South Canterbury Finance Limited

[Enumerate]

So take early action to get to grips with SCF etc. The major difference to earlier finance company disasters is the simple fact its now also a Govt Disaster. A $2 billion Govt Disaster. We will see other finance companies in equal stress. Interest rates must go up and business must slow down even more than at present. What this will do to the share market is a bit confused at present.

Mouse, we have these little things in NZ called "rule by law" and "private property".

The Retail Deposit Guarantee Scheme was a feeble attempt, by government, to bolster confidence in the finance sector - by guaranteeing the deposits of retail investors in certain approved companies.

It is NOT a nationalisation of the finance sector.

It IS commercially stupid policy - that is not the fault of the finance sector.

It does NOT justify a significant over zealousness by public officials in enacting Statutory Management on Allan Hubbard and his wife.

[macduffy]

Enumerate's posts echo my own unease about the action against Aorangi and its owners.

percy's posts, well I'm afraid I don't get his point in relation to this issue but I eat Goodman Fielder's bread if that's relevant!

[percy]

Enumerate's posts echo my own unease about the action against Aorangi and its owners.

percy's posts, well I'm afraid I don't get his point in relation to this issue but I eat Goodman Fielder's bread if that's relevant!

Well I think what I meant was people's buying habits change.Because shoppers may not buy Goodman's bread it does not mean the market for a good bread maker is over.Rather that Copelands were doing well and if I was looking to buy a bread maker shares I would but theirs rather than Goodman.However as you are still buy Goodman bread all is not over for them!!
It is the same with Aussie banks looking to expand into Asia,they will leave a gap for a NZ bank.One finance company no longer financing cars or whatever leaves room for another.Life goes on and as mouse was painting a bleak out look I meant to offer a different point of view.I feel there is a good bright future for finance companies.I trust SCF is one of them.

[mouse]

.I feel there is a good bright future for finance companies.I trust SCF is one of them.

My problem,like Percy, is only seeing Rain. It has been raining in Christchurch for a week. We measure the rain in wheelbarrow loads full. Not so with Finance Companies. They seem to becoming as scarce as hens teeth. With $2 billion worth of loans to be negotiated away from SCF and into other finance companies or banks should SCF go under then the prospect of massive upheaval on the South Island becomes pretty threatening. I am sure that Pyne Gould will make a few dollars out of the disaster. But the dollar loss in the South Island will be substantial. I hope SCF survives. But I doubt it.

[Enumerate]

I feel there is a good bright future for finance companies.I trust SCF is one of them.

I think NZF is a company that will emerge, stronger, from the recession. Not only did they avoid all the mistakes of lending to over extended property developers, related party lending, etc. - but they seem innovative in terms of funding sources (bank dominant) and diversification into insurance.

I too hope SCF survives. I see a Smith's City situation in which they retreat to the core lending to agri-business in the South Island. I reckon that their heartland lenders will remain staunch. They will reduce the core lending business to under $1billion and begin to grow again.

Shrinking the business is actually an easier problem than growing it. NZF has shown that in the residential mortgage space there is room for loan syndication. SCF could do the same. This is an as yet untapped source of funds.

Torchlight will take the "bad bank", I believe ... Southbury will get Scales and Helicopters back. It is primarily a question of stabilising the good bank and then sorting out the other bits and pieces.

Remember, that the "wall of debt" is also assisted in terms of the "hill of loan maturities" - this is the key advantage of downsizing the "good bank". This is also a fact ignored by all the balance sheet boffins inhabiting the SFO and the NBR commentry blogspace. Remember, you can shrink the company with effective negative equity - better recoveries than IFRS accounting on the impaired assets will get you your equity back - it might even be enough to satisfy the new capital adequacy rules.

Despite the SFO blundering, I still firmly believe that SCF has room to maneuver.

[percy]

Enumerate.
What a great post.Makes the most sense to me than all the commentators remarks.Yes shrinking the business,returning to basics,will return it back into a strong finance company.
Still plenty of business opportunities in South Canterbury and North Otago.

[Enumerate]

Yes shrinking the business,returning to basics,will return it back into a strong finance company.
Still plenty of business opportunities in South Canterbury and North Otago.

Well, I do believe it was you who drew the analogy with Smith City. I thank you, very much, for that key observation!

(The situation for Smiths City was, in fact, much worse than SCF - the absolute golden lesson, as you point out, was to focus on stakeholder psychology - that is the lesson from Smiths City. When I see them marching in Timaru, I see the same strength that saved Smiths, that can save SCF.)

[winner69]

To do a 'Smiths' don't SCF have to go into receivership .... didn't it take the receiver many years to get it back on its 2 feet

I remember the PSIS going into Stat Management once .... they are still around

[minimoke]

The recent support for Allan Hubbard on Facebook, newspapers and the streets of Timaru makes me believe that there is strength in the SCF recovery that cannot be underestimated.

I bought some SCFHA, today. Paid a bit more for them than I like ...

You are a brave person - and we hope a wise one.

I note the clear capability of Sandy Maier in conducting the turnaround. I note the introduction of Helicopters and Scales into SCF addiing to the SCFHA security. However, it is this customer loyalty ... same as SCY ... that convinces me that the recovery probability is greater than 17%.

The loyalty of the populace of Timaru is to be applauded - great to see the town get behind one of its leading lights. It strikes me though that the supporters have been people who have borrowed from AH - what he needs now is people who are prepared to put capital into SCF art a faster rate than the borrowers want to extract it. But your rationale for buying may be right - if SCF needs, say $100m thats only $2,000 each person in South Canterbury has to stump up with to provide meaningful support to SCF. But are they prepared to put their money where there mouth is post Deposit Guarantee?

As for the Botherway conflict - just when I was beginning to gain some faith in our Regulators they throw that us. Quite clearly anyone with half a brain would tie AH to SCF so anything you do to AH will impact on SCF regardless.

[Lawso]

One of the things that bothers me most is the effect of this action on SCF's current 8% debenure offer. Apparenly this was getting a reasonably good response from investors until the bomb shell, which must surely have halted this much-needed inflow of funds and cast doubt on Sandy Maier and team's efforts to rebuild. Minister Simon Power said the action was being taken to among other things "protect investors". IMO this precipitate action has further endangered the interests of SCF's 300.000 or so iinvestors.