South Canterbury Finance Limited

[Enumerate]

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

You take away the main financial institution funding these sales .... who is lending the money? I can really see the Aussie banks stepping up to the plate to fund investment in assets that will be in free fall, at that stage.

Maybe George Kerr will have his SI Bank up and running? Maybe PGGW will strike oil and suddenly be awash with petro dollars.

[Enumerate]

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

Under the Trust Deed - the Trustee could declare a default state if any of the loan repayments or interest payments is not made.

This would trigger an event under the Retail Deposit Guarantee Scheme. The government would then be in a position to appoint a Receiver.

The SCF0x0 and Secured debentures would be subject to the 2010 RDGS. This protected up to $1m for NZ investors who did not have expert Trustees or foreigners involved with the investment. The government would payout all this debt and would assume ownership of the various debentures and bonds.

Torchlight's secured facility would have priority for payment as the SCF assets are liquidated. The government and secured creditors outside the RDGS would be the next tranche. Unsecured creditors, which would include all SCFHA holders would be next and anything left over would go to Southbury - the equity holder.

[POSSUM THE CAT]

Enumerate you are not figuring in the losses in the first few years even if you paid cash for the asset you would be better off with that money invested elsewhere as you are losing at least 2% a year compounded that adds up to a lot of money even if you payed cash for the farm butif you are compounding an even bigger margin on debt you might just breakeven in 30 years.

[macduffy]

1) The Aussie Banks have no interest in NZ economic development - much less the rural and 2nd tier commercial sectors that SCF serves.

I havn't been following the SCF debate too closely but the above statement caught my eye.

I couldn't disagree more. NZ represents a significant part of each of the Aussie banks' businesses. NZ's economic fortunes are very important to them.

Won't have any bearing on what happens to SCF, of course.

[fungus pudding]

You take away the main financial institution funding these sales .... who is lending the money?

Someone else, or some other institution; regardless of who it is they certainly won't turn away a borrower solely because of their Sth. Island address.

[winner69]

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.

Agree with you on that point ..... 'investing' in SCFHAs is a rational investment .... as we know there are several scenarios that could play out where these things are worth a buck ..... and at 15 cents thats pretty good odds to make a few bucks if the govt takes an 'irrational' approach to resolving this mess

So why not have a dabble with the petty cash .... jeez Shasta took Spurs at $1,22 in a 2 horse field .... SCFHA's are nearly 7 to one

[Enumerate]

Enumerate you are not figuring in the losses in the first few years even if you paid cash for the asset you would be better off with that money invested elsewhere as you are losing at least 2% a year compounded that adds up to a lot of money even if you payed cash for the farm butif you are compounding an even bigger margin on debt you might just breakeven in 30 years.

Probably true - just like the home ownership vs rental decision. Just as people flock to home ownership - farmers will herd to farm ownership. The psychology of the situation is the same.

A good farmer will always believe they can take any given property and manage it better than the current owner. There is a positive bias due to productivity advances - even for average farmers.

Even economists are not economically rational.

[winner69]

David Hilary says the govt should just give SCF the $1.7 billion to SCF now so SCF can pay everybody out and then put the recievers/liquidators in and close down this disaster of a company once and for all
http://www.lostsoulblog.com/2010/08/...t-why-not.html

All those farmers who have been financed through SCF can keep their farms as long as they stay within the terms of the loan so no wholesale sale of farms (at depressed prices) and no economic demise of the diary industry in the SI. .... or am I naive that most are not up to date with interest payments ... whoops we have a problem then

If at the the end of the day there is a shortfall of 1/2 billion many will wonder where all the money has gone .... surely this amount has just not disappeared has it .... somebody down the food chain must have benefited ... and one bet it wasn't Robin Hood

[GTM 3442]

Agree with you on that point ..... 'investing' in SCFHAs is a rational investment .... as we know there are several scenarios that could play out where these things are worth a buck ..... and at 15 cents thats pretty good odds to make a few bucks if the govt takes an 'irrational' approach to resolving this mess

With SCFHA paying 5.61% until the next reset, who on earth would pay face value ?

Perpetuals at over face value are those with AAA ratings (Rabobank) or the Aussie banks with Long (2013) reset dates.

Unrated Infratil is at 65c in the dollar.

How on earth could SCFHA's be worth face value ?

I can't see them going over 40c in the dollar, even in the most optimistic scenario.

Or have I missed something ?

[winner69]

With SCFHA paying 5.61% until the next reset, who on earth would pay face value ?

Perpetuals at over face value are those with AAA ratings (Rabobank) or the Aussie banks with Long (2013) reset dates.

Unrated Infratil is at 65c in the dollar.

How on earth could SCFHA's be worth face value ?

I can't see them going over 40c in the dollar, even in the most optimistic scenario.

Or have I missed something ?

In normal circumstances i would agree with you. However there are a couple of scearios under which a total retructure of SCF could/would see the prefs being repaid in full .... and the way emotions are running anything is possible

On the other hand there is also a strong possibility that come Tuesday they could/will be worthless

Pick you odds and take your chance

Then again by Tu