South Canterbury Finance Limited

[winner69]

Where did you read that Winner69?? No release to the NZX that I can see.

Sorry guys ... got the story wrong ... Borland has resigned from Southbury Group and not SCF. He was never a director of SCF

My fault ... must lsiten to the water cooler gossip a bit more closely eh

Gossip said he might take over some of Hubbards duties

[clips]

don't tell me...first name Al..?

[Misc]

At 10% interest Lachie McLeods interest (alone) bill is $1.5m p.a ... how does he pay that ?? Or do one of Colins '1st 4 ships funds' sponsor him?
And what of the Kelt Finance Fiji fiasco??

Misc

[Balance]

SCF has to become totally transparent to regain market support. The dance of the seven veils so far of selective disclosure simply will not do.

[whatsup]

Mis, Some of the finance co's in the past collatolorise the interest depending on several circumstances, security, loan comfort,relationship,industry and your eventual ability to pay ( job security).

[Misc]

Warning for finance companies
4:00AM Saturday Aug 01, 2009
By Dene Mackenzie


Bill English says firms must meet new standards to be part of guarantee scheme.
Finance Minister Bill English yesterday warned finance companies to sort themselves out as he considers what to do with the retail deposit guarantee scheme.

The scheme, introduced by the previous Labour-led Government during last year's election campaign, is set to run out in October 2010.

The opt-in scheme covers all retail deposits of participating New Zealand-registered banks and retail deposits by locals in non-bank deposit-taking entities. This includes building societies, credit unions and deposit-taking finance companies.

The deposit guarantee scheme does not include related party liabilities.

In an interview yesterday, English indicated he was considering what would happen to the scheme after October next year, particularly in how it affected the non-bank deposit takers, such as finance companies.

"They are keen to know what we are considering. They tell me people are putting money into them until the end of September 2010. That build-up could all disappear after that."


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The choices for English were: stopping the scheme, extending it, or lining it up with Australia - which was particularly important for New Zealand banks.

Reserve Bank of Australia Governor Glenn Stevens said this week that it would soon be time for banks in Australia and abroad to begin borrowing funds in wholesale markets without the backing of government guarantees.

"I think it will soon be time for banks everywhere, including here, to borrow in their own right," he said.

He noted banks would soon need to reduce their reliance on government guarantees to support fund-raising activity in wholesale credit markets.

"It would make sense for Australian banks, which have accounted for 10 per cent of global issuance of government guaranteed bank debt over the past nine months, to step up their efforts to do so," he said.

English said the wholesale guarantee scheme in New Zealand was taken on an issue-by-issue basis and he expected the scheme to wind itself down as banks started borrowing offshore on their own records.

However, the retail scheme would change. The Government wanted to minimise its losses. At present, if an institution got into trouble, the taxpayers picked up the tab.

The Government also wanted to ensure the system did not become unstable as the stability of New Zealand's financial system had been an advantage.

Now, everyone had to take a guess at what the asset values were backing up a finance company, he said. The kinds of assets behind those companies were not easily traded in these times.

As the economic recovery started, those asset values could increase, making it easier for deals.

But one thing he could guarantee was that whether the scheme ended or changed, things would be more challenging for finance companies wanting to be part of the guarantee, English said.

"You have to keep in mind that before the guarantee runs out, these organisations have to meet the Reserve Bank's new standards for non-bank deposit takers."

Those new standards had been coming in for 12 months and required the institutions to get a credit rating and meet liquidity requirements.

"These institutions have to sort themselves out and we are keen to see signs they are sorting themselves out. We don't want them sitting there thinking the Government will fix it all for them." A guarantee was always a temptation for investors, English said.

[bermuda]

Deane,
Good Post Mmmmate.

[winner69]

Not a good look


South Canterbury man in hot water

NBR staff | Friday August 7 2009 - 07:54am

Top Timaru lawyer and South Canterbury Finance chairman Edward Sullivan has lost his attempt at name suppression and reporting of a complaint by the Law Practitioners Disciplinary Tribunal last October.

He and fellow legal practitioner John McGlashan have been found guilty of professional misconduct in the case brought against them by the Canterbury District Law Society.

The sum of $100,000 had become due to a client’s account but they deducted fees of $22,022 against the client’s instructions for fees they claimed were outstanding.

Judges Panckhurst, Gendall and French upheld the complaint that the lawyers had acted without permission, against client instructions and had abused their trust.

[Balance]

Worries me when SCF has a stretched balance sheet with $170.2m advanced to related parties, and Hubbard is still talking about more dairy farm exposure.

Article also raises a pertinent question - did SCF bailed out ANZ and other banks from their exposure to Hubbard?

Let's hope Hubbard can pull this one out of the fire.

http://www.stuff.co.nz/business/2733...hern-exposure/

Southern exposure
By GREG NINNESS - Sunday Star Times Last updated 05:00 09/08/2009

Allan Hubbard has not let the hard times facing the dairy sector dampen his enthusiasm for pumping money into the industry.

"I just wish I had another billion [dollars] and I'd put it all into dairy farms," he said.

Hubbard is probably this country's biggest private dairy farm owner, controlling a one-third stake of Dairy Holdings, the country's largest corporate dairy farmer and interests in another 14,000ha of farmland which range from lush Southland farms to arid high-country stations.

His enthusaism for the sector was buoyed last week by the 25% rise in the price Fonterra is receiving for its milk powder.

He believes that if that trend continues, it could result in Fonterra's farmer shareholders, of which Hubbard is probably the biggest, receiving an extra $1 per share in their dividends.

"If you are forward-looking, you'd see the dairy industry is not going down the gurgler, it's the saviour of New Zealand," he said.

And he has been putting his money where his mouth is.

Last year Hubbard took out a $150 million mortgage with ANZ on five rural properties he and his wife Margaret own, to buy more of them.

And it says something about the depth of his pockets that most of that money had already been repaid.

"It [the loan] is only around $35m at the moment," he said.

Although farming may be Hubbard's great love, it is South Canterbury Finance (SCF) which has been requiring most of his attention over the past couple of months.

Much of Hubbard's considerable fortune is invested through his private investment vehicle Southbury Group, in which he and wife Margaret and their associated trusts hold a 73% stake. Southbury holds all of the ordinary shares in SCF.

With assets of about $2.2 billion, SCF is the country's third largest finance company but at the end of June it reported its first loss since the Great Depression, largely as a result of its property lending.

Hubbard responded to that by pumping an extra $40m into the company for working capital as if all he had to do was reach into the petty cash tin for the money. He is also providing SCF with a personal underwrite agreement whereby any SCF loans that become impaired will be secured against his private fortune.

Although those moves will strengthen SCF's balance sheet, it is not the end of SCF's problems.

Concerns about related party lending between SCF and other companies with which Hubbard is involved have dogged the company, while worries about its exposure to the property and dairy sector have put it at risk of a credit rating downgrade.

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There was a sharp increase in SCF's related party lending in the second half of last year, up from $62.6m in June $2008 to $170.2m by the end of December. The company's accounts for the year to June 2009 are yet to be released.

Most of the related party lending in last year's accounts was to other companies within Southbury Group. But SCF also lends to other companies in which the Hubbards have an interest.

Apart from Southbury's stake in Dairy Holdings, the Hubbards have stakes in 22 substantial rural properties with a combined land area of just over 14,000ha.

They own 100% of seven of these properties (1565ha) and partial stakes ranging from 23% to 75% in the others.

They also own stakes in a handful of commercial properties ranging from office buildings to coolstores.

Most of these have a single mortgage to one or other of the major banks, but a couple have second mortgages to SCF.

Hubbard said SCF would sometimes provide loans to the companies which own these investments when they were unable to secure additional funding from the banks.

Moonshine Farms, an 829ha Canterbury property in which the Hubbards are listed as the largest shareholders with a 38% stake, has a second mortgage to SCF securing up to $15m. The security for this loan was increased from $3.84m in January last year.

The first mortgage, securing up to $6.75m, is to ANZ.

Hubbard said Moonshine had borrowed money from SCF because it needed additional working capital but had been unable to secure this from its bank. This loan had since been fully repaid, but the security was left in place in case more money was needed in the future.

SCF had also provided a second mortgage to Viewbank Dairy, a 196ha Canterbury farm 30% owned by the Hubbards, to enable it to puchase some additional land.

Because the farm was involved in a dispute about water rights, the property's first mortgagee, ASB, was not prepared to advance any more money, so SCF stepped into the breach to allow the transaction to be settled.

Another company to have benefited from related party lending from SCF is Broadway Industries.

Broadway is an NZX-listed company in which the Hubbards are the largest shareholders with a one-third stake. The company's main asset is Mercer Stainless which manufactures and distributes a wide range of stainless steel equipment. The recession has not been kind to Broadway and, after posting a loss of $1.87m last year, the company undertook an asset sales and capital raising programme via a rights issue in which the Hubbard's participated to shore up its balance sheet.

To tide the company over until these arrangements could be completed, SCF lent Broadway $2m which was supposed to be repaid once the capital raising was completed although by last week, only $400,000 of the loan had been repaid.

Although Hubbard is confident that all of SCF's lending has met the arm's length test, it is likely to be one of the areas coming in for some attention as SCF tidies up its act ahead of Standard & Poor's decision about whether to maintain the company's BBB- credit rating.

A downgrade could make it more diffcult and expensive for SCF to raise money.

Hubbard said Standard & Poor's had not given him a date by which they wouild make that decision, but he expected it to be about the end of next month, by which time all of the work to strengthen SCF's balance sheet would also be complete.

[winner69]

Quote from that article linked - Although Hubbard is confident that all of SCF's lending has met the arm's length test,......

However it does seem that there are so many intertwined arms involved its all one big cuddle session