South Canterbury Finance Limited

[CJ]

IMO this precipitate action has further endangered the interests of SCF's 300.000 or so iinvestors.

yes but only those without the govt guarantee.

You could also argue that the actions were taken to not endanger the 4.5m taxpayers you are underwriting the Govt Guarantee.

[COLIN]

Enumerate: I haven't had much spare time to make any further considered contribution to this thread, but I am fully in agreement with the thrust of your posts. You are a very articulate writer, and I believe that you also should let the various Government functionaries have the "benefit" of the extremely valid points you have made. We need to make them answerable for their ill-considered actions. I will send you a Private Message as to what specific action I have taken.

Lawso: Yes, I agree. And its a great irony that, in purportedly seeking to "protect investors in Aorangi Securities", they have undoubtedly weakened the position of investors in the SCF 2010 bonds and the perpetual preference shares, amounting to $220 million in all - far greater than the amount that Aorangi investors have placed with that company, who will probably emerge unscathed.

How incredibly disingenuous, nay downright naive, of them to state that the announcements re placing Mr & Mrs Hubbard in Statutory Management, and setting the Serious Fraud alsatians onto them, "would not affect SCF!".

[winner69]

Hubbard prob is decent joker and has to be admired for his tireless work over the years and all that but you need to be have concerns about the whole Hubbard and connections / SCF saga even if there is only a semblence of truth in what Shoeshine wrote in the NBR last week - the story about how SCF took a guarantee over $25m of Northwind ( a Hubbard entity) assets in the days leading up to the govt guarantee extension which somehow helped that extension come about .... but then a while later the assets were shifted out of Northwind into another Hubbard trust. Shoeshine says that SCF would be lucky to see that $25m if the guarantee was called upon. Can't recall whether it is Northwind or the trust that is now in SM

I fear a lot more will come out of this whole saga

[minimoke]

I fear a lot more will come out of this whole saga

I'm not sure I understand how AH had the time to be handing out loans to the local plumber, working in his charities, doing good works as well as running a multi million $ corporation as well as untold other companies, trusts etc all at the same time. Something surely has to give - and perhaps it did.

[winner69]

There's a subscriber only pice on the NBR about SCF hocking off Dairy Holding s shareholding .... not the best times to do that I would have thought but then again times are desperate

I would guess that Hubbard has been a bit of a nuisance down at the SCF offices and can't see how desperate things are and prob has had a few decent heated discussions with Sandy ..... if so maybe the old geezer has lost it and SM is a way for sense to prevail going forward

[minimoke]

There's a subscriber only pice on the NBR about SCF hocking off Dairy Holding s shareholding

Hmmm. So what do Landcorp do? Put taxpayer interests into Crafar farms or now into Dairy Holdings? Or both? I think I'd sooner see their money go into Dairy Holdings - that way the tax payers get a double dip benefit. They get some decent farm assets (against Crafars which need a fair bit of work) and SCF gets some cash which may be enough to keep depositors calling of the Deposit Guarantee.

[Enumerate]

Selling Dairy Holdings is clearly activation of Plan 'B" in SCF. However, it is not a last ditch survival pitch - it is an abandonment of Hubbard's Plan 'A' - to keep all the equity assets, intact, for a potential return to Southbury.

From a pure SCF viewpoint, sale of Dairy Holdings would be a great development. It would materially help maintain at least 3 of the covenants in the Trust Deed associated with the latest prospectus. I may also help with the level of related party debt - there are no formal covenants on this.

Of course, alot depends on the structure of the deal. However, it clearly has the capability of significantly improving the SCF balance sheet.

I think that by the time we see the structural effect of introducing Scales, Helicopters; the sale of Dairy ... all the various Torchlight and Hubbard bridging loans ... it will be late August. By this stage, I think we will see a transaction or a series of transactions. New equity for the slimmed down SCF; sale of the "Bad Bank" assets to Torchlight and a clear disposition on the equity assets (it may now not be Southbury buying them back).

Hence, from an investment perspective, waiting for the release of the June accounts will likely mean that you will be too late to anticipate a potential bounce back in pref or bond prices. (Then again, you might just avoid a complete collapse of Bernard Hickeyan proportions; plumbing new depths of financial despair as yet only currently conceived by David Hillary - while this remains a possibility it is not, in my view, a likely outcome).

There are a number of divergent viewpoints on this. I will not attempt to summarise the full spectrum of prognosis ... My own view is that SCF will survive to be carved up along the lines that Sandy Maier has outlined. I think Hubbard will be diluted by a new equity partner, but will remain with a significant asset in a $1b SCF finance company. It is hard to dilute the SCFHA's - which is the prime reason I bought some - I also think it is difficult to force SCFHA holders to face an unacceptable revision in terms.

The SCFHAs offer the best return if the full recovery scenarios prove accurate. However, on the failure scenarios - they provide the worst return. SCF0x0's offer modest returns wtih varying levels of risk. There is something for everyone in SCF ... time to get your own appetite for risk/reward worked out ...

[Alex]

There is something for everyone in SCF ... time to get your own appetite for risk/reward worked out ...[/QUOTE]

And there's of course the 8% essentially risk-free return for the risk averse types...

[Enumerate]

There's a subscriber only pice on the NBR about SCF hocking off Dairy Holding s shareholding ....

The NBR article (or column) foreshadowing the sale of Dairy Holdings seems to have ... evaporated. Is it a case of Journos getting ahead of themselves?

Nothing appears in syndication ... hmmm ... strange.

[Enumerate]

I keep meaning to mention this ... have neglected to, so far, so will do so now:

In the Trust Deed for the SCFHAs is the option for the holder to take new preference shares in lieu of cash payment on the dividend. If push came to shove, I for one would be keen to forsake cash payment in favour of new prefs.

This might not seem terribly significant, in the scheme of things. However, there is another point to note. SCFHAs have their dividend issued fully imputed. You might get 5.6%, but it is tax paid. If the company lacks the imputation credits it must compensate for the lack of imputation, in cash.

Hence the effective payout on the SCFHAs might actually be a greater cash drain than you would have thought at first glace.

Save SCF by taking your SCFHA dividend in new pref shares!