Interesting development with a potential "Heartland Bank":
http://www.nzherald.co.nz/financial-...ectid=10648881
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Interesting development with a potential "Heartland Bank":
http://www.nzherald.co.nz/financial-...ectid=10648881
To my knowledge the ratings agency does not count the value of the gurantee in its ratings. This is because the guarantee is limited in its application, being for "mum & pop" holders only. As far as retail is concerned unless you hold more that $250,000 of bonds which mature before Dec 2011 the bonds should be considered "AAA" because that is the rating of the NZ government Guarantee in NZ currency.
I think the reason is that the guarantee was extended is that the crown could have the keys now or better later, the more time the private sector has to work out a solution the better (maier has until then to work out a capitalisation structure), more time to get value from distressed assets and a bit of "too big to bail/fail"
one old geeza I knew once said never put your money into a finance company that advertises on TV .... and another old sage once said if a finance company has meetings to tell investors whats going on you can kiss your money goodbye (was before the government stupidly guaranteed such investments)
So SCF having investor briefings
But you have to have to find the time to read the comments here ..... insightful ... probably
http://www.nbr.co.nz/article/investo...finance-124288
The Clark guy with two comments posted has for a long time been a devout supporter of SCF ... quickly responding to any who deride Hubbard or SCF .... how his tune has changed .... somebody has pointed out to him what is really going on
And too think that one day my hard earned tax payer dollars are probably to ensure the good old mums and dads get their money back
The NBR commentators are certainly very bearish on SCF. However, it is too early to start assessing the SCF books as if it were to cease trading. The NBR dudes must all be insolvency practitioners ...
We are still waiting for the signs that cash is flowing into SCF, which will save it ...
We have had some positive rumblings on 1) and 2) ... but nothing definite.Quote:
Originally Posted by Enumerate
Hence, it is too early to prepare the lapidary inscription for the SCF tombstone. It is also too early to commit capital to the high yield, speculative, SCF financial instruments.
An investor briefing for a scheme of arrangement is a completely different thing to the SCF investor briefing - which is about an inflow of capital.Quote:
Originally Posted by minimoke
While it is tragic that many people have had too bullish a view on the NZ finance sector; it will also lead to tragedy if people have too bearish as view. Fortunately, the market in exposed instruments (SCFHA and SCF010) seems to reflect a balanced sentiment. I'd begin to get interested in SCFHA at about 10cents; SCF010 at about 50cents on the dollar. Market prices are much better than this. It is this market sentiment that leads me to believe that the secured debenture rollover/issue is probably doing well.
Also, there seems to be some good news on items 2) and 3) of the "three signs":
http://www.stuff.co.nz/business/indu...ny-shareholder
This is a volatile situation ... market pricing will reflect a number of psychological factors as investors try and make sense (and cents) of the situation. I think maintaining a careful watch for developments (positive or negative) could lead to appropriate timing for entry to the high risk/high reward SCF instruments.
I'm not sure this Press release says much.
- Hubbard MAY find a new partner/shareholder by the end of August
- The Trust Deed breach MAY be fixed by 31 August
- There MAY be 5 intrerested buyers - but the price MAY not be right.
- Torchlight MAY have loaned up to $112.5m but sems to have settled on $100m
- The $100m MAY get approval from Treasury, SCF/Torchlight Boards, and Trustee because it is more debt, not equity.
- SCF may accept bids from other parties - but not if they are too low.
- Meetings in Timaru, Wellington, Ashburton (?) and Auckland MAY go ahead but they aren't finailsed.
- Investors MAY get to meet new Directors.
- Timaru investors MAY get to meet Hubbard.
Exactly, hence the word "seems".Quote:
Originally Posted by minimoke
However, there are clearly developments in advancing towards full resolution of 2) and 3). A "portfolio" of significant capital inflow opportunities is better than nothing.
SCF clearly has a viable plan for reconstruction. Further, they are clearly focused on the execution of this plan. Whether they succeed, or not, depends on the capital inflows "measured" by the "3 signs".
About 6 months ago they did not appear to have a viable plan. Execution of recovery seemed to be more about denial and fumbling about than any rational course of action. Things have changed at SCF, for the better. This much, I think we can all agree on.
The issue as to whether these changes are enough to keep SCF "away from the light" is still open. If you read the NBR commentators - SCF has "gone over to the other side". What these people do not understand is that a historical balance sheet can tell you about risk - but it cannot predict the future. SCF could actually trade with "effective" negative equity - this is a point I made earlier.
Cashflow, and only cashflow, can be used to predict the final outcome for SCF. Maier is a smart operator - he is dangling hints - but he would be a fool make this information public, even if it were unambiguously positive. If he can project a positive and confident "vibe" - the SCF reputation will do the rest - in terms of promoting cash inflows. Offering specific targets or timescales would carry high risk in terms of destruction of the "psychology" due to delays or variations.
As an investor - I want to see a complete "case" of evidence to invest. If I wanted 8% - the government guarantee gives me AAA confidence that I will see my capital back from SCF, for certain investment instruments. However, there is the possibility of taking more risk, in SCF, and making a much larger return. The "3 signs" are the basic elements of SCF recovery. At the moment the returns do not outweigh the risks. However, as investors, we should be trying to maintain an accurate view on the state of SCF - neither too bearish nor too bullish - but simply "accurate".
Agree with all your points Enumerate. It would certainly be innappriate for Maier to give too much substance to "hints" - but this leaves him stuck a bit between a rock and a hard place. Like while he is drip feeding positive hints, facts keep coming out - like the new S&P downgrade and the drop in Torchlight funds. I'm not sure trotting out Hubbard is necessaily one way of geting your positive message across - maybe its time for a bit of re-imaging.
8% is not bad for "AAA" but its not just getting your money back at 8% that is important - these depositors are helping keep SCF afloat in the meantime so they also should be thinking are they getting sufficient compensation for this favour. The SCF investors I know are putting their money into SCF soley to keep them going - they are all agreed their money will not be there at the expiry of the Govt Guarantee. Its probably a bit rhetorical but could that money be put to more productive use if it went to other Institutions? So its not necessarily cash flow which is the determining issue - it is cash flow after the Guarantee runs out.
There are of course other opportunites!
Shoeshine in this weeks NBR column started of with the tale of Lehman Bros whose CEO was going on when Lehman was plummeting that perception was trumping reality .... when we all know that the reality was Lehman was in irreversible decline
However the article was about South Canty and he changed the perception and reality to a subheading Reality or deception?
Going on about how the magical equity injection from Torchlight that prob enabled SCF to get the extended govt guarantee has turned into debt and that Torchkight/PGC bow have $151m over SCF assets
Goes on and tries to explain all the different stories that are told over the deal
Spose Maier is the only one who has any idea and he is not always that upfront but some of the things SCF have done have been pretty desperate
Go to the nearest mag shop and buy a copy .... good aarticle
Also alludes to the Allied Farmers mystery $7m that has never surfaced even though it kept the bankers happy
If SCF get their capital inflows ... along the lines of the three likely methods we have talked about, before ... all the sins of the past will be forgiven.
If they don't ... well, the consequences are easy to predict.
I suppose the governments reasoning is that with SCF intact ... there is one large problem to be sorted. With SCF in the ditch ... there would be a myriad of problems to be sorted as insolvency practitioners run riot over heartland NZ business.
I am sure that everyone is aware that SCF is on the knife edge. Reminder of this fact, every now and again, is also useful.
What is not useful is journalistic schadenfreude. I think the suggestion that deception is involved oversteps the bounds of what is useful. Profiling Lehman Bros collapse and then following on with a SCF analysis asking a rather pointed question is a bridge too far, in my view.
If Chalkie wanted to do something useful ... they could give us some information on the capital inflows. That is the key to understanding the future of SCF.
SFO probes millionaire
BREAKING NEWS: Entities run by Canterbury millionaire Alan Hubbard are under investigation by the Serious Fraud Office as the Government moves today to try and protect $134m of investor cash.
http://www.stuff.co.nz/business/indu...ry-millionaire
NBR front page the other day had story about Alan putting his private stuff into the carities where he wanted his money to end up
Must be pretty distressing for the old bugger ..... not many individuals get put into statutory management
You would have to think affects SCF somehow
I sure it is distressing... I'd be interested in the contents of that NBR article but its subscriber content.
It also states in the article that "South Canterbury Finance, with which Hubbard was closely associated, was not part of the statutory management order"
certain irony on a wet day in Timaru that good old Alan who drives around in his old VW is now sort of tainted in the same way that Petrovich and Bryers have been but Hotchin in still squeaky clean
This is sad, really sad.
A man who strode the earth as a financial lion and who should have been basking in the glory of his past achievements in the twilight of his years is reduced to this.
Boop boop de do
Marilyn
Winner69 you must have been lucky I think cos its all still locked up for me.
No I can't get in either.
I do feel sorry for Allan Hubbard, and hope all this stress doesn't kill him. I still think he is an honourable man, maybe I'm naive but he does seem to have done his best to keep SCF going.
At least he hasn't skipped off to Hawaii.
I admire the writings of John Kay in the Financial Times .... sadly what has happened to Alan is what has happened across the world .... all because of a failed new financial world
here's what Kay wrote last year
Quote:
John returns to his experience as a Halifax director to retrace the rocky road to last week’s rescue takeover.
I once gave away more money than Andrew Carnegie or Bill Gates. Ten years ago, as a director of the Halifax Building Society I authorised the distribution of almost £20bn to its 8m members on flotation of the business. Last week, the story reached a sad denouement and much of the windfall slipped away. The organisation, now part of HBOS, agreed to a rescue bid from Lloyds TSB.
The business I joined gathered deposits from small savers, mostly through its branches. It lent the proceeds to house buyers. Founded as a self-help organisation by provident Yorkshire folk 150 years ago, the Halifax became the world’s largest mortgage lender. Its quality of service and competitive interest rates trounced conventional banks in the UK retail savings market. The simple business model was very robust. In the early 1990s, a combination of high interest rates, recession and falling house prices posed much more serious problems for UK homeowners than anything seen, or likely, in the current credit crunch. But the Halifax remained profitable and mortgages readily available.
Accepting deposits and underwriting and administering mortgages requires that millions of records should be maintained and updated every day with almost no errors. This activity does not require flair or imagination but does require conscientious individuals with integrity and loyalty. The Halifax was a precision machine that made the most of the talents of ordinary people. I came to understand the fundamental incompatibility of the cultures of retail and investment banking and why the marriage of the two so often leads to tears.
The road to nemesis began, not at conversion, but earlier – on the day it was decided that treasury should be a profit centre in its own right rather than an ancillary activity. Legal restrictions on UK mortgage lenders were relaxed in 1986. Halifax’s main rival, Abbey, converted to a public company and leveraged its deposit base to build a large balance sheet. Most bankers were incredulous that the Halifax had been so slow to take advantage of this opportunity.
For an economist who taught that profit could be sustained only as a result of competitive advantage, this diversification raised a simple question. Some businessmen on the board, accustomed to a world in which profit is earned only by meeting customer needs, saw the same difficulty. Trading in short-term money market instruments is essentially a zero-sum game – one party’s gain is another’s loss. So what was the source of the trading profits that not just our company, but every company in this business, claimed to make? The experienced bankers would shake their heads at this naivety. If they deigned to answer the question at all, it was to say that our traders were uniquely perceptive and prescient, although it was difficult to remain convinced of that once you had met them. Large banks derived an informational advantage from the volume of business they transacted for their main customers. But it was hard to understand why those customers tolerated it, or how newcomers could muscle in.
Most apparently successful trading strategies involve what I now call Taleb processes, after Nassim Taleb’s book The Black Swan. A series of small profits is punctuated by occasional large losses. Then cognitive dissonance combines with short memories. The profits are attributed to successful trading, the losses are the result of unforeseeable events.
There, in a nutshell, is the story of the credit crunch. And there is the story of how a business that had grown for 150 years forfeited its independence. When the dust settles, many banks and hedge funds will have lost more money on their trading activities in the past year or so than they had made in their entire history. Those conscientious people who process deposits and issue mortgages are still there, though many have had the worst weekend of their lives. The business they do continues to make money. Customers mostly remain loyal. The pursuit of shareholder value damaged both shareholder value and the business. We let them all down.
John Kay stepped down from the Halifax board in 2000.
Talkback already has Hubbard as the NZ version Madoff .... ...... shouldn't allow the lonely and uninformed ring up radio hosts .... but it keeps the ratings up
The psychology that offered SCF some kind of hope for the future has now been reversed. They might as well put SCF into statutory management, now.
If there is impropriety - the Registrar of Companies has no choice but to refer the matter to enforcement authorities. The fact this has been referred to the SFO for investigation is obviously a serious escalation.
I expect a rapid suspension of all tradeable SCF instruments on Monday.
Very sad.
hey Enumerate (love that name) - maybe Shoeshine knew something when he used that word that you thought was a bridge too far - it was journalistic schadenfreude (whatever that means) .
Could be a micro version of Lehmans collapse after all
Hard to see SCF not being embroiled in all this ... (pending) recap organised by the Dunedin sharebroking firm would need his signoff ... doubt whether he is allowed to sign anything for a while
Methinks Treasury have essentailly run SCF for a while now and as Alan was making sure his charities got their money that was the last straw for them
just as well we have a generous government ..... we all pay instead of a few losing the lot ... is that fair
We have gone from "Schadenfreude" to "Widerstehe doch der Sünde".
I was really hoping that it would not come to this. These latest revelations are a complete bombshell. I do not believe anyone was anticipating anything like this. This could end up as criminal charges against Hubbard. Hubbard's integrity was one of the psychological pillars of the SCF rebound.
I'm happy that at least the interest on debentures went though this week.
Yes - I agree they should suspend, as it would not seem right to allow trading in the SCFHAs or SCF010s at least, and if they suspended those, then the SCF020s and SCF030s would have to be suspended too I think.
Not sure if they will though - AH is not directly involved in SCF now (theoretically), but he is, ultimately, the controlling shareholder.
Will be watching as an interested by-stander!
Alan.
Stunned!. But once again we see the words "related party loans". While AH is now only President For Life he was part of the operational side of SCf while the problems with Aorangi Securities were occurring. Even now he says he's the one trying to get a SCF deal together with an interested overseas party. AH was known for his "hands on" approach but Aorangi have, allegedly, unsecured loans which are poorly documented so can any assumptions be made about SCF? This cannot be good for SCF. Like TEL, SCF's whole approach now is based on "trust us" but when you have AH under Statutory Management how far can that trust go. I guess we wait to see what ripples this particular boulder causes now its been biffed into the pond. What will be interesting is to see how closely SecCom and Treasury talk. If a compliant was made in February, then did this information get to treasury while they were looking at the Extended Deposit approval. Treasury were pretty fast in getting confirmation out to depositors that they remained covered and not affected by "todays actions" - bu tit looks like tax payers are one step closer to bailing depositors out.
Statement from Mr Hubbard:
"I am writing to you following recent action by a Government department.
"I have operated Aorangi Security as a mortgage company for over 30 years and during that entire period interest has been paid quarterly and the clients have suffered no loss of capital and have a prompt return of capital.
"The current position of Aoarangi is approximately as follows:
"Mortgage and loans owing to Aoarangi: $126 million
"Cash at bank: $2 million.
"This adds to $128 million.
"Client desposits $88 million which means a surplus of $40 million.
"The $40 million surplus belongs to myself and family and all our equity has been subordinated to client interest, ie, the Hubbard family stands any loss before clients do.
"The Crown seems to believe that your capital is at risk under my management and have appointed a statutory manager whose job is to realise all the loans and repay you your capital. This will take time as it is not possible for borrowers to repay loans at short notice.
"There are sufficent funds on hand to pay interest due at June 30.
"If for any reason you do not receive your capital back in full and provided it is within my resources I will meet any shortfall.
"I extend my personal apology for what has happened.
"I am sorry that this action was taken by a government offical with little consultation with myself and can only conclude that the government official has been misguided in his action.
"In the past month I have been working on finding a solution to South Canterbury Finance affairs and hope to arrange an agreement with an overseas company, subject to confirmation by June 30 to inject a large amount of capital which would place South Canterbury Finance in a secure position for the future.
"As you will have read in the media in February last I introduced $150 million of assets into South Canterbury Finance to ensure that there was an equity for preference shareholders and that they suffered no loss.
"I don't believe in the history of New Zealand that any person has acted more honourably than myself." Allan Hubbard, June 2010.
There are skeletons in the closet not yet exposed. A number of posters on here have alerted us awhile back. Sad state of affairs.
Now, with coal you are either mining the stuff and selling it. Or it is staying in the mine. Is coal where people should, in the South Island, put their cash? Would it be safer than Finance Companies? Try Pike River?
and now the real reason for announcing recently the "President for life" role at SCF becomes clearer.
I don't think they would have had much choice - any material change to the company's circumstances require the prospectus be re-written to cover that event, and I would think the ultimate controlling interest going into Stat Mgt is a material event.
Oddly, the impact on the SCFHAs hasn't been as significant as I thought it would be. I was hoping for another buying opportunity!
Alan.
What a travesty. Alan Hubbard gets his good name besmirched, while real rogues like Hotchin and Watson go free.
The young lion - aka Kerr - is already circling, sensing that the old lion has lost his strength. And meanwhile the vultures and other carrion creatures - aka the great unwashed and uninformed - wheel above, depositing their dung.
Where were these "concerned" civil servants when Strategic and Hanover and Bridgecorp and Provincial and Capital/Merchant and MFS and Babcock & Brown, etc., etc., committed their various acts of public hurt? Nowhere to be seen!
What utter hypocrisy.
Couldnt agree more Colin.
This guy has done more for assisting getting people into business and helping various charities than probably any other NZer.
People like Balance who love to sit and bag him will never acheive a fraction of what AH has.
This is likely to be an opportunity for a few beauracrats whose jobs are threatened to justify keeping them for a while longer.
Its a pity they couldnt find the energy when it was really required.
What utter rubbish.
So Hubbard is untouchable?
If the public servants do nothing because they have done nothing in the past against other finance companies, they must not take action now when there's concerns?
The Securities Commission and SFO better have sold evidence to take such a drastic action. One senses that some serious soul-searching was done before this action was taken.
Always remember what AB all time legend Colin Meads said : "SOLID AS".
The main concern of the government from what I hear is they want to keep all the marbles in one bag before the marbles become lost. Certainly noticeable tonight that we are all mortal and Alan is not the man he once was....
[QUOTE=Balance;308604]What utter rubbish.
QUOTE]
I will treat that comment with the contempt it deserves.
This move has got to be all about saving the taxpayer from a couple of billion dollars in lost assets. They will wind up SCF over the next few years, us taxpayers will lose a bit of a cash, but SCF shareholders should get most of their money back.
Yes it's drastic action, no Alan Hubbard isn't untouchable and these are extraordinary times. Who knows what skeletons are in the closet down in Timaru. This doesn't have much to do with Hotchin/Watson and co because shareholders in those companies opted for moratorium instead of recievership when they could have nailed them to the wall. And those comapanies weren't underwritten by 'we' the taxpayer.
Mr D
Now thats a very good question - indeed they were no where to be seen late 2006 early 2007. I started the Divestor thread in Sept 07 and even then it wasn't until Feb 2008 that Leanne Dalziel finally got Labour off its fat bum and introduced the Financial Advisors Bill.
But look at the alarm bells: Nathans, National and Provincial went under in 06 but the "biggie" - Bridgecorp went under in 07. The punters had the alarm bells ringing but still they got sucked in by the TV and newspaper advertisements and high interest rate offerings - until the the Finance Companies cottoned onto that risk profile and started dropping their rates so the punters got less for higher risk. No number of Civil Servants could have stopped the rush of punters towards these finance companies.
But eventually the government did move. They got the Financial Advisor Bill through so the punters should have more faith in the quality of their advice and the Deposit Guarantee scheme then went and undermined that by backing any old punt. And even then the punters (in Hanovers case) kept chasing the lure of the golden dollar - what does it take to prevent people from hurting themselves?
So now we have a "Concerned" Civil Servant who is finally prepared to make a move - and you cry foul! And the AH followers (just like Buffet disciples) follow blindly on.
I am confident the govt would not have moved on AH and his wife if there wasn't something of substance to back their concerns. The question remains "how much substance".
I'm sure there are many punters who reckoned the sun shone out of Alan Hawkins (I did!), Doug Edgar Somers, Hotchin and definitely Watson, Petricevic and Madoff, Versalko, William Gibson, Peter Marshall, Mark Bryers - how many more do I need to name?. But eventually a concerned civil servant, in some cases made a made. Regardless of the CSS the punters view of these people is now a little different - but it sure took a heck of a lot to open their eyes.
I dont follow SCF but my views are:
- It is very tragic that his has happened to AH but that doesn't mean that it is unwarranted.
- the fact that nothing happened re Bridgecorp etc is irrelevant. You need to fix your mistakes at some point and considering the Government has already provisioned $500m, this seems a good place to start.
- AH may have done nothing wrong but he obviously hasn't satisfied the officials since the complaint was investigated back in February. The softly - softly approached didn't work so they had to go to this. It was a damned if they do and damned if they don't situation i think. Better to try something and fail rather than do nothing and guarantee failure.
The reality is that statutory management of Allan Hubbard is statutory management of SCF. After all, Allan controls Southbury, Southbury controls SCF ... and the government controls Allan.
I expect that things are probably going well, in SCF.
I expect that there is some pressure on Allan given the guarantees he made, probably through Aorangi, to guaranteerite SCF defaulting loans. I would expect that this aspect of Aorangi operations has attracted the concern of the SFO.
Clearly, anyone interested in a SCF stake now believes they can drive a harder bargain. Hence it is bad news that these potential capital inflows will be delayed.
Clearly, debenture investment and rollover in SCF has suffered a knock. Based on the market reaction to the news of Hubbard's investigation - perhaps this will be inconsequential.
I think a deal to refloat SCF will happen. I am torn between feeling that Allan Hubbard should have been left to do the honorable thing - restructure SCF with Southbury taking the hit; and worry that there is a case to be answered under the Companies and Crimes act.
From an investor perspective ... unless you are hot money looking for 8%, a government guarantee and a complex life .... my first choice of SCF010's are still way too expensive, SCFHA's are insanely risky.
I think, in reality you'll find the beauracrats have more than enough on their plates at the moment - there are loads of directors in the courts and many more under investigation. I don't think they need any more work to justify their wage. I'm no fan of beauracracy but its not a bad thing that they do have the energy to do what they have done - on the face of it they are trying to protect $00's m in the Trusts as well as the spin off effects into SCF. This whole house of cards has been very shaky for a long time but there are many people working hard at trying to keep it all together. If these beauracrats can save the trust depositors and the tax payers who will fork out under the Deposit Guarantee then I'm all for it.
After all the debacles in the finance company sector it's not surprising that the Securities Commission is now "playing safe" in this case.
Whether such action is justified, we'll have to wait and see.
Looking back on the old SCF accounts Aorangi and one or two those trusts mentioned borrowed money from SCF but the amounts were never disclosed. All seem to have gone now.
Makes you wonder why Aorangi, the vehicle for Alans wealthiest investors, would also want to borrow from SCF
I get the feeling that the back room games and politics of all this is because Hubbard prob doesn't want to have his share of SCF/Southbury watered down too much from the expected recap of SCF .... and the SM is one way to take him out of the equation to speed things up ... just conjecture on my part
Amazing stories going around about all this ... like who was the Aorangi investor who bought this to the attention of the authorities
Something doesn't smell right about this ...
AH has been progressively sidelined and isolated from the levers of power in SCF, over the past few months. Statutory Management now effectively puts control of Southbury in government hands.
Allan Hubbard is, effectively, "in check". He is now completely isolated from any key decision effecting SCF.
Maybe Treasury held it's collective nose upon reviewing the SCF accounts presented in support of the government retail deposit guarantee extension, approved it anyway because of the consequences of an SCF administration. However, moves have been afoot to seize control of Southbury and to stitch up a salvage deal. Clearly, Allan Hubbard is the patsy ... he will take the loss in Southbury with a dilution and loss of control over interests in SCF.
Events over the last six months can be interpreted as the unfolding of a master plan. If this is indeed the case, beware. It basically means that private property does not exist in New Zealand. If you get between the government and it's financial interests ... your property rights will be extinguished.
In any event, the SFO better move quickly to prove a charge or be prepared for a public spanking on Allan Hubbard's knee.
Looks really bad :
"The Companies Office found that NZ$98 million in funds lent to Aorangi by 407 Otago and Canterbury investors had been lent on either directly or indirectly to trusts and interests associated with the Hubbards, contrary to instructions that they be lent as first mortgages secured by property."
SCF 22/06/2010 PROSPECT REL: 0910 HRS South Canterbury Finance Ltd PROSPECT: SCF010: South Canterbury Finance registers amendments to its prospe 22 June 2010 South Canterbury Finance registers amendments to its prospectus South Canterbury Finance Limited registered a memorandum of amendment to its current prospectus and investment statement yesterday, Monday, 21 June 2010. South Canterbury Finance Chief Executive Officer Sandy Maier says the Company fulfills its obligations to keep investors informed by registering amendments when there are material events that require the investment statement and prospectus to be updated. Both documents are available on the Company's website: www.scf.co.nz Ends
Seemingly the above Amendment to the Prospectus would make it legal to immediately proceed with allocating funds already collected by SCF, as well as new funds got in from recent public meetings & advts. And the fundraising efforts & restructuring at SCF can resume, presumably with even greater urgency.
"South Canterbury Finance has had its credit rating cut from B+ to B- by Standard & Poor's on concerns the statutory management of owner Allan Hubbard's interests will damage investor confidence."
Its gone down to a B-/C and Sandy can still put a positive spin on it: 'If anything, the rating action reinforces the determination of the directors and management to build on the good progress already achieved to turnaround the business of the company.''. Great to know the Directors determination is being reinforced -
The more you think about it the more obvious that the whole Hubbard empire should officially be in receievership / statutatory management or whatever
Its obviously been treated as Alans pile of money to do what he wants to do with it ... so many related party transactions is why the whole empire needs to be wound up .... not this de facto charade we have at the moment
If the govt guarantee is called up how long is the money tied up before the punters get their money back? I assume it is dead money in the interim?
Wonder who the whistleblower was?.
Totally agree with you. I have yet to see anything that shows Hubbard is not an honourable man. His only mistake may have been to trust those running the business.
Sad that a man who appears to have done so much for charities in NZ is being crucified like this without even a trial, and to put him in the same category as the Hotchins etc of the financial world.
Whoop-whoop, Terrain, whoop-whoop, pull up, whoop-whoop, terrain pull up pull up!
Boop boop de do
Marilyn
Hubbards hometown newspaper, the Timaru Herald, has an ironic sense of humour ..... lots of stories about the home town boy as well as an article on how Madoff funnelled $9 billion or some outrageous amount to his close associates before being arrested
Madoff was very honorable with other people's money - never missed a single interest payment or redemption - until he got caught.
Madoff donated generously to charities as well.
So easy to be charitable with other people's monies.
http://www.boston.com/bostonglobe/ed...ted_donations/
And BTW, Hubbard was running the trusts, not some employees.
"The Companies Office found that NZ$98 million in funds lent to Aorangi by 407 Otago and Canterbury investors had been lent on either directly or indirectly to trusts and interests associated with the Hubbards, contrary to instructions that they be lent as first mortgages secured by property."
More facts and infor to come out yet.
Colin Meads : "Solid As".
Poor bugger ... can't even go to the office any more
http://www.stuff.co.nz/business/indu...cruellest-blow
SCF approaches Crises point:
It looks like the SCf 010 would be a great trade at 70 cents in the dollar. Either SCF hits the wall soon and the GG gives you $1.00 back or Maier gets his equity injection and the bonds all rally. Either way a trade with little downside
The SCFHAs are getting down towards a realistic price. I'm not buying into a downwards momentuum like that though - sentiment might put them below 10c in the near future - difficult to justify a valuation.
Alan.
Don't put words into my posting - it does you and all the AH cheerleaders no credit whatsoever.
I am simply drawing your attention to the fact that you guys are the ones who hold him up as 'untouchable' due to his charitable acts etc. Madoff provides a great perspective of what can lurk under a persona.
Good luck to AH but if he has been using investors' monies contrary to their instructions - the die is cast.
For those looking for a background to the man there is a bit of a social history here
http://www.listener.co.nz/issue/3654...bury_tale.html
There is a risk Cantabrians (and Southlanders) can be a bit one eyed over this. They forget though that just because you are rich and do noble things doesn't mean that things cant go wrong. Take Peter Stewart, son of revered Sir Robertson Stewart who founded PDL. For 40 years he lived with sodomy, rape and indecency offences against an 8 year old and lead an otherwise blameless life.
Now I'm not for a moment putting AH in the category of sex offender (we can leave Graham Capill to hold that mantle) - however the one-eyed adorees possibly need to reflect that SCF is in the situation it is now because of AH's guardianship, despite best efforts to pin Lachie Mcleod as the scapegoat.
That AH has done great things is incontrovertible; that he has perhaps exercised cloudy judgement is debatable; that he has committed criminal offences has yet to be determined.
Without a doubt SCF now need to rapidly isolate itself from AH. SCF is big business - its not work scheme for the aged and infirm. That he appears not to have a succession plan should be of concern to SCF punters. A man who appears to not recognise his own mortality is, perhaps not the best person to be leading SCF out of the quagmire. An enforced break may give SCF the edge it needs.
amazing story bit like the godfather specially the bit helping 100 young farmers with % free loans costing 40 mil of is own money
what a laugh it's a peter pays paul storey and peter has stopped paying just like madoff .
It is one of the endearing features that SInlanders are one eyed about things.
The endearing part goes out the window however when they start preaching conspiracy against others - when the information has been there for a while that AH has been using SCF like his own war-chest to do whatever he felt like doing.
The level of related party transactions was and is a huge window into SCF and AH style of looking after investors' monies.
In the end though, the truth will prevail - if AH has not been using investors' monies for his own purposes, then he has nothing to fear and will be totally vindicated. SIslanders and Cantabrians can rejoice and the govt agencies have suffered a setback from which they will not recover.
I get the sense that the government agencies (as well as the Government and individual Ministers including Key and English) are very well aware of the risks surrounding SCF and AH. I also sense that they would not have embarked on this latest course of action unless they had very real concerns that could be substantiated.
This is not a case of some quaint country bookkeeper looking after Nanas nest egg to afford himself a slap up meal of Steak and Chips at the local Cobb and Co which keeps the neighbors daughter employed as a waitress. People are losing sight that there is $000's m at stake hear - and ultimately the tax payer is the one propping up this house of cards and who is facing the prospect of working for many years to pay the taxes to give to the people who, with one eye closed, gave their money to SCF.
I must admit, I didn't know the Allan Hubbard story. It is all the more upsetting, when you understand his history, where he finds himself, today. I sincerely hope that things work out for the best, for him (and his wife),Quote:
Originally Posted by peat
I think he has good support from Maier. If anyone can intelligently call the shots and manage the psychology ... it is Maier.
Practically speaking ... I just may have to buy some SCF debentures ... to do my bit.
I keep looking at the SCF010's and think what am I missing, surely buying at 38% has got to be a bargain, there doesn't seem any way now that SCF can survive.
Minimoke .... can you change the little photo under your name to a golden VW to fit the occasion
Statutory management - it may take 5 to 10 years before you get your money back. Interest stops accruing from day SCF goes into receivership (if). So time value of money means your money is stuck and you do not earn any interest.
Market is not dumb - some investors may be.
In financial terms, comparing Allan Hubbard with Bernie Madoff is like, in political terms, comparing Mahatma Gandhi with Joseph Stalin.
I think that it is quite clear that running a $20million Timaru finance company based on "handshake" contracts and 50's era documentation process does not work for a national, $2billion, finance business.
Sprinkle in the trials and tribulations of a lending boom during a property bubble, the liquidity crunch of the GFC, failure of a bunch of "new mates" to meet their basic obligations ... result is a lot of very worried people who realise they lent too much.
Has the SFO over reacted?
At this stage, who knows. However, it better be some significant charge, that sticks and not some vague worry that Allan was running a $100million finance company out of a shoe box. (The associated shoe, belonging to his mother ... Old mother Hubbard ... (sorry, couldn't resist)).
Enumerate
I'm not sure anyone here is comparing AH directly with Madoff (watson hotchin et al).
That some comparisons (such as Maddof was highly respected for his philanthropic work amongst the Jewish community prior to 2009) can be drawn is valid but there is no evidence of fraudulent or criminal behavior on AH's part so there is no basis for any comments that might infer that.
What is causing me (as a tax payer) concern now is the one eyed adoration which is losing all sense of perspective. Todays newspaper ads are starting to resemble the David Bain Fan Club with their startling inability to focus on the known facts of the present situation - preferring to rely on personality and past deeds. Don't get me wrong - those past deeds should be recognised and celebrated. But today it is the tax payer who is standing behind the punters who are throwing their money into SCF based on AH's reputation rather than on SCF's ability to survive on its own two feet.
Read this on NZ herald site. Which 3 categories are not covered by the Govt guarantee?
"Most of South Canterbury's 30,000 investors have the Government's backing after the business qualified for a guarantee protecting most categories of deposits. However three categories of NZDX-listed shares do not qualify for the guarantee."
Essentially a complaint has been made and issues raised. Investigations are being carried out to firstly determine if there is any substance to those issues. Riding tandem to that is the securing of data (copy paper files , securing hard drives etc) and preventing the movement of funds which may not be in the interests of investors. It may be that the investigations find there is no substance - in which case SecCom and SFO go home with their tails between their legs (but holding the moral high ground because they are "working in the interests of investors" - though why they never did this for Hanover, Bridgecorp etc remains a question to be asked). If there is substance they then have to work out if any offences have been committed. From there they work out if its in the public interest to pursue charges - if so they then get the evidence together and enough evidence to support whoever is going to prosecute those charges. Still early days.
I agree with you. However, I do maintain a different perspective:Quote:
Originally Posted by minimoke
1) Tax payer exposure to SCF through the deposit guarantee was unsolicited by SCF. Another of Cullen's blunders ... Once the guarantee scheme was enacted, there was no choice but to subscribe. The government has no moral right to "defend it's interest" in SCF because it imposed a stupid guarantee on retail deposits.
2) Are Allan Hubbard's supporters excessive and irrational in their support. Too bloody right! Ask yourself why this large community of people exists and why they are voicing such extreme opinions. This gives credibility to the Alon Hubbard legends. It makes me think that SCF will be well supported by a core constituency when the time comes to rolling over the "wall of debt".
3) The issue is not "are Hubbard supporters right or is the SFO right about Hubbard's integrity?". The Registrar of Companies is no fool and has integrity that would match (or exceed) Allan Hubbard. Adam Feeley has been recently appointed to head the SFO. There has been a significant restructure there and a massive step up in the energy and enthusiasm in addressing potential breaches of the various securities acts. This is a very good thing. I think Allan Hubbard is a man of the highest integrity. I also think our bureaucrats are also of the highest integrity and are now working for a Minister that has put intellectual muscle and moral fibre in place to investigate and persue cases. The former minister (Dalziel) was clearly not up to the task and the pre-Feeley SFO matched this degree of incompetence.
I can see this situation can have a positive outcome. The days of informal governance at SCF, based on Allan Hubbard's informal loans processes are over. Maier is in charge now. Allan's wider activities will also be brought into line - the SFO probe will see to that. Allan will be cleared of malicious wrong doing - his integrity will be intact. There will be some changes to the governance of Aorangi and trusts - this will also be a good thing. The SFO will prove it can act and will act ... this will be a triumph for the Minister.
A number of good things will result from this process.
not really too different!
SCF went into the guarantee voluntarily - they could have just said "we stand by the integrity of AH and the strength of our books and do not need the Guarantee. Similarly depositors could have shown their support by investing in non-govt guaranteed deposits. That neither did this should raise concerns and neither should expect the tax payer to back them - particularly now.Quote:
1) Tax payer exposure to SCF through the deposit guarantee was unsolicited by SCF.
I am stunned beyond belief that they seem to think it is OK to be running a sizeable business apparently without systems or paper work. They are quite entitled to think SCF is like getting a newspaper on tick at the local dairy, or a piggy bank with a lose bung - but again the tax payer should not be backing themQuote:
2) Are Allan Hubbard's supporters excessive and irrational in their support. Too bloody right!
And I'm amazed the One Eyed supporters are making it so personal. Its not about AH - theres is a much much bigger picture. And we can all give thanks to Dalziels departure - she was a total waste of space .Quote:
3) The Registrar of Companies is no fool and has integrity that would match (or exceed) Allan Hubbard.
If Maier can pull SCF through now it will be something no less than miraculous. Perhaps he is really AH's legacy.Quote:
Maier is in charge now.
I can only think of four listed securities:
SCF010
SCF020
SCF030
SCFHA
Of those, certainly the SCF010 and SCFHA are not covered in the sense that they mature after the EGS expires (or never in the case of the HA perpetuals).
I'm not certain, but the SCF020 and SCF030 have (previously) been trading as if they are covered.
Alan.
Several interesting comments in this article ...
http://www.nzherald.co.nz/investment...0653710&pnum=1
I was under the impression the complaint was laid some time ago and it was determined there was substance to that complaint, hence the sever actions taken. Otherwise they would have given AH more time as he requested.
Note: l hope for the sake of the Govt guarantee that there is no fraud or other issues and that SCF can trade out.
I note that Chris Lee, in Taking Stock, on his well known web site, takes a very subdued tone on the Statutory Management of Allan Hubbard, his wife, and certain companies. His commentary comes at the end of the multi-topic'ed blog - almost as a footnote. About the only point he makes is that he reckognises that the deep subordination of the perpetuals put them at the highest risk, if SCF folds. I am not really sure if he is saying "sell SCFHA" - you need to read for yourselves at www.chrislee.co.nz.
It is very strange that while Chris Lee seems to be approaching a nadir of despond on SCF, I am beginning to see the signs of capitulation as a buying opportunity!!
There is a piece by veteran reporter Vernon Smellie on www.stuff.co.nz (Business Wire) today which is worthwhile reading. He quotes the views of McDouall Stuart, along these lines.
Something that alarms me is the following quote in today's "Press" from Feeley, the SFO guy:
"We have reasonable belief an offence may have been committed but that is quite different from saying there is a case to be answered and charges to be laid. IF ANYTHING, THAT BELIEF COULDN'T BE FURTHER FROM THE TRUTH". If that is the case, then why the blazes have they gone about this in a way that, in all probability, has dealt a mortal blow to any chance that SCF can be placed on an even keel. Sure, the Registrar of Companies should investigate any perceived non-compliance with the law, but why announce to the world that they suspect SERIOUS FRAUD until such is proven, if in fact it does exist?
One of the ironies is that the Government says it has taken these moves "to protect investors in Aorangi Securities"; but what about the thousands of Mums and Dads and Grandmas and Grandpas who hold investments in the SCF 2012 bonds and the perpetual prefs; these are not protected by the Govt Gtee, and the SFO's actions have virtually now guaranteed that they will be deeply out of pocket, whereas probably not one cent of Aorangi investors' interest or capital will be at risk.
Another point that doesn't seem to have received much airing: Aorangi doesn't appear to have been soliciting money from the public in general, but its nature is rather that of a club of wealthy friends of Allan's, who have been using his skills to invest on their behalf. That being the case, why the need for a prospectus, etc? If I get together with some of my mates and they decide to pool their cash and have me invest it for them, at what point do I have to register a prospectus?
Just some musings aloud. And its good to see some well-reasoned, balanced, objective contributions coming through on this thread, from the likes of yourself and Minimoke.
Cheers.
[QUOTE=COLIN;308928].
Something that alarms me is the following quote in today's "Press" from Feeley, the SFO guy:
"We have reasonable belief an offence may have been committed but that is quite different from saying there is a case to be answered and charges to be laid. IF ANYTHING, THAT BELIEF COULDN'T BE FURTHER FROM THE TRUTH". If that is the case, then why the blazes have they gone about this in a way that, in all probability, has dealt a mortal blow to any chance that SCF can be placed on an even keel. Sure, the Registrar of Companies should investigate any perceived non-compliance with the law, but why announce to the world that they suspect SERIOUS FRAUD until such is proven, if in fact it does exist?
One of the ironies is that the Government says it has taken these moves "to protect investors in Aorangi Securities"; but what about the thousands of Mums and Dads and Grandmas and Grandpas who hold investments in the SCF 2012 bonds and the perpetual prefs; these are not protected by the Govt Gtee, and the SFO's actions have virtually now guaranteed that they will be deeply out of pocket, whereas probably not one cent of Aorangi investors' interest or capital will be at risk.
Couldn't agree more Colin
As someone who usually believes -"always expect the worst and you won't be disappointed" I am on Allan Hubbards side in this.
However until the whole business is clarified there is this lingering doubt?
Westerly
Very good article - had to dig it out - it is syndicated across a number of publishers - here is a one that came up on google:Quote:
Originally Posted by COLIN
http://business.scoop.co.nz/2010/06/...reeze-what-if/
I have read quite a bit today about Hubbard, Aorangi, etc. etc. One point that struck me (that I now can't find and properly attribute) is that SCF traded in the space of emerging and developing business. This sector of the economy is vital to the vibrancy of the economy - because this is the crucible of new investment - in which tomorrows growth companies are shaped. Hubbard's style was perfect for the nurturing and growth of these companies.
The haunting conclusion was that the failure of SCF would see these companies starved of cash at a vital stage of their development. The banks aren't interested ... the government has no clue ... other finance companies are too small or too weak to fill the void.
When you read about the Hubbard legends ("Hubbardology") - I get the sense that SCF was seminal in arranging so much productive investment, in the South Island, that the place would be significantly poorer without his financing vision.
I think alot of people recognise this contribution to their well being. It was achieved without government intervention or support, without bank support, even when the people beneficially effected couldn't share the vision, at the time.
I just wish I could remember the article and author who made these points - to cite properly.
I haven't read that article but, yes, I think the thrust of your recall does capture the setting. One has to live in the South Island to fully appreciate the intensity of feeling there is, in these parts, about the perceived harm and injustice arising from last weekend's developments. I have little doubt that it could do electoral harm to the ruling coalition; South Islanders, rightly or wrongly, tend to regard North Island "suits" with a certain amount of suspicion and even disdain. And when one of their own is perceived to have been treated shabbily, they react.
It is, of course, a great pity that Allan had not moved years ago to make proper succession plans for his booming business interests. When he first talked about going to the capital markets a few years ago, it was going to be on the basis of a public float of part of the company. But, unfortunately, he then decided to pull back and, instead, went with that preferential share issue (SCFHA). If, instead, he had admitted other ordinary shareholders, along with some independent directors, and then gradually reduced his own percentage ownership, I think the present situation might have been averted.
In the Independent (i think) it said he was relunctant to move to electronic records as he was a technophobe (rightly so for someone his age). Apparently he also keep a private book of loans for those he knew (ie the personal touch).
Agree with Colin, this could have significant impact on investment in the South Island. There is no doubt he helped a lot of people get to where they are today.
Timaru shows support for Allan Hubbard:
http://www.nzherald.co.nz/business/n...ectid=10654352
Amazing! Vox populi, vox dei. It is quite clear that a significant body of NZers believe that an injustice is brewing ...
Given the demonstration that our politicians cannot behave with integrity with their expenses, that our public officials have a very patchy record in enforcing our finance and securities laws ... I don't think there is much public patience with the direction the Minister has taken.
People will be long suffering in terms of being ripped off by Petricevic, Watson, Hotchin and Bryers (and a host of others). However, they will not stand for the perceived injustice against Hubbard.
What a wonderful country.
If they are right (and I would currently be very surprised if AH is guilty of 'theft' of funds or anything close), then I think this reaction is exactly right.
It is one thing to lose (or see others lose) out to a con-man, but seeing an innocent man be dragged through the mud is much worse and makes most decent people quite angry.
We'll see, but if this is just a 'paperwork' issue then I think the administration will have mucho problemo.
On a separate note, I thought it was interesting that John Key was so strong in his backing of Simon Power. He could easily has said, "I won't comment on an ongoing investigation" and left it at that. Why go further ahead of any findings / investigation?
Alan.
Were SCF to be put into Statutory Management, would that make it ineligible for the Government guarantee ?
Complex question.Quote:
Originally Posted by GTM 3442
Effectively, the RDGS applies to organisations that have met the RDGS terms, been approved, payed the costs ... and continue to meet the terms of their lending trust deed.
The powers of Statutory Management are detailed in the Corporations (Investigation and Management) Act 1989 ("CIMA"). Statutory Management is a measure of last resort to be used if:
* The affairs of the corporation cannot adequately be dealt with by any other formal and collective insolvency regime; or
* The public interest requires it to be used.
Could you envisage a situation in which SCF maintains the integrity of it's Trust Deed - but is put into Stat Mgment .... why yes!
Could you envisage a situation in which SCF violates the integrity of it's Trust Deed - and is put into Stat Mgment .... why yes!
In the first situation, the guarantee is applied to the retail depositors. In the second situation, it is not.
I am in the process of drafting a letter to the Chairman of the Securities Commission, which I will be copying to Simon Power, expressing my alarm at the content of the following statement by the SCOM spokesperson, Roger Marwick, quoted in today's Press, in relation to the alleged conflict of interest arising from the fact that Simon Botherway's brother's business was placed into receivership by SCF last year. For those who haven't seen the article, I quote as follows:
"Securities commission spokesperson Roger Marwick said chairwoman Jane Diplock was made aware of the connection yesterday, five days after the recommendation was made to the minister to put Hubbard's business interests into statutory management, but did not believe there was a conflict of interest.
"There is no conflict of interest in this issue BECAUSE THE STATUTORY MANAGEMENT DOES NOT AFFECT SOUTH CANTERBURY FINANCE." (my capital letters.)
I am incredulous that such a ridiculously naive statement could be made, on behalf of the body that is supposed to be overseeing the conduct of the securities market in this country. The Statutory Management notices might not have included South Canterbury Finance in word, but they certainly have in effect, as borne out by Standard and Poor's immediate downgrading of their credit rating. And, if SCF is not part of "Hubbard's business interests" then I'm a Martian.
This whole fiasco deplores me.
A couple of months back, Percy made the following observation:
The recent support for Allan Hubbard on Facebook, newspapers and the streets of Timaru makes me believe that there is strength in the SCF recovery that cannot be underestimated.Quote:
Originally Posted by percy
I bought some SCFHA, today. Paid a bit more for them than I like ...
I note the clear capability of Sandy Maier in conducting the turnaround. I note the introduction of Helicopters and Scales into SCF addiing to the SCFHA security. However, it is this customer loyalty ... same as SCY ... that convinces me that the recovery probability is greater than 17%.
Please, do your own research on this ... there are still very significant risks with credible people saying SCF failure is a certainty. SCFHA holders share Allan Hubbard's fate if it turns pear shaped - there will be minimal chance of a recovery on default.