South Canterbury Finance Limited

[temuk]

heck the guy is over 80 apparently .... prob still sahrp as .....

correct! And still drives his 35 year old VW to work every day.

[COLIN]

Gidday

No disrespect to sharer only a 2 year newbee, I was scanning the left hand margin to see how long we have been kicking around, I've been here for seven years OMG! & even before that on the previous format,
COLIN here for 9.5 years !!

Hope you are all well & doesn't time fly when you are having fun?

Gee, is it as long as that. Yes, I do have grey hair, but unfortunately that doesn't always guarantee respect these days! And I'm not quite as old (or as investment-savvy) as Alan Hubbard.
Someone asked whether the perpetuals were Govt-guaranteed; the answer is "no". The company can also suspend the dividend payments on these, but I would be very surprised to see them do this as such action would badly shake the confidence of their thousands of loyal investors, something that AH would do everything in his power to avoid.
I have actually been "putting my money where my mouth is" and buying the prefs lately - the current severely-depressed price levels are just too tempting to bypass. What has to be remembered is that AH would lose every cent of his ordinary equity in the company (and he owns by far the majority of the Southbury shares) before the preference shareholders lose a bean.
I don't think it is beyond the realms of possibility that some tie-up between SCF/PGC/Marac/PGW will emerge over the coming months. Hubbard came to the aid of Norgate, gaining a foothold in PGW for his "generosity", but I believe there is a longer game in all this. Norgate has his back to the wall; the market's sensing of this is reflected in the slump in the PGW shareprice; and PGC has to deal with its PGW involvement before the way can be cleared for it to obtain a banking licence for Marac. Put all this into the pot, add any other seasonal morsels you can find, stir until an even consistency is achieved, and simmer for 6 months!
And also don't be surprised if SCF preference shareholders are offered the opportunity to convert to ordinary capital, as part of an overall restructure. Remember, this was a course that SCF were comtemplating two or three years ago when they were considering an IPO of ordinary shares, but they pulled back. Given that AH has now accumulated a few more years and thus succession planning becomes even more to the fore, and given that original investors in the public pref issue have seen a 60% decline in the market value of their outlay, I feel reasonably confident that he would be thinking along these lines.
I am also of the view that an AH underwrite of SCF losses would be of greater strength than the recent PGC underwrite of Marac's losses.

[Dr_Who]

heck the guy is over 80 apparently .... prob still sahrp as .....

correct! And still drives his 35 year old VW to work every day.

Alot of very sharp and experienced investors have lost alot of dole in this financial market downturn and AH is no exception.

Colin, why would one want to tie up the four companies you have mentioned? How would a tie up solve their current problem?

[COLIN]

Colin, why would one want to tie up the four companies you have mentioned? How would a tie up solve their current problem?

The old saying: "Necessity is the mother of invention" springs to mind.
UDC (ANZ-owned) MARAC and SCF are the only Finance Companies of any substance left in NZ, with BBB- investment- grade ratings or above. Both MARAC and SCF are under pressure from severe impairment of loan assets. Of these two I suggest that SCF is the stronger one. PGC is aiming to get a banking licence for MARAC but that quest must be an uphill road at the moment, not the least difficulty being the requirement for PGC to dispose of its PGW shareholding. And rationalisation would clearly require the injection of outside capital.

All I am saying is: "Watch this space."

[srotherh]

The old saying: "Necessity is the mother of invention" springs to mind.
UDC (ANZ-owned) MARAC and SCF are the only Finance Companies of any substance left in NZ, with BBB- investment- grade ratings or above. Both MARAC and SCF are under pressure from severe impairment of loan assets. Of these two I suggest that SCF is the stronger one. PGC is aiming to get a banking licence for MARAC but that quest must be an uphill road at the moment, not the least difficulty being the requirement for PGC to dispose of its PGW shareholding. And rationalisation would clearly require the injection of outside capital.

All I am saying is: "Watch this space."

Trouble is Colin there is too much space and not enough detail
I bet many more people than view this forum are "Watching This Space" and very nervously I might add.

[Misc]

The 'play' here would be to borrow SCFHA stock and short the bejesus out of it ... there will be other 'Colins' around who are blindly buying the stock imo.

There is a massive dilution coming , at best!

Misc

[Capitalist]

Gidday

Let's look at some other issues.

Recently there was consensus that there was only two rock solid finance co's Marac & SCF.

Long successful history.

Main man the richest south islander est $650 mill.

Not quick,showy boomtime money. A conservative gentleman, similar to Warren Buffett.

Talk of a possible one notch downgrade sends you guys into a "the sky is falling" mode.

IMHO there won't be a problem. Time only will tell.

The 'main man' sounds a lot like Eric Watson...except for the showy bit.

The rest of the post sounds like Hanover's PR.

[macduffy]

The 'main man' sounds a lot like Eric Watson...except for the showy bit.

The rest of the post sounds like Hanover's PR.

I don't think you could get two operations more dissimilar than SCF and Hanover.
The former is, as Contrarian says, a long established conservative firm with a long history of profitable trading with a "main man" who is eveything that EW isn't.
They seem to have overstretched themselves a bit in property lending but I'm picking that they have the financial strength to see them through. Might have to follow Colin in having a closer look at the pref shares.

[macduffy]

Ok I wouldn't touch finance companies with a barge pole but I am still trying to get some clarity here:

http://www.nzx.com/markets/NZDX/SCFHA

quite clearly refers to a 37% yield. Yet others have said it is actually priced at 37c. What is the story here? Is the NZX site misleading?

The price today was 37.5c to give a running yield of around 25%.

[Balance]

Can anyone enlighten us as to how much of Hubbard's wealth is represented by his shareholding in SCF?

I recall a few years ago that part of SCF was going to be floated and it represented half of his net worth.

Point is that SCF now needs money from Hubbard rather than the other way round.