South Canterbury Finance Limited

[Balance]

A positive development - SCF repays its USPP bonds early.

[Alan3285]

Hi Balance,

A positive development - SCF repays its USPP bonds early.

Whilst not negative, I don't really see it as particularly positive for them.

Just means they have the liquidity to pay it now rather than in a month (or whatever it was), but so what?

The issue isn't liquidity in the next 30 days, it is the next eight months.

Alan.

[GTM 3442]

Still waiting for the price (SCFHA) to get below 30c again.....
I'm not getting in again until the top sell on the board has a 2 in front of it.

Alan, I rather think that if the price gets back down to those levels again, it'll be a sign that you won't want to get back in !

[Alan3285]

Hi GTM,

Alan, I rather think that if the price gets back down to those levels again, it'll be a sign that you won't want to get back in !

A very valid point!

Perhaps I should have said that I won't even look at it again until there is a '2' in from of the lowest sell price.

Then I will reconsider buying back in, but as you rightly point out, it would be foolish to say that I'd DEFINITELY buy at that price, since it depends on what has happened and what is known at that point.

Thanks,

Alan.

[Balance]

Tick .... tick ....

SCFHA last traded at 30c and SCF010 at 25%.

[Balance]

More related party transactions?


HALFYR: SCF010: SCF half year loss, group restructuring & recapitalisation

1 March 2010

South Canterbury Finance: half year loss, group restructuring and
recapitalisation

Southbury Corporation Limited, the parent company of South Canterbury Finance
Limited, has fulfilled a longstanding commitment to support the Company by
making a substantial injection of new equity into South Canterbury Finance
totaling $152.5 million.

The capital injection was completed on 28 February 2010 and was pursuant to a
group restructuring in which Southbury Corporation Limited, which is
indirectly controlled by Mr & Mrs AJ & MJ Hubbard, sold its 100 per cent
shareholding in Helicopters (NZ) Limited and 64 per cent of the shares of
Scales Corporation Limited to South Canterbury Finance.

The total purchase price of $162.5 million has been satisfied by the issue of
approximately 317.7 million new ordinary shares by South Canterbury Finance
to Southbury Corporation for an aggregate issue price of $152.5 million, all
of which shares have been credited as fully paid, and by the payment of $10
million in cash. The transactions were reviewed by Independent Experts
approved by the Crown, under the Company's Crown guarantee, who certified to
the Crown that the acquisitions were at fair value and on an "arms length"
basis.

South Canterbury Finance now holds approximately 79.7 per cent of the equity
of Scales Corporation and 100 per cent of Helicopters (NZ).

Mr Hubbard says Helicopters (NZ) and Scales Corporation are both excellent
businesses with which he has had a long and personal association, as a
founder of Helicopters (NZ) and as a driving force in Scales.

"Scales is an innovative company closely linked to New Zealand's backbone
industries. Helicopters (NZ) started life eradicating gorse on South Island
hills and evolved to be an internationally recognised helicopter operator
working in many countries supporting global resource companies, government
funded research and tourism."

Helicopters (NZ) and Scales Corporation are substantial and highly profitable
companies. In the year ended 30 June 2009, Helicopters (NZ) reported earnings
before interest, tax and depreciation (EBITDA) of $30.2 million and net
profit after tax (NPAT) of $16.2 million. Scales Corporation reported EBITDA
of $35.4 million and NPAT of $13.6 million. The combined FY09 results for
Helicopters (NZ) and Scales Corporation were EBITDA of $65.6 million and NPAT
of $29.8 million.

The results for the current financial year will reflect more challenging
market conditions and the usual uncertainties regarding currency and export
realisations. Both companies have sound growth prospects over the longer
term.

"The earnings contributions of these two successful companies are now part of
South Canterbury Finance, which materially and substantially changes the
earnings profile and prospects for the Company. The acquisition of
Helicopters (NZ) and Scales Corporation will provide a superior outcome for
all stakeholders."

Mr Hubbard says his absolute confidence in the future of South Canterbury
Finance and the role it plays in providing funding for the growth of
businesses, particularly in provincial New Zealand, has led to the further
investment in the Company by Southbury Corporation.

The transactions will initially restore then improve the capital position of
South Canterbury Finance which has been adversely impacted by an increase in
provisions for the six months to 31 December 2009 arising from extended
weakness in economic conditions and depressed asset prices.

After a rigorous review of all asset valuations by the new management team
and board, assisted by new auditors Ernst & Young, the provision for losses
on impaired or non-performing assets has been increased by $180.3 million.
As a result, the Company has reported a preliminary unaudited net loss after
tax of $154.9 million for the half year. South Canterbury Finance will
release its audited results when the audit has been finalised.

Including the Scales Corporation and Helicopters (NZ) transactions, the net
equity of South Canterbury Finance on a pro-forma financial position at 31
December 2009 was $252.8 million. On the same basis, the Company's equity
ratio was approximately 11.8 per cent of total assets of $2.15 billion.

As a consequence of the acquisitions of Helicopters (NZ) and Scales and the
capital issued for these, South Canterbury Finance would have been in breach
of two of the financial covenants contained in its trust deed. These
covenants relate to the level of single party exposure (the investment in
shares in Helicopters (NZ) is greater than 35% of shareholders' funds) and
the level of total equity investments to total shareholders' funds (which is
greater than 100%). Trustees Executors Limited has granted a waiver from
compliance with these two covenants until they are next tested following
completion of the Company's 30 June 2010 financial statements.

Commenting on the performance of the Company in the six months, South
Canterbury Finance Chief Executive Officer Sandy Maier says sectors other
than property are largely performing satisfactorily.

"The rural sector is benefiting from the upturn in the price of milk solids
which has in turn had a flow-on effect to businesses in provincial areas
where the bulk of South Canterbury Finance's lending customers and assets are
located," Mr Maier says.

"The half year result incorporates a total of $229 million of losses on asset
realisations and additional allowances for impairment. The underlying
trading results show a breakeven result for the six months which is
creditable given the significant disruption and costs experienced during this
period."

As previously indicated, the Company continues to enjoy the support of its
investors with the steady net inflow of funds in excess of redemptions
evident in January 2010 extending through February. The re-investment of
funds has also continued at satisfactory levels as qualifying investors
continued to seek the benefit of the Company's attractive rates and Crown
retail deposit guarantee scheme.

The Company is working with The Treasury on its application for acceptance
into the extended retail deposit guarantee scheme effective from 12 October
2010 through to 31 December 2011.

Mr Maier says progress is being made daily to consolidate South Canterbury
Finance's position. Further restructuring and asset sales will be undertaken
to continue to strengthen the Company's position and revert back to its
longer-term history of sound financial performance.

"The enthusiasm of the staff and management with the active support of the
directors and advisors for the tasks undertaken has been unstinting and gives
great encouragement for the future of the business."

"In recent times, the Company has engaged with a wide number of parties
interested in concluding capital and funding solutions for South Canterbury
Finance. Forsyth Barr is continuing to work with South Canterbury Finance to
advance proposals to further strengthen the capital base of the Company.
Further announcements will be made when arrangements are confirmed," Mr Maier
says.

Contact:
Sandy Maier
Chief Executive Officer
South Canterbury Finance
021 163 3806

Editor's note:

Helicopters (NZ) Limited is one of New Zealand's leading and most experienced
dedicated helicopter service operators. The business was founded in Timaru in
1955 and is internationally recognised for its high performance levels across
a diverse range of helicopter capabilities. The majority of revenue from
helicopter service operations is derived from term contracts with a broad
range of customers including oil, gas, and mining companies, public sector,
corporate, tourism, and long established companies. The company is
headquartered in Nelson and has principal maintenance and overhaul workshops
in Nelson, New Plymouth, Perth, and Vientiane (Laos PDR). The company has an
annual turnover of approximately $90 million. Further information is
available at www.helicoptersnz.co.nz.

Scales Corporation Limited is a public unlisted company and one of New
Zealand's oldest and most respected companies having been formed in 1912 as a
shipping service for the wool industry. Today Scales consists of a wide
range of businesses including Mr Apple New Zealand Limited, the largest
grower, packer and exporter of apples in New Zealand, as well as extensive
coldstore operations through Polarcold Stores Limited and Whakatu Coldstores
Limited which service many of New Zealand's primary producers. In addition
Scales owns and operates one of New Zealand's most experienced shipping
agents with a long history in the shipping and cargo industry sectors and one
of the largest pet food processing operators in the country. The company
also has a bulk liquid storage and processing business, a captive insurance
company to service the group's needs, and also manages a substantial property
portfolio throughout the country.

[minimoke]

More related party transactions?

Um - so Southbury loose the profitable helicopters and scales and gain shares in the loss making SCF and Mr and Mrs Hubbard get $10m in cash

[winner69]

Um - so Southbury loose the profitable helicopters and scales and gain shares in the loss making SCF and Mr and Mrs Hubbard get $10m in cash

All one happy family eh

And the trustee happy to turn a blind eye to some financial convenents put in place to stop large exposures to one investment

Hey what the heck Sandy has raised $152 of capital at the wave of the wand ... and Mr and Mrs Hubbard in a round about sort of way still own most of the helicopters

And what was the loss again .... or did I read that it was really breakeven

[Alan3285]

Surely this must mean the listed bonds and prefs fall significantly??

Drop baby, drop - any luck they'll overshoot and we can pick up another bargain!

Alan.

[Morpheus]

At least the Torchlight money is safe