Tui moment :D
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Tui moment :D
I have just sent a deposit to SCF for 18 months at 8%.Why?
1/Govt guarantee
2/I would like to see this company suceed
Hopefully there will be plenty prepared to do the same and let all the knockers look for another target.
Fact is the SCFHA's are either worth $1 or they are worth nothing.
The market is saying that they have a 40% chance of being worth $1.
This may, or may not be accurate ... you cannot verify an opinion from public information. My basic problem with the SCFHA's is that there are much better alternatives to taking a punt.
The future for SCFHA holders is that if SCF finds the capital it needs ($380million, in some reports) then SCF will endure a few miserable years of rebuilding (low margins due to having to pay the gov't retail guarantee margin, restructuring/recovery costs (partitioning the loan book, pursuit of recovery litigation) and a scale bask in the basic business levels (though it seems some of the past business was in fact not worth having). The SCFHA holders can expect to have their interest payments suspended for a number of years.
If this was an Australian company - SCFHA's would be trading at about 15cents. Once the interest payments stop - 10cents. If there is no early good news on the recapitalisation - less than 10cents.
You have bought an asset of dubious quality except for the fact that Michael Cullen stitched up the NZ Taxpayer to take the fall, if the worst happens.Quote:
Originally Posted by Awamoa
Your reason for this is because you would like to see them succeed. (Despite the fact that they authored their own demise - SCF were not forced to make stupid loans and have bad processes. This begs the question whether SCF actually deserves to survive).
Fact is that your debenture money simply allows SCF to bleed for a bit longer. (The only material event that will save them is a significant recapitalisation, in the short term, and a complete review of their business activities in the long term. It is not clear if you lazy money debenture investment will achieve these goals).
I would have thought that more rational investment goals would have been to invest your money productively in preparation for some SCF capital raising. (This requires you to leave the safety of the taxpayer provided guarantee and to make sharp investment decisions based on fully understanding the risks and rewards).
Your Reason #2 is one I hear most often used by depositers - but when pressed they can't really work out why they want the company to suceed other than they have deposited with them for years and have faith that Alan will deliver the goods. When pressed they have few other reasons for their deposits.
But if we look at your deposit choice in a bit more detail there are probably a few more reasons:
- you are probably a bit of a gambler. You know reward is tied to risk and at 8% you'll be getting a much higher reward for risk than most other offerings out there.
- You know they risk is really high (thats why they have the guarantee) but you are happy to let the tax payer back your punt rather than Alans skills.
- You seem content to let SCF experience greater expenditure on the Guarantee levy. Greater expenditure means less cash to enbable the company to grow and prosper.
- You are prbably more interested in making sure current depositers get paid out when their deposits fall due. This will help feed the "Sucess Story"
- You want the compnay to suceed. Well that, of course, is a given. No matter where we put our money we want the compnay to succeed. I have yet to hear an investor say "I'm putting my money into XYZ company and am not too bothered if they succeed" (tasman Capital is an exception)
- I have no faith in the company beyond Dec 2011 (assumning it lasyts that long) when the Guarantee expires otherwise I woudl have put my moey in for a longer term.
So what you are really saying is "I'm more than happy to take the 8%, its the best rate around and the tax payer will back my purely self interst in securing the best deposit rate around"
Belg, there have only been three compnaies to call on hte Guarantee (Vision, Mascot and Strata) so not a lot of detail we can draw on to answer your question. My understanding is that when the Guarantee is called the Crown takes over the rights of the depositor. So if its a recievership, whatever rights the Depositer had will go to the crown - and that will determine the Crowns placing on the list of order of payments.
As for assets, depositors relying on hte Extended Schem may need to watch out for teh Crowns "Opt Out" option which enables them to withdraw the Guarantee if the Company's net tangible assets drop below a certain point. Depositors in SCF might want to keep an eye on NTA becasue their cash is by no means 100% assured.
Indeed it does say that, but I have a feeling that we will get a "clarification" from Brian Gaynor in the not-too-distant future. At least I hope that we do because in general I respect Brian Gaynor for his fairness and honesty. What he actually said about Deposits with South Canterbury is accurate, but it isn't the complete picture and so it is misleading.
The South Canterbury prospectus and investment statement deals with both Secured Debenture Stock and Unsecured Deposits. Anyone (who is otherwise eligible) investing in the Debenture Stock (which is probably most South Canterbury investors) will be covered by the deposit guarantee scheme until 12th October 2010 and then by the extended retail deposit guarantee scheme until the end of 2011. Anyone investing in the Unsecured Deposits will not be covered.
I have a feeling the Mr Gaynor didn't read the prospectus really well. Instead he quickly scanned it and gave an opinion without understanding the detail - Not understanding the detail is aided by South Canterbury producing on of the most opaque documents that I've seen in a long time!