South Canterbury Finance Limited

[westerly]

[QUOTE=Alan3285;295392]Hi winner69,


Quote
'If it were a straight debt for equity swap it could only improve SCF liquidity - no way for it to be worse unless they somehow increased actual cash costs of administration beyond whatever they were reaslising (repayments and interest) from the Strategic loan book."


SCF is reducing it's exposure to property. Why would they take on Strategics' property loans which appear to be under some stress as far as repayment goes.?
It would not be a big surprise if Scales and the Helicopters went back to Allan Hubbard once the capital problems are sorted. The Press editorial this morning seemed reasonably confident in the future of SCF.

Westerly

[Alan3285]

If it were a straight debt for equity swap it could only improve SCF liquidity - no way for it to be worse unless they somehow increased actual cash costs of administration beyond whatever they were reaslising (repayments and interest) from the Strategic loan book."

SCF is reducing it's exposure to property. Why would they take on Strategics' property loans which appear to be under some stress as far as repayment goes.?

In exactly the same way as it was positive for ALF (but not necessarily for its existing shareholders), it would improve liquidity of SCF by whatever amounts they were able to extract / recover from the loan book in the coming months.

Subject to somehow massively increasing their admin costs (I can't see how), it would all be extra cash flow for SCF.

That's the only reason for SCF to do something like that, but as I said above, I don't think the scenario is actually very likely, not least due to the fact that I don't believe the Strategic investors would approve it.

It would not be a big surprise if Scales and the Helicopters went back to Allan Hubbard once the capital problems are sorted. The Press editorial this morning seemed reasonably confident in the future of SCF.

Westerly

Perhaps, but it would have to be at market value and for 'fair' consideration.

Given that AH has now got a lot of his wealth in SCF as ords, I can't see how that would happen since it would require a cancellation of those ords - not likely in the foreseeable future at least.

As I set out above, I am not at all sure SCF can make it past 12 Oct 2010.

It'll be fun on the way for some though!

Alan.

[Balance]

[QUOTE=westerly;295420]

Hi winner69,


Quote
'If it were a straight debt for equity swap it could only improve SCF liquidity - no way for it to be worse unless they somehow increased actual cash costs of administration beyond whatever they were reaslising (repayments and interest) from the Strategic loan book."


SCF is reducing it's exposure to property. Why would they take on Strategics' property loans which appear to be under some stress as far as repayment goes.?
It would not be a big surprise if Scales and the Helicopters went back to Allan Hubbard once the capital problems are sorted. The Press editorial this morning seemed reasonably confident in the future of SCF.

Westerly

If Strategic investors are prepared to swap debt for SCF's equity, it will be a good deal for both.

[minimoke]

As I set out above, I am not at all sure SCF can make it past 12 Oct 2010.

Isn't it the next 90 days that counts - the date when S&P are due their next rating. If its a one point drop its all over rover. If they retain current rating then they may get through to Oct 2010.

[mrmoosy]

Isn't it the next 90 days that counts - the date when S&P are due their next rating. If its a one point drop its all over rover. If they retain current rating then they may get through to Oct 2010.

Wasn't the BB rating level necessary to be held for them to make application for the guarantee extension. Is a change after application deadline irrelevant?

[minimoke]

Wasn't the BB rating level necessary to be held for them to make application for the guarantee extension. Is a change after application deadline irrelevant?

The BB sees them safe until October. But if they go down a point in three months time this means they have to go up in the following period/s to get back to that threshold by October (or when they apply for entry into teh extended scheme). Going down would affirm a downward trend - at some point supporters will start to loose the faith and I think that downgrade would be the tipping point. And its not just one point they are up against - its been flagged it could be two.

They need to be BB to be eligible for entry into the extended scheme. They also need to be a finance business. As mentioned earlier they are now a business involved in helicopters, apples and finance - so presumaby they have to divest those interests by the time they apply. That I think makes them a distresed seller of those assets if the sale doesn't go through soon. The longer tehy leave hte cheaper teh price, the more vulnerabel they become. Best to have that BB secured in 3 months time!


Don't forget the BB is on long term rating. Their short term ratings are already at B (without a positive credit watch) which means facing major ongoing uncertainty.

[Alan3285]

If Strategic investors are prepared to swap debt for SCF's equity, it will be a good deal for both.

I completely agree, but I think there is a (mistaken) impression around that the Hanover investors somehow got done by ALF.

In reality, I believe the Hanover investors got as good a deal as they could have, and it was actually the ALF pre-existing investors who lost out.

The problem would be if the Strategic investors were offered a debt for equity trade into SCF, they might reject it on a perception that it wasn't good for Hanover.

I'd be happy to see it happen though.

Alan.

[Alan3285]

A supportive editorial from Stuff here:

http://www.stuff.co.nz/the-press/opi...Finance-rescue


The contrast they draw with Watson / Hotchin is spot on in my opinion:

Hubbard is renowned not for high-living but for being a generous philanthropist and a businessman with integrity. And that integrity was visible this week in the rescue package for SCF and its 40,000 investors.

Alan.

[minimoke]

A supportive editorial from Stuff here:
http://www.stuff.co.nz/the-press/opi...Finance-rescue
The contrast they draw with Watson / Hotchin is spot on in my opinion:
Alan.

If we had a continuum with Hotchin/Watson at one end and Mother Theresa at the other, Hubbard clearly does not belong at the Hotchin end - I think we would all agree on that. But let’s not get too carried away with the AH Glee Club.

And lets face it - why should Hotchin and Watson be held in apparent disdain. They have done a very good job of protecting shareholder interests in turbulent times - and that was their primary responsibility. Is it fair to say Hubbard did the same during the good times?

Hotchin and Watson have probably done their bit to keep the good folk at Archibald Motors employed. We can follow this trail to prestige vehicle marques in Europe, keeping leading edge motor manufacturers employed looking for better efficiency engines thus helping solve the worlds global warming problems. Hubbard, by keeping his Volkswagen is now linked to Porche.

Hotchin and Watson have no doubt kept bespoke craftsmen employed so those skills of building high quality homes and leading by example in the Knowledge Economy by looking for the latest in technological innovations. AH might have thrown a bit of work to Tony Boyce.

Hotchin and Watson clearly have a heart for the troubled in mind and insecure in democracy. They have supported the Fijian economy and their workers during Banniramas illegal coup. Have the moteliers in Geraldine seen much of AH?

They have also made significant contributions to the body sculpting and personal image industries. Without them I'm sure we all wouldn’t be so familiar with the benefits of Botox and liposuction. I’m not sure AH has even paid for a bottle of Lord Grecian.

These are all honest industries, just as dairy and water are.

But - on a more serious matter. I do take issue with Sandy Maier saying SCF have "Passed cleanly over that hurdle" with respect to their BB rating. That’s is wrong and dishonest. He's clearly unaware that there are 10 hurdles in his particular race and he's not at the end of the race yet. He's dropping in pace going from a BB+ to a BB with a negative credit watch - how is that a "clean" pass? His heart is beating at a B rate - and that’s geriatric and may not even get him through in a Masters event. As for the hurdles ahead, there’s a head wind which is building in strength. His lungs are bursting and the doctors reckon there’s a risk of a one point down grade and that old ankle injury threatens a further point down grade which would totally hobble him.

Maier is clearly spinning as Hotchin and Watson have done previously. And it is Hubbard that made that appointment.

[Balance]

Minimoke, good one!

I guess Maier has alligators biting in every direction and he has to keep staff morale up and investors confident. I do not envy him his task.

What is wrong however is if he misleads the public and induces them with PR spin to deposit money with SCF outside of the govt g'ttee period.

That is the single biggest issue I have with SCF and Hubbard over the last 2 years - the relentless PR BS fed to the market. It is immoral and unethical.