South Canterbury Finance Limited

[minimoke]

Hi Balance,



How can SCF010 or SCF020 be covered when they both mature after Oct 2010?

The most that could be covered (as outlined above) is the interest up to Oct 2010, but not the capital.

Alan.

I thought that with the existing Guarantee Scheme if there is a default event prior to 12 October 2010 then "the principal sum borrowed will be paid back plus any interest required to be paid under the terms of the institution’s indebtedness to the depositor or investor". A "Default Event" can be:
- SCF fails to make a payment that is due (like interst)
- SCF becomes insolvent
- bankruptcy proceedings start
- liquidator or reciever called in
- SCF is placed under Statutory maangement.

So isn't it then that the SCF0101 and SCF 020 will be covered in full (principal and interest) up to 12 October 2010

With the extended Guaranteee (which is a seperate scheme) it is only securities that become due and payable between 12 October 2010 and 31/12/2011. The SCF010 and SCF 1020 principal beyond 12 October 2010 is knackered, in the event of a default, because
- SCF aren't in the Extended Guarantee scheme
- and even if they were the principal amount payable date falls outside the extended period - 31/12/2011.

[Alan3285]

Out of date? That's putting it mildly!

SCF is still using accounts from 30 June 2009 to raise money from the public - accounts we now know to be grossly inaccurate. Note that SCF has had to provide for another $180m of losses and impairments in its latest accounts - less than 4 months after it released its prospectus to the market in October 2009. No wonder Forsyth Barr and SCF other advisors have not been able to find investors to put capital into SCF.

Your numbers are similarly grossly inaccurate - just hope you have not been using numbers like them with seconds of thinking to make investment decisions!

You have not accounted for the $155m loss for 6 months to 31 Dec 2010.

So equity = $225m - $155m loss + $153m 'equity injection" = $223m.

15% of $223m = $34m. SCF has a long long way to go to meet the 15% related party criteria to qualify for EGS.

The five seconds was an attempt to double the time you had spent on it. Now we're up to 10 seconds between us! As I'm not currently in SCF, I'm not about to spend a lot of time digging out the figures right now.

So, which is it? Are we using 30 Jun 2009 accounts, or the 31 Dec 2009 accounts? What's the latest info available on the RPTs? I would think that if you pull the 31 Dec 2009 accounts, they should give us updated numbers of some sort at least. Whether the detail is there is another question entirely, but at least it would be more up to date.

Alan.

[Alan3285]

Hi MiniMoke,

I thought that with the existing Guarantee Scheme if there is a default event prior to 12 October 2010 then "the principal sum borrowed will be paid back plus any interest required to be paid under the terms of the institution’s indebtedness to the depositor or investor". A "Default Event" can be:
- SCF fails to make a payment that is due (like interst)
- SCF becomes insolvent
- bankruptcy proceedings start
- liquidator or reciever called in
- SCF is placed under Statutory maangement.

So isn't it then that the SCF0101 and SCF 020 will be covered in full (principal and interest) up to 12 October 2010

With the extended Guaranteee (which is a seperate scheme) it is only securities that become due and payable between 12 October 2010 and 31/12/2011. The SCF010 and SCF 1020 principal beyond 12 October 2010 is knackered, in the event of a default, because
- SCF aren't in the Extended Guarantee scheme
- and even if they were the principal amount payable date falls outside the extended period - 31/12/2011.

If you can find some reference that speaks explicitly to whether the bonds are covered from SCF itself, or RBNZ or similar, I would love to see it.

In the absence of anything specific (and most guidance will necessarily be generic at least on the RBNZ site), I am still assuming that it is only the retail depositors that are covered, and not the exchange traded securities and will only re-invest my previous SCF gains on that 'worst case' basis, but I'd be very happy to see any definitive statement on the scope of the guarantee.

Alan.

[Balance]

Which is it?

Are they using 30 Jun 2009 accounts as you claim, or are they using the 31 Dec 2009 accounts that you refer to?

What's the latest info available on the RPTs?

Alan.

Alan, how can they use 31 Dec 2009 accounts when they are not finalised and audited? Can I kindly suggest you go to SCF's web-site and have a look? That's what I did.

http://www.scf.co.nz/investments/scf...ectus.pdf/view

Also, have a look at this.

http://business.scoop.co.nz/2010/03/...restructuring/

Just need to be doubly careful of the spin that SCF is now infamous for in the market.

[Balance]

Hi MiniMoke,



If you can find some reference that speaks explicitly to whether the bonds are covered from SCF itself, or RBNZ or similar, I would love to see it.

In the absence of anything specific (and most guidance will necessarily be generic at least on the RBNZ site), I am still assuming that it is only the retail depositors that are covered, and not the exchange traded securities and will only re-invest my previous SCF gains on that 'worst case' basis, but I'd be very happy to see any definitive statement on the scope of the guarantee.

Alan.

So would we all.

[Alan3285]

Alan, how can they use 31 Dec 2009 accounts when they are not finalised and audited? Can I kindly suggest you go to SCF's web-site and have a look? That's what I did.

http://www.scf.co.nz/investments/scf...ectus.pdf/view

Also, have a look at this.

http://business.scoop.co.nz/2010/03/...restructuring/

Just need to be doubly careful of the spin that SCF is now infamous for in the market.

Okay thanks - its just that I thought you were referring to the 31 Dec 2009 numbers above, but they are just 'informal' at this stage.

Alan.

[minimoke]

Hi MiniMoke,

If you can find some reference that speaks explicitly to whether the bonds are covered from SCF itself, or RBNZ or similar, I would love to see it.

In the absence of anything specific (and most guidance will necessarily be generic at least on the RBNZ site), I am still assuming that it is only the retail depositors that are covered, and not the exchange traded securities and will only re-invest my previous SCF gains on that 'worst case' basis, but I'd be very happy to see any definitive statement on the scope of the guarantee.

Alan.

Its all getting a bit moot - and we probably won't know for sure until SCF has a default event and the guarantee is called.

But what we should have confidence in is that the Guarantee Scheme covers Bonds - and I don't think there is any doubt that SCF010 is a Bond.

The Guaranteee Scheme does not cover equity like instruments. With SCF010 you are not owning part of SCF nor recieving a dividend. You are recieving interest and a promise the loan will be repaid. So this also suggests SCF010 is covered as a debt instrument.

I don't think there is any suggestion that SCF010 is a subordinated debt. Its a secured first ranking fixed rate bond.

So it shoudl be covered??

Technechalities that wil hopefully never have to be questioned.

But heres another for you. If the Guarantee Scheme expires at 12.01am on 12 October 2010 (which according to the Guarantee deed it will) do they mean 1 minute past midnight on the night the 11th and the 12th of October or do they mean 12.01pm - being just after noon on the 12th?

[Alan3285]

Hi MiniMoke,

Its all getting a bit moot - and we probably won't know for sure until SCF has a default event and the guarantee is called.

But what we should have confidence in is that the Guarantee Scheme covers Bonds - and I don't think there is any doubt that SCF010 is a Bond.

The Guaranteee Scheme does not cover equity like instruments. With SCF010 you are not owning part of SCF nor recieving a dividend. You are recieving interest and a promise the loan will be repaid. So this also suggests SCF010 is covered as a debt instrument.

I don't think there is any suggestion that SCF010 is a subordinated debt. Its a secured first ranking fixed rate bond.

So it shoudl be covered??

Technechalities that wil hopefully never have to be questioned.

Agreed - I'm still going to assume the worst when investing ;-)

But heres another for you. If the Guarantee Scheme expires at 12.01am on 12 October 2010 (which according to the Guarantee deed it will) do they mean 1 minute past midnight on the night the 11th and the 12th of October or do they mean 12.01pm - being just after noon on the 12th?

If it says 12:01am then I would say that it is exactly what it is.

That is 1 minute past midnight on the morning of 12 Oct 2010.

Alan.

[minimoke]

If it says 12:01am then I would say that it is exactly what it is.

Which would make it 00.01am. In which case for practical purposes the Guarantee scheme runs out on the 11th of October. Only a rhetorical point - but it may be important to those who are planning on going to the wire. And this may include AH - assuming the bonds are covered up to 12 October he may choose to default up to that date to insure investors get their principal back - if he doesn't then he's effectively throwing those investors to the dogs/gods past 12 Oct.

[Alan3285]

Which would make it 00.01am.

Correct.

In which case for practical purposes the Guarantee scheme runs out on the 11th of October. Only a rhetorical point - but it may be important to those who are planning on going to the wire. And this may include AH - assuming the bonds are covered up to 12 October he may choose to default up to that date to insure investors get their principal back - if he doesn't then he's effectively throwing those investors to the dogs/gods past 12 Oct.

Yes - I suppose you are right, it would seem that any transactions must be completed by close of business on 11 Oct 2010.

If it comes to it, and if I am in the bonds at that point, AND... if I want to get my cash out of the bonds (I have never had any retail deposits with SCF nor will I in the foreseeable future), then I'll aim to have done that by the end of Sep 2010 - I wouldn't want to get tied up in the machinations of the guarantee scheme even if it would eventually pay out. Imagine the hassle and the paper war that would likely ensue if the govt beaurocracy ever gets involved!

Alan.