statutory%20Managers%20R eport%20FINAL.pdf

[minimoke]

From reading the report, I think it is fair to say AH equity in both of these entities has been wiped out.
You're assuming of course AH actually had equity in there and if he really does have $40m on hand

[minimoke]

Sounds like ING!

Alan.

Also sounds like Huljich Kiwisaver where he propped up the fund value

[fungus pudding]

You're assuming of course AH actually had equity in there and if he really does have $40m on hand

If in fact he was ever Sth Island's wealthiest man, as many claimed over the years.

[Beagle]

http://www.goodreturns.co.nz/pics/R100826_Aorangi_and_Hubbard_Statutory_Managers_Rep ort_FINAL.pdf

Full Report...I don't think I need to add anything to what's been said other than its a sad day for AH supporters

[minimoke]

its a sad day for AH supporters
Bugger the supporters!. Its the investors I feel very sad for. Heres just another example of a financier using other peoples money for his own ends and being very frugal and creative with the truth. These people are just wolves dressed up as sheep (or in this case perhaps cows) and unfortunately the human flock exhibit similarities to the sheep flock.

[Alan3285]

Also sounds like Huljich Kiwisaver where he propped up the fund value

Yes - you could be right.

If so, very sad.

Alan.

[Balance]

Very very sad day for the people of Timaru.

There will be a lot of soul-searching by those who have been helped by Hubbard and to their credit, have rallied in support of him. There is no shame in what they did - they were simply misled and misguided.

[Beagle]

Bugger the supporters!. Its the investors I feel very sad for. Heres just another example of a financier using other peoples money for his own ends and being very frugal and creative with the truth. These people are just wolves dressed up as sheep (or in this case perhaps cows) and unfortunately the human flock exhibit similarities to the sheep flock.

Yeah that's more than fair comment. I think its sad all round. Ah has been caught out by the GFC, his stratagy of building wealth through very high leverage simply doesn't work in this new economic environment. The vast array and exponential growth in related party transactions shows he's been putting out scrub fires since the GFC began.

We can all learn some lessons from this extremly sad situation.
1. Keep proper records.
2. Don't B.S. people, the truth always comes out.
3. Don't run highly leveraged positions, especially as you get older.
4. Don't give money away that isn't yours.
5. Retire in good time, no point being a workaholic till the day you die.

Anyone care to add to the list ?

BTW What's the bet that lots of SCF lending is of a similar calibre to Aorangi and HUbbard Funds Management ?

Another financial nuke bomb about to be dropped on 31 August regarding write-downs anyone ?

Perhaps another loss of $200m to add to the first six months of the same amount ?

[Romulus]

Trading Halt of SCF010 etc by the exhange pending material announcement from SCF

[winner69]

Ah so ... is it the Chinese money arrived Roger?

[minimoke]

Trading Halt of SCF010 etc by the exhange pending material announcement from SCFIf only we had time to hold a Poll. Either Sandy has got teh Equity or he hasn't. I'm inclined to think the Aorangi news today will be enough to scare off the remaining keen parties. The SCF brand is irrepairably damaged.

[Beagle]

Ah so ... is it the Chinese money arrived Roger?

We'll know soon enough.

[Balance]

If only we had time to hold a Poll. Either Sandy has got teh Equity or he hasn't. I'm inclined to think the Aorangi news today will be enough to scare off the remaining keen parties. The SCF brand is irrepairably damaged.

Makes sense now for the Crown to take over ownership of SCF - like in Air NZ.

[Alan3285]

Makes sense now for the Crown to take over ownership of SCF - like in Air NZ.

That would not be such a bad outcome overall (given the alternatives).

Doesn't have to be 100% (I think AirNZ was left 10-15% in private hands?)

Alan.

[minimoke]

Makes sense now for the Crown to take over ownership of SCF - like in Air NZ.
Why? Air NZ was essentially the only air carrier in NZ at the time with some iconic/ national status. There are no shortage of financial institutions investors can place there money in or loan from. From a public policy perspective the consumer still has a lot of choice. I think Govt intervention will be unpalatable - what about the Hanover / Bridgecorp investors. What gives SCF Special Status? Air NZ still had a robust brand - SCF (despite Sandy's best efforts) is in tatters.

The Aorangi Stat Mans are encouraging farmers to seek alternative lending facilities - interestingly at lower rates than they are currently paying.

Put in the receivers and see what value they can extract to re-imburse the tax payer for the Deposit Guarantee.

[Balance]

Why? Air NZ was essentially the only air carrier in NZ at the time with some iconic/ national status. There are no shortage of financial institutions investors can place there money in or loan from. From a public policy perspective the consumer still has a lot of choice. I think Govt intervention will be unpalatable - what about the Hanover / Bridgecorp investors. What gives SCF Special Status? Air NZ still had a robust brand - SCF (despite Sandy's best efforts) is in tatters.

The Aorangi Stat Mans are encouraging farmers to seek alternative lending facilities - interestingly at lower rates than they are currently paying.

Put in the receivers and see what value they can extract to re-imburse the tax payer for the Deposit Guarantee.

Hanover/Bridgecorp did not have a govt guarantee - SCF does. So the government is on the hook anyway.

Take out the property development loans and SCF has been a good financial institution for small Island businesses and companies over the years.

The trading banks are certainly not prepared to do that business - equipment leasing etc.

[Balance]

Hubbard report an eye opener

Duncan Bridgeman | Friday August 27, 2010 - 11:09am

Say what you like about the process by which Allan Hubbard, his wife Jean and their associated entities were placed into statutory management but the evidence presented today appears to provide ample justification for the move.

The second report, released this morning, should be an eye opener for those investors in Aorangi Securities and Hubbard Funds Management who appeared unconcerned by the lack of paperwork and security over loans uncovered in the first report.

Their “blind faith” has been torn apart by the allegations of Grant Thornton’s investigators Richard Simpson and Trevor Thornton.

This report is ultra damning for those investors with a combined $83 million tied up in Hubbard Funds Management with concerns that investments in the form of cash and shares never existed and investments were significantly overstated.

The overall theme of false accounting, misleading investors, poor accounting records and asset shifting are remarkable claims against a man who started business as an accountant 60 years ago.

How much of this management style was bedded into South Canterbury Finance over the years can only be speculated on but it surely underscores the difficulties that firm has found itself in today. South Canterbury securities are currently in a trading halt pending a material announcement.

In Aorangi Securities, Mr Hubbard has staked investor funds in the dairy industry and other commercial entities, many of which he is, or was, the major shareholder.

Aorangi received $96 million from individual investors and in turn, invested $130 million in farming entities, the Te Tua Charitable Trust and other commercial entities.

In March this year, Mr Hubbard had to mortgage his own assets and introduce his own cash to make the March interest payments, according to the report.

This could be seen as an honourable move on Mr Hubbard’s part, unlike some of the controlling shareholders of finance companies which went down the gurgler.

Mr Hubbard has also pledged to investors that his investment in Aorangi could be used to help offset any potential losses.

But the facts purported in the statutory managers report go beyond a simple case of Mr Hubbard making good on any losses.

Take Aorangi’s loan to Te Tua Trust. The loan of $24 million appears to be secured over interest free loans to farmers to give them a “helping hand” in their early years.

The loans are typically repayable in equal instalments of principal over a period of five to seven years, often with an initial repayment holiday.

These loans are likely to be written down to just $9 million, according to the report.

A further $59 million of Aorangi money was invested through 51 loans to 25 dairy farms, many of which are struggling financially.

The statutory managers believe only 17 of the 51 loans and investments will be able to meet their full interest obligations due in September.

A further $23 million was invested in other commercial entities, including $10 million into Southbury Group, a company that Mr Hubbard is the major shareholder.

The remaining $13 million are mainly in first and second mortgages to a range of businesses.

As Grant Thornton notes, the way these investments have been structured is “far from ideal” in terms of how it was presented to investors.

"There is an alarming gap between the income Aorangi is presently receiving from its loans and investments and the amount it needs to pay out to its investors," the report adds.

The situation is unlikely to get any better for investors.

The next update will come from the Serious Fraud Office.

[minimoke]

Take out the property development loans and SCF has been a good financial institution for small Island businesses and companies over the years.


But if there are bits of SCF that look like Aorangi the these business are highly geared, supported by second tier loans with seasonal and fluctuating income and assets which have no or little demand should they need to be liquidated. Add to that capitalised interest on depreciating assets in a market that will recover - but not necessarily quickly. Why should the tax payer be involved. Let them go to the banks for cash and let their financial position speak for itself. If not the banks then head over to Marac or somewhere for the equipment leasing. If these people can't get money from a variety of traditional sources why should th tax payer support their obviously high risk business?

If there is a good book - flog it off and use the cash to repay the tax payer for the Govt Guarantee. Likewise for Helicopters and Scales. Since when should the taxpayer get involved in a helicopter Business - it ain't no Air NZ. If I want a part of Helicopters I''ll buy shares. If I don't why should my elected representatives have a dabble - jeez they can't even flog off the Skyhawks.

Most taxpayers have to be in a sufficiently finacially sound position to borrow money. What makes South Island dairy farmers so special?

[Balance]

But if there are bits of SCF that look like Aorangi the these business are highly geared, supported by second tier loans with seasonal and fluctuating income and assets which have no or little demand should they need to be liquidated. Add to that capitalised interest on depreciating assets in a market that will recover - but not necessarily quickly. Why should the tax payer be involved. Let them go to the banks for cash and let their financial position speak for itself. If not the banks then head over to Marac or somewhere for the equipment leasing. If these people can't get money from a variety of traditional sources why should th tax payer support their obviously high risk business?

If there is a good book - flog it off and use the cash to repay the tax payer for the Govt Guarantee. Likewise for Helicopters and Scales. Since when should the taxpayer get involved in a helicopter Business - it ain't no Air NZ. If I want a part of Helicopters I''ll buy shares. If I don't why should my elected representatives have a dabble - jeez they can't even flog off the Skyhawks.

Most taxpayers have to be in a sufficiently finacially sound position to borrow money. What makes South Island dairy farmers so special?


Minimoke, matey - I agree with your sentiments 100% but it's a question now of limiting the loss to taxpayers.

I believe taxpayers are best served by SCF being owned by the Crown. Like Air NZ, it will be managed by professional managers, not someone from the government.

[Anna Naum]

http://www.nzx.com/news/4067597/SCF-in-trading-halt-talk-of-new-investor

[Beagle]

Minimoke / Balance I believe there is a case to be made for the logic in the Govt assisting with what appears might be a forthcoming announcement regarding re-capitalizing SCF. I would speculate an interested party wouldn't want the so called bad bank and part of the process that I've been hinting at for the last while is it could be in the Govt's interests purely from a loss mitigation perspective to assist the execution of a transaction, if they take over the bad bank.

Seems to make sense to me as otherwise they're on the hook good and proper for the whole lot.

[minimoke]

Minimoke, matey - I agree with your sentiments 100% but it's a question now of limiting the loss to taxpayers.

I believe taxpayers are best served by SCF being owned by the Crown. Like Air NZ, it will be managed by professional managers, not someone from the government.
Hasn't Treasury already got around $850m provisioning for net loss under the Deposit Guarantee. National Finance have just taken $130m gross of that . SCF would clearly be a big gross hit - but there is some value in there to reduce the tax payer overall exposure.

[minimoke]

Minimoke / Balance I believe there is a case to be made for the logic in the Govt assisting with what appears might be a forthcoming announcement regarding re-capitalizing SCF.
Suspect that might well be the case - though I'm reminded the Govt wouldn't do it when Fisher and Paykel were in strife.

[Beagle]

Suspect that might well be the case - though I'm reminded the Govt wouldn't do it when Fisher and Paykel were in strife.

I hear you, but clearly in this case the Govt have a "direct and significant" financial incentive to mitigate losses. One might suspect that they want to keep as much of that $850-900m provisioning intact as possible, even though 12 October is'nt that far away i'd be surprised if there wasn't one or two other NBDT's affecting that provisoning before then.

[Alan3285]

Say what you like about the process by which Allan Hubbard, his wife Jean and their associated entities were placed into statutory management but the evidence presented today appears to provide ample justification for the move.

Yet another one who seems to think that the ends justify the means.

I hope that one good thing that comes out of this fisco is that the process around statutory management is made more transparent.

A few people sitting in a 'smokey room' making a decision - one of them whose brother failed to make good on his obligations to SCF and got pinged for it - is not good enough.

Alan.

[Wolfman]

I hear you, but clearly in this case the Govt have a "direct and significant" financial incentive to mitigate losses.

They may but this whole empire needs to be sorted out, letting market forces prevail. The decks awash with cash, in the past, have distorted the local farming community both financially and environmentally and the chips must now fall where they may.

The 'too big to fail' mentality has not worked in the States and it won't here !

[macduffy]

I'd normally agree with that, Wolfman, but in this case, the Govt went beyond market forces when it introduced the deposit guarantee scheme. It now has a duty to taxpayers to mitigate that cost, as Roger points out.

[Billy Boy]

Further to macduf's comments
The politicial angle must play a role here.....
Cantabs are a very loyal lot and SCF is one of their hero,s
The rural community is very close and SCF is part of that.
Note how the folks howled when they thought Allan might
go to the wall. Regardless of right or wrong
A hell of a lot of Tory vote comes from here and if SCF
was allowed to go under, then there is a big number of Coy's
and voters will go with them.
Canty is still a place of hand shakes and your word signs a deal.
BB
BB

[Danthetitan]

Further to macduf's comments
The politicial angle must play a role here.....
Cantabs are a very loyal lot and SCF is one of their hero,s
The rural community is very close and SCF is part of that.
Note how the folks howled when they thought Allan might
go to the wall. Regardless of right or wrong
A hell of a lot of Tory vote comes from here and if SCF
was allowed to go under, then there is a big number of Coy's
and voters will go with them.
Canty is still a place of hand shakes and your word signs a deal.
BB
BB

Today's the day the Hubbard loyalists laid down their guns and surrendered. The politics changed today from why are you chasing this old man to why didn't you do more or act sooner?

[Beagle]

Today's the day the Hubbard loyalists laid down their guns and surrendered. The politics changed today from why are you chasing this old man to why didn't you do more or act sooner?

Yeah it hasn't gone unnocticed that the resident cultist (Enumerate) has gone to ground.

Come out of your hole Enumerate and let's see how you defend your man now !!

[Billy Boy]

Today's the day the Hubbard loyalists laid down their guns and surrendered. The politics changed today from why are you chasing this old man to why didn't you do more or act sooner?
:confused::confused:
I,m a Southlander ( you know !! Randfurley sheild country)
Read my post again.... in the way i intended it to be read.
cheers BB:)

[minimoke]

Canty is still a place of hand shakes and your word signs a deal.

That world is shrinking - not so many hands as a couple of decades ago. Sure theres a few votes in it - but there will be more in annoyed Hanover / Bridgecorp investors who will see themselves as not Special enough.

[Wolfman]

Canty is still a place of hand shakes and your word signs a deal.
BB

Not sure where that puts one in the ranking of creditors 'tho !

The bottom line appears to be that some people have put up some money and others have been advanced it on pretty easy terms. Now that the counting has started, it may be that it's not there to pay back !



Cantabs are a very loyal lot and SCF is one of their hero,s
The rural community is very close and SCF is part of that.
BB

We'll see just how loyal they are !

[Balance]

Yeah it hasn't gone unnocticed that the resident cultist (Enumerate) has gone to ground.

Come out of your hole Enumerate and let's see how you defend your man now !!

Time to let go, Roger.

Enumerate is suffering from deep shock. I feel sorry for him - I really do.

He had so much faith in AH and so little trust that Simon Power, John Key, the government, Securities Commission, Companies Office and SFO had strong and worrying grounds to act decisively against AH.

There will be many investors out there who are relieved that they did not become victims of the "use Paul to pay John' money scheme run by AH. There are already enough victims in Aorangi & HFM. More were being lined up if AH was not put into SM.

[Billy Boy]

That world is shrinking - not so many hands as a couple of decades ago. .
I hear what you say....
A friend and I were at a bull sale a few months back.
Like insider trading,
It would appear both are alive and well

[fungus pudding]

Time to let go, Roger.

Enumerate is suffering from deep shock. I feel sorry for him - I really do.

All is well after all. Just heard Paul Carruthers interviewed on the radio - and the investigation is just a crock. No evidence. He said so - so there!

[Wolfman]

I should say that I am really referring to Aorangi Securities, HFM et al as described in today's report.

[Beagle]

Time to let go, Roger.

Enumerate is suffering from deep shock. I feel sorry for him - I really do.

He had so much faith in AH and so little trust that Simon Power, John Key, the government, Securities Commission, Companies Office and SFO had strong and worrying grounds to act decisively against AH.

There will be many investors out there who are relieved that they did not become victims of the "use Paul to pay John' money scheme run by AH. There are already enough victims in Aorangi & HFM. More were being lined up if AH was not put into SM.

Fair comment mate. I guess if you have been on the receiving end of one of Alan's friendly loans its hard to be objective.

[minimoke]

All is well after all. Just heard Paul Carruthers interviewed on the radio - and the investigation is just a crock. No evidence. He said so - so there!
Perhaps he's confusing the Stat Man efforts with those of the SFO.

To spell things out simply:
- Hubbard Management Funds reported value has been overstated by at least 25% with further losses likely
- HMF statements include investment's and cash balances that do not exist.

- Aorangi securities accepted on-call money and placed it in long term "investments"
- Aorangi investments are in farms, and some commercial entities which are of poor quality and do not generate enough interest to pay investors
- $10m in Aorangi went to Southbury
- $59m went to farms associated with AH
- $24m went to Te Tua Trust and they can't make their interest payments to Aorangi
- Te Tua has lost $10m with another $5m on the cards
- Aorangi money went into non-interest bearing trusts
- Many Aorangi investment's rank behind all other creditors.

Paul needs to take off those rose tinted glasses!

[fungus pudding]

Perhaps he's confusing the Stat Man efforts with those of the SFO.

To spell things out simply:
- Hubbard Management Funds reported value has been overstated by at least 25% with further losses likely
- HMF statements include investment's and cash balances that do not exist.

- Aorangi securities accepted on-call money and placed it in long term "investments"
- Aorangi investments are in farms, and some commercial entities which are of poor quality and do not generate enough interest to pay investors
- $10m in Aorangi went to Southbury
- $59m went to farms associated with AH
- $24m went to Te Tua Trust and they can't make their interest payments to Aorangi
- Te Tua has lost $10m with another $5m on the cards
- Aorangi money went into non-interest bearing trusts
- Many Aorangi investment's rank behind all other creditors.

Paul needs to take off those rose tinted glasses!

Undioubtedly. He was a real laugh. Stand him in a downpour and he'd swear black and blue it wasn't raining.

[GTM 3442]

Further to macduf's comments
The politicial angle must play a role here.....
Cantabs are a very loyal lot and SCF is one of their hero,s
The rural community is very close and SCF is part of that.
Note how the folks howled when they thought Allan might
go to the wall. Regardless of right or wrong
A hell of a lot of Tory vote comes from here and if SCF
was allowed to go under, then there is a big number of Coy's
and voters will go with them.
Canty is still a place of hand shakes and your word signs a deal.
BB
BB

Not a lot of votes down south.

[Enumerate]

Yeah it hasn't gone unnocticed that the resident cultist (Enumerate) has gone to ground.

Come out of your hole Enumerate and let's see how you defend your man now !!

The lynch mob has heard one side of the story and is prepared to return a guilty verdict (or at least execute mob justice).

It is usual, in our system of justice, to have both sides of a case argued. As far as I am aware, the Statutory Manager has not even spoken to Allan Hubbard. How could this "evidence" be accepted, by so many, when it is many months in the preparation by a hostile entity looking to "nail" Hubbard.

Most on the thread have not read (or at least understood) the report. Most loud drunken opinion aired today reflects the "headline" and not the substance.

In our system of justice, it is conventional to have an accused actually charged with something. The lynch mob on this thread completely overlooks there have been no charges laid and hence no charges to answer.

IT IS A COMPLETE SCANDAL THAT THE SFO SEEMS TO BE JUSTIFYING STATUTORY MANAGEMENT BY "PLAYING" PUBLIC OPINION AGAINST ALLAN HUBBARD.

THE SFO HAS IRREPARABLY DAMAGED ALLAN HUBBARD'S BUSINESS AND REPUTATION WITH NO RIGHT OF REPLY OR ABILITY FOR HUBBARD TO FACE HIS ACCUSERS.

ADAM FEELEY IS A COWARD

SIMON POWER WILL ANSWER AT THE NEXT ELECTION

Those weak minded fools on this thread who are prepared to execute their form of justice without any reasonable due process have earned my everlasting contempt. If I want the opinion of a drunken rabble - I will certainly know where to come. However, it is the death of our system of justice that really concerns me. Minister Power certainly has alot to answer for on this.

[Balance]

LOL - Why do I get the feeling that Paul Carruthers and Enumerate are the same person?

Did you guys see the sun shining ever so brightly at 3.00am last night? In fact, last night was daytime.

[Danthetitan]

totally unverified from Stand by Hubbard
Friday 27th August 2010
Yesterday the board of South Canterbury Finance received two
investment offers, the first of which was significantly higher than the
other offer.
The higher offer was declined by the board of South Canterbury Finance in favour of the significantly lower offer.
...The higher offer, which was significantly higher than the offer the
board of South Canterbury Finance accepted, would have been very
beneficial to South Canterbury Finance and its Investors.
We fail to understand how or why the board of South Canterbury Finance arrived at this decision.

[Balance]

totally unverified from Stand by Hubbard
Friday 27th August 2010
Yesterday the board of South Canterbury Finance received two
investment offers, the first of which was significantly higher than the
other offer.
The higher offer was declined by the board of South Canterbury Finance in favour of the significantly lower offer.
...The higher offer, which was significantly higher than the offer the
board of South Canterbury Finance accepted, would have been very
beneficial to South Canterbury Finance and its Investors.
We fail to understand how or why the board of South Canterbury Finance arrived at this decision.

Delusional is too gentle a word to describe some of the characters on that site!

[winner69]

I don't know whether to laugh or cry but seeing Hubbard scuttling away from the TV cameras yelling 'Bugger off and leave me alone' just showed what a circus this has become .... but we see that sort of behaviour on TV every second night or so when the journos try to talk to the those running away from the cameras outside the court

[winner69]

Anyway I'm glad that whatever way SCF goes next week the Stat Man has done a great job ... Sandy could not made as much progress without his help

[Marilyn Munroe]

Balance said;

"Delusional is too gentle a word to describe some of the characters on that site!"

To face reality means admitting that you were wrong, and that you will never see any of your money again. Some people find that difficult to face up to.

It is a very human failing, and one in the investment sphere that will cost people dearly.

My actions in these situations is to follow the American saying, "If you are going to panic make sure you panic first".

Boop boop de do

Marilyn

[Balance]

totally unverified from Stand by Hubbard
Friday 27th August 2010
Yesterday the board of South Canterbury Finance received two
investment offers, the first of which was significantly higher than the
other offer.
The higher offer was declined by the board of South Canterbury Finance in favour of the significantly lower offer.
...The higher offer, which was significantly higher than the offer the
board of South Canterbury Finance accepted, would have been very
beneficial to South Canterbury Finance and its Investors.
We fail to understand how or why the board of South Canterbury Finance arrived at this decision.

Ah - now the picture emerges! AH wants taxpayers to take over $800+ of bad assets and for the 'good bank' to be recapitalised by $350m of equity.

If the deal involves taxpayers not being liable from there on to cover investors' deposits, the deal does make some sense.

Knowing the nature of the beast, it is more likely that AH & new shareholder want to have their cake and eat it - have taxpayers take over the bad assets and still guarantee deposits.

That's my reading.

Government won’t help, says Allan Hubbard

Friday, 27 August 2010, 7:54 pm
Article: Businesswire
Government won’t help, says Allan Hubbard

By Pattrick Smellie

Aug. 27 (BusinessDesk) – The fate of South Canterbury Finance hangs in the balance this weekend, with just four days until a waiver on its trust deed expires next Tuesday, Aug. 31.

According to Hubbard himself, the issue is whether or not the government will support a rescue package that creates a “bad bank” to take on SCF’s dud assets, and the Treasury is advising it should not.


"We thought they would take up a bad bank offer,” Hubbard told BusinessDesk. “They have to make a decision over the weekend.”

The issue will reportedly go to the Cabinet next Monday, Aug. 30, for consideration because SCF is covered by the government’s bank deposit guarantee scheme, rather than because Hubbard and his wife, Jean, were placed under statutory management in June, a rare use of the draconian legal process that allows state control of private assets.

Hubbard said tonight the Treasury is advising against the taxpayer taking up the liabilities of SCF’s non-performing assets. Yet this is a crucial element of the bail-out proposal favoured by the statutory managers, Grant Thornton, Hubbard says.

The bid was “contingent on the government making a contribution toward a bad bank and they rejected that,” Hubbard said.

“The people running the process favoured this first bid even though it was a lower number,” said Hubbard. “I don’t know the reason for that.”

He declined to name either the favoured bidder or the bidding party he wants to bring to the table.

“That would be difficult.”
Hubbard told BusinessDesk tonight that he still hoped to help recapitalise SCF through the unidentified foreign bidder, whom fervent Hubbard supporters say is offering $300 million.

Hubbard hoped, if a deal was in the wind, that Trustees Executors, the trustee, might give a few days’ further extension to a waiver on a breach of the trust deed that has been running since March, and reflects the distress in the Hubbard financial empire.

Hubbard’s supporters also say the favoured bid is offering only $150 million, half the amount available from Hubbard.

“Yesterday the board of South Canterbury Finance received two investment offers, the first of which was significantly higher than the other offer,” Paul Carruthers, head of the “Stand by Hubbard” campaign said in an email.

“The higher offer was declined by the board of South Canterbury Finance in favor of the significantly lower offer.

“The higher offer, which was significantly higher than the offer the board of South Canterbury Finance accepted, would have been very beneficial to South Canterbury Finance and its investors,” Carruthers claimed.

The SCF empire is not part of the Hubbards’ personal statutory management, although its fortunes are closely tied to Hubbard’s. Corporate resuscitator Sandy Maier is chief executive of SCF now, and focused on getting a new capital partner into SCF ahead of next Tuesday’s deadline.

SCF bonds and preference shares, listed on the NZDX, were placed on trading halt earlier today pending an announcement about a new and unidentified investor.

Sources close to the process ruled out South Island investor George Kerr and his Torchlight group, who last month confirmed they had raised $150 million to take advantage of stressed company opportunities, and which already have substantial exposure to SCF through a series of capital support payments over the last year.

Hubbard himself scotched rumours running among his many supporters that Russian investors were involved. “Not Russian,” he said, declining to identify the nationality of the proposed investor. The Russian suggestion is credible because of Hubbard’s long association with supplying Russian Antarctic bases, using ice-breaker ships and the helicopter fleet in which Hubbard still has interests.

Officials in the office of Justice Minister Simon Power, who invoked the statutory management, directed BusinessDesk inquiries to the office of Finance Minister Bill English as the Minister responsible for issues relating to the deposit guarantee scheme.

Maier had not returned calls from BusinessDesk at time of filing.

[Billy Boy]

Not a lot of votes down south.

Geeez man !!!! where the hell have you been all your life ????
Southland is sooooo blooody blue they've run outta blue paint.
BB

[fungus pudding]

Geeez man !!!! where the hell have you been all your life ????
Southland is sooooo blooody blue they've run outta blue paint.
BB

Not many people = not many votes.

[GTM 3442]

Geeez man !!!! where the hell have you been all your life ????
Southland is sooooo blooody blue they've run outta blue paint.
BB

Bill, two quotes:

Whatever colour you are, there's times when you must lose - Kursaal Fliers

The South Island is sometimes called the "mainland". While it has a 33% larger landmass than the North Island, only 24% of New Zealand's 4.3 million inhabitants live in the South Island. - Wikipedia.

[Enumerate]

Allan Hubbard is giving the government a run for their money.

They put him into Statutory Management - he is now forcing them to chose between buying the "Bad Bank" or taking massive losses under the retail deposit guarantee scheme.

Take it to the wire Allan - make sure THEY blink first.

Given the damage done to Allan's business and reputation by arbitrary government action, they can either cough up a compensatory package or they can endure political oblivion.

Economic development, in the South Island, is the other price that may need to be paid. None of the Aussie trading banks is interested in the rural and industrial coalface, in New Zealand. These banks simply want high margin, high security residential property mortgage portfolios - they do not have the skills or the inclination to lend in the engine room of the NZ economy. The Aussie banks are pumping cash out of the NZ economy - back to Australia; SCF collapse will not be "healed", in financial terms, for 50 years. I hope Treasury are sticking these considerations in their financial models.

[Balance]

AH giving the govt a run for their money? Taxpayers money, that is.

The govt can extend statutory management to SCF and take control of SCF - sell off the good bank and fund the bad bank.

Net result to the government is the same.

AH cannot be trusted to be a shareholder, owner or operator anymore.

[fungus pudding]

AH giving the govt a run for their money? Taxpayers money, that is.

The govt can extend statutory management to SCF and take control of SCF - sell off the good bank and fund the bad bank.

Net result to the government is the same.

AH cannot be trusted to be a shareholder, owner or operator anymore.


This is interesting reading

http://www.stuff.co.nz/timaru-herald/news/4071018/Anger-at-release-of-harsh-report

Particularly this gem

Timaru retiree Margaret Cowan said she was not worried about her investment, based on what she had heard about the report, having not yet received it. "We all know he has his own way of doing things."

[Winston]

What happens to the value of the Preference shares if the Government does buy into S.C.F?

[Balance]

What happens to the value of the Preference shares if the Government does buy into S.C.F?

Depends on what kind (if any) deal is struck between the negotiating parties.

[Balance]

Alan, I wish I had your bright, sunny and optimistic, disposition.

Alas, I am cursed with a restless brooding - I keep thinking: "how many more difficulties will they find if they further improve their audit and control mechanisms".

I am haunted by an old geology phrase: "If you want to shoot elephants; look where elephants have been shot before".

I am plagued with the notion that a greater mess might be just under the surface, down Timaru way ...

My only comfort is that my hard earned $$ are well away from these deep dark pits.

Fascinating how putting a few $$$ into SCFHA as a punt can warp a person's thinking.

http://www.youtube.com/watch?v=5j2F4VcBmeo

[minimoke]

Bill, two quotes:

Whatever colour you are, there's times when you must lose - Kursaal Fliers

The South Island is sometimes called the "mainland". While it has a 33% larger landmass than the North Island, only 24% of New Zealand's 4.3 million inhabitants live in the South Island. - Wikipedia.
And most of them live in Christchurch and most of them are Red - or so it seems as they are keen on voting Jim Anderton in for Mayor god help us!

[Enumerate]

What happens to the value of the Preference shares if the Government does buy into S.C.F?

Depends on the nature of the deal; or, indeed, the likely aftermath if there is no deal.

Should SCF fail - the SCFHA become subordinated debt ranking behind all the secured debenture holders. I think there is some prospect of recovery, for holders, even in this scenario. $120m of pref shares could be worth as little as $12m.

The "play" in this scenario is that the SCFHA holders are likely to be able to determine who conducts the administration and potential liquidation process. This is because the government becomes the single senior creditor (for a very large amount of secured debt) but in NZ law - you need a majority by amount and by number to control the creditors meeting.

The irony is that the government would be dealing with a hostile block of SCFHA creditors = all of the mind that it was the clumsy actions of Minister Power and his SFO goons that put everyone in this unenviable position. I think I would propose putting Hubbard Churcher as Administator - overturning any government appointment.

Of course Minister Power, who has shown a flagrant disregard for due process in the justice system, would probably institute some act of parliament to overturn SCF creditor rights. The mentally deficient NZ fourth estate would probably find all of this perfectly acceptable in their world of "the end justifies the means". Sophisticated global investors would take one look at these arbitrary interventions and assess that Robert Mugabe's Zimbabwe would be a safer place to invest.

The survival options for SCF have always been:

1) Sell the "bad bank" for no less than current impaired valuation;
2) Trade the equity assets for genuine tier one capital; or
3) Find a new source of equity.

Any attempt to compromise the interests of the SCFHA holders in a deal that involves any or all of the above would trigger administration, at this late stage.

The most likely option, in the survival scenario, would be for SCFHA holders to maintain the equity value of their investment but lose income for a period of time while SCF restructures and rebuilds. The machinery for achieving this is already present in the trust deed.

[minimoke]

Given the damage done to Allan's business and reputation by arbitrary government action, they can either cough up a compensatory package or they can endure political oblivion.

Enumerate, without wishing to rehas old ground but it was AH who did the HMF statements so they included investment's and cash balances that do not exist. What else do you need?

[fungus pudding]

And most of them live in Christchurch and most of them are Red - or so it seems as they are keen on voting Jim Anderton in for Mayor god help us!


No. God help them.

[Lizard]

What happens to the value of the Preference shares if the Government does buy into S.C.F?

My thoughts...

I would have thought not much different to what happens if any investor buys in - i.e. probably issue cancellation notice for dividends and then put a special resolution to a meeting of Holders that somehow substantially reduces the obligations to holders/value of prefs. As I read it, the divs are non-cumulative once cancelled and the only lever noteholder will have is their option to wait some years until ordinary shareholders want to pay themselves a div and have to first re-instate divs on prefs. Maybe 40cps or less with a valuation report that says it's fair?

Alternatively, any deal will be made conditional on pref holders agreeing to take a haircut on the value of their prefs anyway, when faced with the alternative of a long liquidation process which might or might not yield them any return in 5 - 10 years time... (probably not - liquidations being generally so costly!). Maybe 20-25cps with a valuation report that says not fair but reasonable?

Other option, maybe get offered to convert to ordinary shares and left with a minimal residual value after dilution by new investor - though seems unlikely a new investor would want these disgruntled's tagging along.

[Balance]

My thoughts...

I would have thought not much different to what happens if any investor buys in - i.e. probably issue cancellation notice for dividends and then put a special resolution to a meeting of Holders that somehow substantially reduces the obligations to holders/value of prefs. As I read it, the divs are non-cumulative once cancelled and the only lever noteholder will have is their option to wait some years until ordinary shareholders want to pay themselves a div and have to first re-instate divs on prefs. Maybe 40cps or less with a valuation report that says it's fair?

Alternatively, any deal will be made conditional on pref holders agreeing to take a haircut on the value of their prefs anyway, when faced with the alternative of a long liquidation process which might or might not yield them any return in 5 - 10 years time... (probably not - liquidations being generally so costly!). Maybe 20-25cps with a valuation report that says not fair but reasonable?

Other option, maybe get offered to convert to ordinary shares and left with a minimal residual value after dilution by new investor - though seems unlikely a new investor would want these disgruntled's tagging along.

The market will determine the price in the first instance.

If SCF goes into statutory management or receivership, game over.

[Balance]

Enumerate, without wishing to rehas old ground but it was AH who did the HMF statements so they included investment's and cash balances that do not exist. What else do you need?

How dare you assert that! The Statutory managers are Crown agents caught up in a conspiracy to destroy the South Island's most respected and honorable businessman.

AH would never stoop to using fictitious accounts - no way.

Or would he?

[Enumerate]

Fascinating how putting a few $$$ into SCFHA as a punt can warp a person's thinking.


Balance, you have been played.

Have you noticed that since the trading halt you vocal mate has disappeared. Perhaps there are now no punters to scare into making a foolish decision?

It is well known, on this thread, that at the beginning of the year I was very bearish on SCF. This fact has been observed and restated by many people on this thread. I have even made a point of restating it, myself.

So, for the benefit of Balance and the other Alzheimers patients, I will restate my reasons:

1) Late 2009, SCF were in complete denial - they were in a very serious situation without leadership or a plan
2) Sandy Maier, within a few months, completely turned this situation around. He triaged the loan receivables; appointed a new auditor; appointed a new leadership team; focused the team on the goals of restructuring the company in three "divisions"; restored some degree of public confidence (timely accounts, equity restructure, prospectus registration, Trustee relationship) and provided clear leadership. At this point - SCF became a strong recovery prospect.

We are now at a stage in which these recovery prospects are being tested.

Ask yourself a question: "In NZ financial circles, who knows the most about the inner workings and prospects for SCF?".

Some months ago, I asked myself this question. I came up with an answer. I have acted to follow this "smart money" by making an investment in SCFHAs.

I remain of the view that people selling SCFHAs at less than 15cents are vastly overstating the probability of failure and grossly understating the prospects for recovery. The trading halt, finally, has put an end to the malicious games.

[Balance]

Balance, you have been played.

Have you noticed that since the trading halt you vocal mate has disappeared. Perhaps there are now no punters to scare into making a foolish decision?

It is well known, on this thread, that at the beginning of the year I was very bearish on SCF. This fact has been observed and restated by many people on this thread. I have even made a point of restating it, myself.

So, for the benefit of Balance and the other Alzheimers patients, I will restate my reasons:

1) Late 2009, SCF were in complete denial - they were in a very serious situation without leadership or a plan
2) Sandy Maier, within a few months, completely turned this situation around. He triaged the loan receivables; appointed a new auditor; appointed a new leadership team; focused the team on the goals of restructuring the company in three "divisions"; restored some degree of public confidence (timely accounts, equity restructure, prospectus registration, Trustee relationship) and provided clear leadership. At this point - SCF became a strong recovery prospect.

We are now at a stage in which these recovery prospects are being tested.

Ask yourself a question: "In NZ financial circles, who knows the most about the inner workings and prospects for SCF?".

Some months ago, I asked myself this question. I came up with an answer. I have acted to follow this "smart money" by making an investment in SCFHAs.

I remain of the view that people selling SCFHAs at less than 15cents are vastly overstating the probability of failure and grossly understating the prospects for recovery. The trading halt, finally, has put an end to the malicious games.

Fair enuf, Enumerate and good luck.

Doesn't change the fact that AH has been cooking the books and shuffling assets around, using investors' money. In the case of SCF, using taxpayers' money.

[Enumerate]

Enumerate, without wishing to rehas old ground but it was AH who did the HMF statements so they included investment's and cash balances that do not exist. What else do you need?

Mini, have you actually read the Statutory Manger's second report?

Broadly, the issues against Aorangi are simply matters of opinion. There are dark hints of related party lending - but, wake up everyone, if you want to invest in Aorangi you wanted to invest along side Allan Hubbard - you wanted him to have "skin in the game" - that is why you invested.

There are no charges laid ... because none of this is a crime.

What is criminal is that the Statutory Manager will now proceed to crystalise losses in investments that were likely to be viable. In a perverse way, the more the Stat Man loses ... the more he justifies his position.

If I were an Aorangi investor - this would be the thing that scares me the most.

In terms of HMF ... let us apply Occam's Razor.

This simplest explanation of the weasel words in the report is that the Statutory Manager doesn't have a complete handle on what is going on.

Remember, these are the guys who didn't know HMF existed in the first place!

These are also the guys who have refused to talk to the key player in this fund - Allan Hubbard.

How about this as a scenario:

1) The Grant Thornton Statutory Managers are too stupid to collect the basic information from the people who know what is going on.

2) Therefore, the Statutory Manger is confused, befuddled ... under pressure from political masters to "nail" Hubbard

3) The HMF report reflects language that does NOT speak of criminal intent .... the "accounts were not reconciled before the statements went out" - proceeding in good faith with incorrect information is not a crime. (Duhhh, why not ASK HUBBARD the basis on which the statements were made ... this is not rocket science).

4) The 25% overstatement in asset value figure is calculated ... how? Is this the application of retrospective Stat Man valuations? These are the ultimate weasel words to imply impropriety but not court a lawsuit for defamation. Weak minded people will pick this up and will easily be panicked into foolish action.

5) There are, apparently "non existent funds". However, there are also "unallocated funds". Why not provide a reconciliation? Why play this for the maximum press impact by implying funds do not exist when a simply conclusion is that the Statutory Manager has failed to complete a reconciliation.

I am white hot with fury that the Statutory Manager is allowed to liquidate a business that has never been insolvent.

I am white hot with fury that Simon Power, on the advice of the corrupt Simon Botherway and the incompetent Jane Diplock, has destroyed multiple businesses and damaged the reputation of Allan Hubbard.

I am white hot with fury that this damage has been rendered by an Order in Council - bypassing and frustrating any and all conventional commercial law. Bypassing the courts and the legal process. Granting all rights to the state and none to Allan Hubbard.

I am white hot with fury that Allan Hubbard cannot confront his accusers - state his evidence and argue his case.

I am white hot with fury that malicious interests are allowed to savage both Allan Hubbard's reputation and his business interests in this climate of state sponsored commercial terrorism.

[Balance]

Say what you want, Enumerate and think what you like.

[Enumerate]

Say what you want, Enumerate and think what you like.


You fail to respond to any of my points.

You fail to produce any contradictory facts.

You cling to a conclusion you arrived at some time ago, with no evidence.

You are, therefore, impervious to rational debate.

I look forward to the day in which the NZ High Court considers these matters. I think, at this stage, Adam Feeley will get the spanking that he richly deserves.

[Billy Boy]

Bill, two quotes:

Whatever colour you are, there's times when you must lose - Kursaal Fliers

The South Island is sometimes called the "mainland". While it has a 33% larger landmass than the North Island, only 24% of New Zealand's 4.3 million inhabitants live in the South Island. - Wikipedia.

I understand what you all are saying and agree.... but the point I am making, is can the Nat's/Gvment
afford politically to shake rural canty/southland any more. There are a lot of mutterings (rural) now in regards
the treatment of the rural south island. Especially in regards to the $$$ the island earns (%GDP) and the problems.
Some being. fiber optic, Kawarau Bridge, Milford road, Westland, Gumment services. etc
Now I dont want to get into discussions in this respect, (not the forum). But I do think there are politicial standpoints.
If not now, then there will be. Coz the failure of SCF will affect mostly the Sould Island rural community.
And potential effects on exports ??.
cheers BB :)
PS I am not "Red" & I'm in with the rural play....;)

[Balance]

You fail to respond to any of my points.

You fail to produce any contradictory facts.

You cling to a conclusion you arrived at some time ago, with no evidence.

You are, therefore, impervious to rational debate.

I look forward to the day in which the NZ High Court considers these matters. I think, at this stage, Adam Feeley will get the spanking that he richly deserves.

The SM's Reports are too damning and too conclusive of the games that AH had been up to. The evidence is there for anyone to read.

Start with violation of securities regulations (obtaining funds without a registered prospectus) and falsifying accounts to procure and retain investors' funds.

No point arguing valuations and opinions etc - cash is cash is cash. What happened to the $6m cash that AH stated HFM had as at 31 March 2010? How did it turn into $350,000?

Fact is that AH can cast total doubt on the SM's reports by simply verifying where the cash was. Simple, effective and he will then have the SMs running for cover.

I for one will rise in support of the man. Bet you it is not going to happen however.

Meanwhile, no charges being laid at this stage mean bugger all - it took the SFO 2 years to lay charges against the directors of 5 Star Finance.

If you want red-hot anger, try taxpayers' money being used to bail out gross mismanagement.

[Balance]

Good example here of SCF's directors and management helping themselves to SCF's finances to speculate in the property market.


SCF unlikely to recover all of NZ$9 mill loan to Paritai Drive townhouse development by former CEO Lachie McLeod
Posted in News Friday, August 27, 2010 - 6:09pm, Alex Tarrant

Paritai Drive Townhouse built with loan to company once directed by Lachie Mcleod and Ed Sullivan. It is now being sold by receivers.

By Alex Tarrant

South Canterbury Finance is unlikely to recover all of a NZ$9.1 million dollar loan to a property development company set up by former chief executive Lachie McLeod and a former director Edward Oral Sullivan.

A receivers report shows the property development company, Arundel Park Limited, built six townhouses on Auckland’s exclusive Paratai Drive. The company was set up in 2006 with McLeod and Sullivan as its two directors. Two of the townhouses at 139 Paritai Drive are now being sold by receivers for NZ$1.8 million each, this realestate.co.nz listing shows.


Arundel was originally owned by Strathallan Nominee Company, in which Sullivan was a shareholder, according to Companies Office documents.

In July 2007, the share parcel for Arundel changed hands from Strathallan to Victoria Three Trustee Limited, owned by John Robert Williams of Auckland, documents show.

McLeod and Sullivan ceased to be directors of Arundel in June and July, 2007, respectively, documents show.

SCF, as a secured creditor, was estimated to be owed NZ$9,106,288 by Arundel, receivers Stephen Tietjens and Peter Chatfield of Accru Smith Chilcott said in their first receivers’ report on August 20.

SCF was unlikely to be repaid in full, they said.

South Canterbury Finance placed Arundel in receivership in June this year after the property company defaulted on a repayment to SCF, the receivers said.

The receivers’ report said SCF placed Arundel in receivership under the power contained in a general security agreement dated March 22, 2007 - which was before McLeod and Sullivan had ceased to be directors of Arundel.

Sullivan ceased to be a director of SCF in May this year, while McLeod stood down from the CEO position in 2009.

The receivers said one of the townhouses had been completed by their appointment in June, three were close to being finished, with two further units to be completed.

They said they intended to complete all six townhouses, after receiving funding support.

Four had been put on the market, with one unconditional agreement and two conditional agreements having been signed. Completion and marketing of the other two units should be done in the next few weeks, they said.

Williams, McLeod, Sullivan, the receivers and SCF could not be reached for comment on Friday afternoon.

[Enumerate]

Start with violation of securities regulations (obtaining funds without a registered prospectus) and falsifying accounts to procure and retain investors' funds.


Neither point is actually made, by the Statutory Manager, in the report. This is your imagination at work.



No point arguing valuations and opinions etc - cash is cash is cash. What happened to the $6m cash that AH stated HFM had as at 31 March 2010? How did it turn into $350,000?


If this is your "accounting evidence" you won't even make it past a deposition hearing.



If you want red-hot anger, try taxpayers' money being used to bail out gross mismanagement.

Too bad Balance, you as a taxpayer are going to pick up a bill no matter what happens. I suggest you look to Minister Power for a full explanation of why the government decided to grasp defeat from the jaws of victory.

[Enumerate]

Why, Balance, did you edit your post to remove your assertion that Allan Hubbard will be charged?

[Balance]

Why, Balance, did you edit your post to remove your assertion that Allan Hubbard will be charged?


I gave you the benefit of a full reply why he will be charged.

LOL - Do you actually read or choose to read what you want to read?

[Balance]

Neither point is actually made, by the Statutory Manager, in the report. This is your imagination at work.

That is NOT the role of the SM. Have a look at 5 Star, Bridgecorp etc - the receivers do their job and then, it's up to the SFO, Securities Commission and/or Companies Office to take action.

If this is your "accounting evidence" you won't even make it past a deposition hearing.

Cash is cash is cash. The burden of proof is now with AH to show where the cash was. Bet you that he will not be able to do so.

Too bad Balance, you as a taxpayer are going to pick up a bill no matter what happens. I suggest you look to Minister Power for a full explanation of why the government decided to grasp defeat from the jaws of victory.

That's life so cool cucumbers. However, AH will not get away with recklessly using taxpayers' money.



E - do you actually have any understanding of the different roles that are and will be played by the SMs, SFO, Companies Office and Securities Commission?

[Cully]

I have followed this thread for some time and am finally joining it out of exasperation. Enumerate, despite your claim that there has been improper legal process, there is in fact a robust and well-established legal process in train here. The reality is clear - investors in the Hubbard funds are facing a dire situation that the statutory managers and the regulators are doing their best to salvage. They did not cause it, and there is no conspiracy. If you choose to persist in your delusions, so be it. But consider the effect you are having on investors. The likes of you, Paul Carruthers and those clowns from EUFA are misleading them with false information and false hope.

[Enumerate]

Balance, in this post .... which you have edited to say:


Say what you want, Enumerate and think what you like.

You said, in the original, that it was inevitable that Allan Hubbard will be charged. You deleted this assertion ... why?

[Enumerate]

Enumerate, despite your claim that there has been improper legal process, there is in fact a robust and well-established legal process in train here.

How many times has an individual been placed in Statutory Management before the Allan Hubbard case? Answer - once.

How many times has a solvent company been placed in Statutory Management before the Aorangi case? Answer - never.

How many times has Statutory Management been invoked where clear remedies under the Companies or Financial Reporting Act have been present but not enacted? Answer - never.

How many times have newly minted posters appeared in the SCF thread to harangue and spread falsehoods about the Statutory Management of Allan Hubbard? Answer - more times than I care to count.

If you believe:



The reality is clear - investors in the Hubbard funds are facing a dire situation that the statutory managers and the regulators are doing their best to salvage.


Then I suggest that you completely discount the harm done to Aorangi (solvent but now in liquidation), HMF (solvent but now in liquidation), the Trusts (solvent but now in liquidation), SCF (solvent, restructuring but now under threat due to government action - FUD (fear, uncertainty and doubt).

Spare me any future efforts by the Statutory Mangers (who seem barely competent in their political knife job - completely incompetent in their role as manager, under the Act) and Regulators (who have no role at all in all) in a "salvage" operation.

[Cully]

How many times has an individual been placed in Statutory Management before the Allan Hubbard case? Answer - once.

I think that is correct but I'm talking about the process, not the circumstances. Statutory management itself is rare but the process is mandated by statute and is clear.

How many times has a solvent company been placed in Statutory Management before the Aorangi case? Answer - never.

Agreed - except still never. Aorangi is not solvent - will not be able to meet next interest payment. AH having to take out mortgages to meet previous ones.

How many times has Statutory Management been invoked where clear remedies under the Companies or Financial Reporting Act have been present but not enacted? Answer - never.

Agreed - including this time.

How many times have newly minted posters appeared in the SCF thread to harangue and spread falsehoods about the Statutory Management of Allan Hubbard? Answer - more times than I care to count.

Do a new poster's views not count? I'm not the one spreading falsehoods.

If you believe:



Then I suggest that you completely discount the harm done to Aorangi (solvent but now in liquidation), HMF (solvent but now in liquidation), the Trusts (solvent but now in liquidation), SCF (solvent, restructuring but now under threat due to government action - FUD (fear, uncertainty and doubt).

But they were'nt solvent - that's the point. The regulators are reacting to the situation, not causing it.

Spare me any future efforts by the Statutory Mangers (who seem barely competent in their political knife job - completely incompetent in their role as manager, under the Act) and Regulators (who have no role at all in all) in a "salvage" operation.

Happy to spare you, not the other investors.

[minimoke]

Mini, have you actually read the Statutory Manger's second report?
...
There are no charges laid ... because none of this is a crime.
.
Yes I have read it. I have also read that they got an independent person involved in HMF. This is what is said in the report
"HMF has been described to us by an independent fund manager as having:
• an investment profile that is not consistent with what we understand would be appropriate for a
typical investor in HMF;
• a high risk profile;
• a number of small holdings that add no value to HMF;
• investments in private equity funds, second tier companies and “penny dreadfuls”;
• very few blue chip shares; and
• many illiquid investments."

[minimoke]

H......and Regulators (who have no role at all in all) in a "salvage" operation.
Presumably you would also like to see the Treasury "regulator" kept right out of the salvage process as well as any other government funds that may be laid on the table.

If you want the Govt out of SCF you need to be more vocal about SCF standing on its own two feet.

I'd much sooner not be working to create taxes which will eventually pay deluded people in Timaru and Waimate as well farmers who are operating unsustainable business models.

[Balance]

LOL - one meets all kinds and all types in the world. It's refreshing to meet a character who stands in the rain and says he is not wet!

I LOVE it!

[Cully]

LOL - one meets all kinds and all types in the world. It's refreshing to meet a character who stands in the rain and says he is not wet!

I LOVE it!

I know, it's been damn amusing. But it's getting past that for me now. Ponzis, prime bank schemes, affinity fraud - they all rely on the idea that you can't let the regulators get involved because they will make it all come down in flames. And to the credulous, this always appears to be true. They can't understand that their statements of returns were fictional, and that it had already crashed and burned long before the govt got involved. Enumerate and his ilk perpetuating these myths means uninformed investors will be destined to repeat the cycle again and again.

[Billy Boy]

I know, it's been damn amusing. But it's getting past that for me now. Ponzis, prime bank schemes, affinity fraud - they all rely on the idea that you can't let the regulators get involved because they will make it all come down in flames. And to the credulous, this always appears to be true. They can't understand that their statements of returns were fictional, and that it had already crashed and burned long before the govt got involved. Enumerate and his ilk perpetuating these myths means uninformed investors will be destined to repeat the cycle again and again.

Every Sixteen years, some say less that that.
Good post Cully

[minimoke]

News this afternoon that Sandy is telling investors there is no need to panic. (newsflash - it would get them no where anyway because SCF is in a trading halt!)


Apparently they are speaking to a handful of investors this weekend to raise the equity - its going to the wire.

And once again he reminds investors to take comfort form the Deposit Guarantee whatever the outcome.
So whats it going to be:
- Stat man
- Receivership
- Duncan Saville with his rumored $170m (but don't SCF need $200m +?)
- The Russians (via Scales?) with $350m - another rumor
- me and you with our taxes

SCF had, apparently $10.6m cash on hand last Monday. That will have paid a few people over the past week but it doesn't sound like any new money is flowing in. It certainly won't have on Friday and chances are slim on Monday when more payments will no doubt be due. So what will come first a failure to repay debenture trigger or a Trustee trigger?

[Balance]

I know, it's been damn amusing. But it's getting past that for me now. Ponzis, prime bank schemes, affinity fraud - they all rely on the idea that you can't let the regulators get involved because they will make it all come down in flames. And to the credulous, this always appears to be true. They can't understand that their statements of returns were fictional, and that it had already crashed and burned long before the govt got involved. Enumerate and his ilk perpetuating these myths means uninformed investors will be destined to repeat the cycle again and again.

You are right, Cully.

Bang on.

[Hamdrew]

There's lots of debate going on here about how it got to this point...I'm keen to know ppls opinions of how this sorry saga is going to play out over the next three days, as the end game approaches. My humble thoughts are that cabinet will bypass treasuries advice and put up however many millions are required to wind things down, rather than write out 1 BIG chq immediately. Everyones views???

[Balance]

Every Sixteen years, some say less that that.
Good post Cully

Looks to me like every 4 to 5 years?

Well, GFC expsoed the finance companies - so say, 2007.
IT boom and bust - 2002.
Asian financial crisis - 1997.
Property syndications - 1996.
LE mania (RJR Nabisco) - 1991.
Biggie - 1987 Sharemarket Crash.

[Cully]

Every Sixteen years, some say less that that.
Good post Cully

Thanks Billy Boy, and also Balance for your subsequent comments. Seems the boom and bust cycle has been getting more frequent. Investment scams though are going on all the time regardless of these cycles. My question is, why are investors not learning about either of these things? A while ago I would have said investor education is lacking - it still is, this stuff should be taught in primary schools - but actually there is loads of information out there. I'm sorry if this seems off point but to me this is very relevant to the Hubbard situation - don't have blind faith in anyone, get a prospectus, find out what you're investing in, if the answers aren't there or they don't seem credible be damn suspicious.

[Beagle]

SCF are due to make their monthly interest payment on debentures on 31 August, at around 1.2b @ 8 % that will absolutly wipe out any remaining minor cash balance as at Friday 27th August. Even if the Trustee shows a little grace with a further extension the company will have run out of money so its game over unless a deal is done on or before 31 August.

Enumerate, I have never seen a finer example of an Ostrich with his head so firmly entrenched in the sand. You have lost almost all credibility on this blog and after this fiasco is over and done with you might as well change your user name and come back under another identity because you will forever be known as the most dillusional of all A.H. supporters. Frankly I have better things to do, especially on the weekend, than debate this matter with such a fervent Cultist. Just read the SM's report again, its all in there, enough said.

I predict the Govt will make some concession and buy the bad bank at "so called" written down value provided serious new money is introduced by a party capable of running SCF properly, i.e. not associated with Mr Hubbard.

[westerly]

Get it right Roger,debenture interest is due on the 30/09/10

Westerly

[Beagle]

Get it right Roger,debenture interest is due on the 30/09/10

Westerly

A lot of investors have selected the monthly option for payment of interest and there will be a substantial payment due on 31 August. That in tandem with the fact that the company only had just on $10m as at 23 August, with redemptions since then and you don't have to be a rocket scientist to work out its game over.

[Cully]

Enumerate, I have never seen a finer example of an Ostrich with his head so firmly entrenched in the sand. You have lost almost all credibility on this blog and after this fiasco is over and done with you might as well change your user name and come back under another identity because you will forever be known as the most dillusional of all A.H. supporters.

LOL but please don't suggest change of user name - I'd rather know an Enumerate when I see one!

[mouse]

:mad ;:An advert in todays Press, page C21, for Secured Debenture Stock in South Canty Finance. 8% offered plus its Govt Guaranteed. Minimum investment is only $100. Roll up. 12 or 14 month options available. A good rate of interest in todays market.:t_down:
Why?

[Cully]

:mad ;:An advert in todays Press, page C21, for Secured Debenture Stock in South Canty Finance. 8% offered plus its Govt Guaranteed. Minimum investment is only $100. Roll up. 12 or 14 month options available. A good rate of interest in todays market.:t_down:
Why?

If the prospectus is still off the market, this would be illegal.

[sharer]

:mad ;:An advert in todays Press, page C21, for Secured Debenture Stock in South Canty Finance. 8% offered plus its Govt Guaranteed. Minimum investment is only $100. Roll up. 12 or 14 month options available. A good rate of interest in todays market.:t_down:
Why?
The same advt is in DomPost today.
Could it be that the revised Prospectus (after rating downgrade to CC) has been approved & re-issued already?

[Cully]

The same advt is in DomPost today.
Could it be that the revised Prospectus (after rating downgrade to CC) has been approved & re-issued already?

Yeah although with trading halt, unlikey. Maybe they just couldn't pull the ads in time.

[Cully]

I've just checked out "Leave Allan Hubbard Alone" on Facebook. So bizarre. Why do these people think they know anything?

[Balance]

I've just checked out "Leave Allan Hubbard Alone" on Facebook. So bizarre. Why do these people think they know anything?

???? How do you get in?

[Cully]

???? How do you get in?

Log in to facebook then search "leave allan hubbard alone" as a group. Can't post unless you join but can see comments.

Hope that helped. I'm pretty much a Facebook virgin - you need to register first I think. Enter a "find friends" search first, it won't produce results but next screen will have a series of options, one of which is "group". Regret my pathetic Faceboook ignorance, guess I'm too old!

[Beagle]

Log in to facebook then search "leave allan hubbard alone" as a group. Can't post unless you join but can see comments.

Hope that helped. I'm pretty much a Facebook virgin - you need to register first I think. Enter a "find friends" search first, it won't produce results but next screen will have a series of options, one of which is "group". Regret my pathetic Faceboook ignorance, guess I'm too old!

Likewise but if I have to read any more truly pathetic posts like the resident cultist, pardon me asking the question, but why bother ? Why would you want to read the pathetic ramblings of a whole bunch of ignorant cultists who wouldn't know the first thing about the commercial world ?

[Jonny]

Looks like the opposition is ready to make an issue out of stat man if it all goes pears...

http://www.voxy.co.nz/business/dalziel-labour-will-hold-government-account-over-hubbard-statutory-management-on/5/60608

[Cully]

Likewise but if I have to read any more truly pathetic posts like the resident cultist, pardon me asking the question, but why bother ? Why would you want to read the pathetic ramblings of a whole bunch of ignorant cultists who wouldn't know the first thing about the commercial world ?

Oh no - they're way worse than Enumerate! The only reason to bother is to get a handle on the level of ignorance out there - including among so-called investor advocate groups like EUFA. Drives you (well, me) insane but makes you realise that rational debate on this is not possible with the cultists. Probably nothing you didn't already know.

[Billy Boy]

By Cully
Seems the boom and bust cycle has been getting more frequent. Investment scams though are going on all the time regardless of these cycles. My question is, why are investors not learning about either of these things? A while ago I would have said investor education is lacking - it still is, this stuff should be taught in primary schools - but actually there is loads of information out there. I'm sorry if this seems off point but to me this is very relevant to the Hubbard situation - don't have blind faith in anyone, get a prospectus, find out what you're investing in, if the answers aren't there or they don't seem credible be damn suspicious.

Oh no - they're way worse than Enumerate! The only reason to bother is to get a handle on the level of ignorance out there - including among so-called investor advocate groups like EUFA. Drives you (well, me) insane but makes you realise that rational debate on this is not possible with the cultists. Probably nothing you didn't already know. Unquote....

Hell Cully !!!
have you been reading the draft to my book !!! ??
I,m with you man :t_up:
cheers & beers BB:):)

[Cully]

By Cully
have you been reading the draft to my book !!! ??
I,m with you man :t_up:
cheers & beers BB:):)

Well no but sounds like I might like it, let me know when it's published! Cheers to you too, and as you mention it I am enjoying a beer right now, hope you are too.

[drew]

Yes I have read it. I have also read that they got an independent person involved in HMF. This is what is said in the report
"HMF has been described to us by an independent fund manager as having:
• an investment profile that is not consistent with what we understand would be appropriate for a
typical investor in HMF;
• a high risk profile;
• a number of small holdings that add no value to HMF;
• investments in private equity funds, second tier companies and “penny dreadfuls”;
• very few blue chip shares; and
• many illiquid investments."

Minimoke I havent read the report and dont intend to but this statement seems irrelevant and spurious. People should judge for themselves whether they consider an investment is appropriate for themselves. The implication is that a lot of AH investors were old people therefore they shouldnt put their money into dairy farms, private equity? I dont think that govt officials should be deciding for us what is or isnt an appropriate investment.

I have no position or opinion on AH but the whole saga has set a dangerous precedent where a company can be seized by govt officials. This can only be mitigated by serious evidence of fraud by AH that was held before they chose to take action. Hopefully the actions will be justified.

Btw if enumerate is white hot with anger over how AH is being treated i will be just as aggrieved if there is a real loss here and govt officials will be putting their hands in my pocket to bail out investors who voluntarily handed their money over to AH.

[Enumerate]

...I'm keen to know ppls opinions of how this sorry saga is going to play out over the next three days, as the end game approaches.

I believe there will be a deal, announced Monday.

I expect that it will be complex and involve all three elements of the restructure:

1) Sale of "Bad Bank" assets;
2) Sale of elements of the the equity asset portfolio (Dairy (primary), Scales and Helicopters); and
3) Infusion of new equity into the "Good Bank"

I hope that no one on the thread was frightened into selling their SCFHAs by the chorus of approbation. I believe that of all SCF stakeholders - SCFHA holders will be smiling the widest. I believe that their capital (to $1 per pref) will be secure.

I am happy to be known as a "Hubbard cultist". I believe this "cult" does exist. It is the "cult" of making money through rational investment.

I am deeply outraged by the injustice that Allan Hubbard has had to endure. This sorry saga is not over yet, for him.

For those on the thread who would have Allan Hubbard endure an injustice so that they may save on their tax dollars - you simply have my contempt.

[Wolfman]

f you want red-hot anger, try taxpayers' money being used to bail out gross mismanagement.

Amen to that !

[Wolfman]

I'd much sooner not be working to create taxes which will eventually pay deluded people in Timaru and Waimate as well farmers who are operating unsustainable business models.


And that's the rub. This good ole boy network, where business appears to have been done on a nod and wink has now, after creating the mother of all local bubbles (rural land prices) come unstuck.

Unpalatable as it may be for all of us, a revaluation is long overdue.

[Balance]

And that's the rub. This good ole boy network, where business appears to have been done on a nod and wink has now, after creating the mother of all local bubbles (rural land prices) come unstuck.

Unpalatable as it may be for all of us, a revaluation is long overdue.

A ponzi scheme - keep buying and pushing up dairy farm prices using other people's money.

The music has stopped.

[mouse]

And that's the rub. This good ole boy network, where business appears to have been done on a nod and wink has now, after creating the mother of all local bubbles (rural land prices) come unstuck.

Unpalatable as it may be for all of us, a revaluation is long overdue.
I was listening to Bill English last Thursday at the FMG AGM. The question to him I forgot. The answer from Bill I will never forget. "Anyone who pays $800 a sheep stock unit for land has payed too much and cannot be profitable." Obviously the Govt view is the farming land price bubble has to burst. I do not know the implications for SCF.

[Balance]

For those on the thread who would have Allan Hubbard endure an injustice so that they may save on their tax dollars - you simply have my contempt.

Injustice? Try injustice to the thousands of investors who AH deceived - taking their money using inaccurate and dressed up accounts to buy dairy farms etc.

That bright sphere in the sky in the night - it's not the moon, it's the sun - according to some people.

[minimoke]

Minimoke I havent read the report and dont intend to but this statement seems irrelevant and spurious. People should judge for themselves whether they consider an investment is appropriate for themselves. The implication is that a lot of AH investors were old people therefore they shouldnt put their money into dairy farms, private equity? I dont think that govt officials should be deciding for us what is or isnt an appropriate investment.

Drew, might I suggest you read the Report. Its easy reading, not complex but does give background to the essence of this thread. It would help to be just a wee bit informed.

It was originally argued by AH supporters that his investors were sophisticated investors - time and information has shown this is not the case. AH's investors (and anyone are quite free to invest in Dairy farms private equity or whatever - as long as they know that is where there money is going. Investors in Aorangi and HWM appear not to have had that knowledge.


The AH Stat Man is by no means a dangerous precedent - it is however extremely rare. There are clearly issues around bringing in the Stat Man. Time will tell if that decision was warranted. What does remain is wether there will be consistency in approach in the future - which begs the question why others weren't brought under Stat Man during the GFC. But thats water under the bridge now. Theres enough to mull over with AH's recent activites.

[minimoke]

I am deeply outraged by the injustice that Allan Hubbard has had to endure. This sorry saga is not over yet, for him.

What about some outrage for the locals who put their money into Aorangi and HWM only to find the fund manager making up cash and investment's that don't exist and putting their hard earned money into high risk areas. They didn't know where the money was going - AH didn't issue a prospectus. They just trusted AH. And on the basis of the two Stat Man reports that trust was misplaced. Whether than amounts to fraud on the part of AH remains to be seen - but we'll hear from the SFO in due course. The sorry sage isn't over for the locals who may now have some hope off getting some of their cash back. Without the Stat man it appears their cash was being used to prop up AH's own personal interests in unsecured depreciating investments in illiquid markets. Tahts a sorry state!

[Arbitrage]

Like all cultisits, the followers of AH seem to be blind to what has happened. As a taxpayer I am looking down the barrel of carrying $250 million of toxic debt. Not happy. If AH investment is rational then perhaps we need a new definition of the word.

[minimoke]

I
I am happy to be known as a "Hubbard cultist". I believe this "cult" does exist. It is the "cult" of making money through rational investment.


I wouldn't have had you pegged as an H cultist - I thought you were more interested in making money out of the SCFHA's - and good luck to you if you do. But I don't see teh "cultists" as those wanting to make money through rational investment.

They appear to actually be irrational. Rather than relying on prospectus they rely on personality. Rather than being prepared to operate in the "real world" where if you want to borrow money you pay for the privilege, they live in a world where a philanthropic chap gives you other peoples money for free. Rational investment surely means taking an interest in where your money is going and what it is doing and what the associated risks are relative to the return - I don't see any of that amongst the "Cultists".

[Arbitrage]

Yes MM you are right and I think as everything comes out in the wash up over the next few weeks the "rationality" is going to get worse. I hope you paid some tax this year to help me pay for the "investments" made by/to AH and his mates.

[minimoke]

I hope you paid some tax this year to help me pay for the "investments" made by/to AH and his mates.
Its why I'm working this weekend. I'd have preferred my tax money to go to some solo mum breeding her 7th child or some meth cooker on a Sickness benefit - at least they put some thought and effort into their enterprise.

[Enumerate]

I wouldn't have had you pegged as an H cultist - I thought you were more interested in making money out of the SCFHA's - and good luck to you if you do. But I don't see teh "cultists" as those wanting to make money through rational investment.

The term "Hubbard Cultist" was not mine. People on the thread imagined that it was appropriate - I simply provided a coherent definition - someone pursuing a rational investment strategy.

It seems that you have some other definition in mind. By this definition - I am not a "Hubbard Cultist". You will have to take this up with Roger and Balance (et al) - they seem convinced of the opposite view.

Balance does seem to have some further meteorological and astronomical "insights". I am not sure what it all means but I have a feeling that sometime tomorrow all further speculation will be unnecessary - we have have the facts of the situation to consider.

[minimoke]

I am not sure what it all means but I have a feeling that sometime tomorrow all further speculation will be unnecessary - we have have the facts of the situation to consider.
I suspect you are right. Remember we were also promised YE accounts by the end of August so it should all become crystal clear in the next day or so.

[Enumerate]

If the government does decide to put in a few hundred million to save SCF, consider the following:

1) They made close to a $billion out of fees to the Wholesale and Retail guarantee schemes. Most of this came from the Aussie Banks. If the government spends part of this windfall to cover off much greater potential liabilities, to SCF debenture holders in the event of SCF default, this would seem to be a rational financial decision.

2) Introducing new capital to SCF effectively underwrites the government's retail guarantee risk. It is rational, financially, to pay something to have your risk exposure eliminated.

3) It is possible that a SCF deal (ensuring SCF survival) could be a significant boost to South Island economic development. An effective "Hubbard succession" for a newly focused SCF, Dairy, Helicopters and Scales - would be the seed of development for major industry sectors in the South Island. New money and new skills could see a step change upwards in South Island business activity.

4) The Aussie Banks create demand for NZ$ (through the carry trade) and yet have no focus on boosting the NZ productive export sector. SCF, on the other hand, boosts the NZ productive export sector and provides domestic NZ investors with better returns than the Aussie Banks - without generating an upward bias on the exchange rate. A bigger SCF contributes to more productive export companies and a lower/stable exchange rate. More Aussie Banks - more property inflation and higher/unstable exchange rates.

On the other hand, failure of SCF would be a devastating blow to the South Island economy:

1) The Aussie Banks have no interest in NZ economic development - much less the rural and 2nd tier commercial sectors that SCF serves. The Aussie Banks "sponsor" the residential real estate bubble and make safe profits which they promptly export. A failure of SCF will be a major blow to the engine room of the NZ economy and this void will not be filled by the Aussie Banks. Expect South Island rural and commercial economic development to be set back 20 years if SCF fails - with no short or medium term prospect of recovery.

2) Aggressive liquidation of SCF would see forced sales of South Island farms and commercial assets with no prospect for South Island investors to raise capital to purchase. The South Island would likely become a kind of "economic colony" of Australia and Asia - who have the capital, now, to buy the cheap assets.

3) There would be a step change down for economic activity in the South Island. Hubbard's paternalism has been criticised as non-commercial; stop this activity, there will be suffering; remove this capital on even a commercial basis and there will be devastation.

4) Economic development turned the Amercian South from staunch Democrat to staunch Republican. Economic disintegration in the South Island will turn the South Island red. This will decide the next government.

[fungus pudding]

2) Aggressive liquidation of SCF would see forced sales of South Island farms and commercial assets with no prospect for South Island investors to raise capital to purchase.



Since when has geographic location been the criterion for borrowing?

[Balance]

Since when has geographic location been the criterion for borrowing?

Precisely. It's the rampant speculation and ramping up of land and dairy land prices in particular by the likes of AH, and SCF funding the speculative activity.

Now that comes to an end and it will be good for NZ in the long term.

[minimoke]

2) Introducing new capital to SCF effectively underwrites the government's retail guarantee risk. It is rational, financially, to pay something to have your risk exposure eliminated.

But theres the rub. A significant part of the value in SCF is its brand, particularly around AH. After Fridays revelations I can't help but feel the brand has been severely undermined if not fatally damaged. SCF didn't do enough to separate AH from its brand over the past 8 months.

[Enumerate]

Since when has geographic location been the criterion for borrowing?

Since the Trustee retains the ability to make the equity assets part of the charging group - the assets are not simply loan receivables.

[Enumerate]

But theres the rub. A significant part of the value in SCF is its brand, particularly around AH. After Fridays revelations I can't help but feel the brand has been severely undermined if not fatally damaged. SCF didn't do enough to separate AH from its brand over the past 8 months.

Tell that to the people marching through the streets of Timaru. My estimate is that SCF has huge positive brand profile in the business sector that matters the most. This is one of the primary reasons for my investment in SCFHAs - there is a significant demand for SCF financial services and there is significant loyalty to that brand.

[Enumerate]

Precisely. It's the rampant speculation and ramping up of land and dairy land prices in particular by the likes of AH, and SCF funding the speculative activity.

Now that comes to an end and it will be good for NZ in the long term.

Your analysis of dairy is flawed.

Dairy productivity, in NZ, has grown at a phenomenal average rate over a very long timescale. Some estimates put this at upwards of 15% pa. This productivity is driven by improving farming practice and biotech innovation. We do not even approach the intensive farming practice of some countries nor do we even remotely match their innovation investment (eg Nederland).

We have the most efficient grass fed dairying systems in the world - there is a premium for products in this category - further, our practice is closest to being "sustainable" rather than peak "efficient".

Fonterra, as a NZ "institution" also confers some significant advantages to NZ dairy farmers.

Is there a "Dairy Bubble?" or has Bernard Hickey had his brain stapled? (Hint: part of Bernard's problem is his poor statistical base for his claims - still waiting for the 30% collapse in NZ property prices?)

[Billy Boy]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10669541

Now who was it said....to hell with the spinoff's and the politics mean nothing..... note enough votes
etc.....
BB

[drew]

Drew, might I suggest you read the Report. Its easy reading, not complex but does give background to the essence of this thread. It would help to be just a wee bit informed.

It was originally argued by AH supporters that his investors were sophisticated investors - time and information has shown this is not the case. AH's investors (and anyone are quite free to invest in Dairy farms private equity or whatever - as long as they know that is where there money is going. Investors in Aorangi and HWM appear not to have had that knowledge.
Minimoke i have read the report (only 10 pages long) and dont feel any more knowledgeable about the situation. It did not go into any detail whatsoever about the missing 25% of funds which seems crucial to this investigation.

I still stand by my statement that govt officials and bureaucrats have no business telling investors what are appropriate investments for people. The statement that AH was putting money into things that were not appropriate for his investors is totally irrelevant. The real question is whether AH lied about what he was actually doing with their money.

Anybody is free to invest in whatever they feel is appropriate for themselves. If AH investors didnt know or understand what they were investing in because they didnt bother to investigate or just didnt care out of trust then thats their problem. If the investment goes sour they should bear the losses after all they dont expect to share the profits.

If they have been fraudulently misled then there is a case to answer. But to simply say AH investors didnt know what was being done with their money is irrelevant. It might make for an interesting academic study as to why some people are so willing to hand their money over without doing any homework. But thats not a reason for govt to step in an seize a business. It seems to me that the inclusion of this statement was grasping at straws.

In fact a good dose of the free market may make people open their eyes a little bit before handing their money over to strangers. Is there any difference between AH acting (as alleged) as a robin hood helping out the south islanders, which has supposedly led to the current state of affairs and govt officials acting as a robin hood and bailing out the AH investors? I am totally opposed to govt intervention in the market and bailing out investors even if they are victims of fraud.


The AH Stat Man is by no means a dangerous precedent - it is however extremely rare. There are clearly issues around bringing in the Stat Man. Time will tell if that decision was warranted. What does remain is wether there will be consistency in approach in the future - which begs the question why others weren't brought under Stat Man during the GFC. But thats water under the bridge now. Theres enough to mull over with AH's recent activites.
Agreed. I think what has been so surprising is that no actions have been taken against other firms like hanover or bluechip.

[Balance]

Your analysis of dairy is flawed.

Dairy productivity, in NZ, has grown at a phenomenal average rate over a very long timescale. Some estimates put this at upwards of 15% pa. This productivity is driven by improving farming practice and biotech innovation. We do not even approach the intensive farming practice of some countries nor do we even remotely match their innovation investment (eg Nederland).

We have the most efficient grass fed dairying systems in the world - there is a premium for products in this category - further, our practice is closest to being "sustainable" rather than peak "efficient".

Fonterra, as a NZ "institution" also confers some significant advantages to NZ dairy farmers.

Is there a "Dairy Bubble?" or has Bernard Hickey had his brain stapled? (Hint: part of Bernard's problem is his poor statistical base for his claims - still waiting for the 30% collapse in NZ property prices?)

Yeah right - Dairy farms selling at 3 to 4% return and that's sustainable.

It's all a question of price.

[fungus pudding]

Since the Trustee retains the ability to make the equity assets part of the charging group - the assets are not simply loan receivables.

You mentioned aggressive forced sales which according to you excluded Sth. Islanders. That is plain nonsense.

[Enumerate]

Yeah right - Dairy farms selling at 3 to 4% return and that's sustainable.


Do the math, Balance. You pay 8% for a capital asset that shows a 3% return, say. However, you can improve the return by 15% a year for 10 years, say.

Your return after 1 year is a miserable 3.45%

However, your return after 10 years is 12.14%

In fact, the first 7 years of your ownership are run at a loss. However, once you are over this hump - you have a fantastic asset. When you retire ... you are debt free and have an income producing asset worth several million$.

It is a "get rich" slow scheme - but a "get rich" scheme none the less. This is why dairy is so popular and why the land prices are so high.

[Contrarian]

Gidday

I have a few questions,

In the event of not being able to nail down capital, what are the options for SCF, Stat Man, Receivership, liquidation & what does each mean?

If the trigger for Govt guarantee kicks in, do all the scf010,020 &030 get treated the same ? 010 are until 15/12/12. & the SCF030 are so close to maturing $100 mill 8/10/10 but they only have $10 mill? so that's not likely.

SCFHA $100m Perpetual
SCF010 $125m 15/12/12
SCF020 $125m 15/6/11
SCF030 $100m 8/10/10