PGC - Licenced to Bank

[Balance]

Sorry, I have tried to find a link to insert but cannot locate one. So it is in todays Press, Bruce McKay, page A12, South Canty Finance comment. The argument is basically that the Capital Adequacy is not 11.9%, rather it is 1.2%. If true, then SCF is in major trouble. But I cannot understand the article. Or the table. Help!

Sorry, Mouse, would like to help but I have no access to the Press.

Maybe you scan and post?

[percy]

HI MOUSE.
,capital adequacy rules tough on risk,means $1 mil house may be valued at $650,000 $1mil PGC shares may be valued at $500,000 $1mil at bank may be valued at $950,000.
So article says SCF equity goes from $256,389,000 to $62,463,000 under new rules.
So AH needs to turn PGC shares into cash at bank.same $1m goes from being $500,000 to $950,000.note above is just an exercise to help explain. I am sure other posters will explain it better than I can do.

[percy]

SCF.AH has not done a runner.He is working to put it right.He is putting more of his assets into the company.He is doing the noble or the honorable thing.There is a lot of goodwill towards AH.
I was in Timaru last friday and could not help to see timaru as a busy place.Hilton Haulage trucks everywhere,Leo Lenard Motors full of commercial vehicles.All I would expect financed by AH.
PGC shareholders did not walk away and neither is AH.

[mouse]

HI MOUSE.
,capital adequacy rules tough on risk,means $1 mil house may be valued at $650,000 $1mil PGC shares may be valued at $500,000 $1mil at bank may be valued at $950,000.
So article says SCF equity goes from $256,389,000 to $62,463,000 under new rules.
So AH needs to turn PGC shares into cash at bank.same $1m goes from being $500,000 to $950,000.note above is just an exercise to help explain. I am sure other posters will explain it better than I can do.

Many thanks Percy. That is what I thought it said. So a book value asset or debt becomes substantially Downward Risk Adjusted, depending upon the nature of the asset or debt. It seems to me these adjustment percentages can also be adjusted themselves, depending upon the situation at the time. The new capital requirements may well wipe out many finance companies in NZ. South Canty Finance is in very deep trouble if what Bruce McKay has written is correct.

I do not have a scanner, being a bit limited with computers. I wonder if someone else could at least scan the calculations. I am not an investor in SCF, except through Pyne and that seems to be covered.

If what the article says is true, and I do not know if it is, then our shares are a quite fantastic hold. Since very few finance companies will be able to borrow cash from the NZ public.

We need to get a bit of informed discussion on the matter.

[Balance]

Many thanks Percy. That is what I thought it said. So a book value asset or debt becomes substantially Downward Risk Adjusted, depending upon the nature of the asset or debt. It seems to me these adjustment percentages can also be adjusted themselves, depending upon the situation at the time. The new capital requirements may well wipe out many finance companies in NZ. South Canty Finance is in very deep trouble if what Bruce McKay has written is correct.

I do not have a scanner, being a bit limited with computers. I wonder if someone else could at least scan the calculations. I am not an investor in SCF, except through Pyne and that seems to be covered.

If what the article says is true, and I do not know if it is, then our shares are a quite fantastic hold. Since very few finance companies will be able to borrow cash from the NZ public.

We need to get a bit of informed discussion on the matter.

SCF needs to sell a whole heap of assets or raise a whole heap of capital in a big hurry.

Meanwhile, Marac has just been granted the extension to the retail government guarantee to 2011.

Primed and ready to help SCF out of its problems by buying some choice assets.

[Anna Naum]

From todays Herald:

Meanwhile Torchlight, Pyne Gould Corporation's vulture fund which has a $75 million first ranking security over South Canterbury, also appears to be waiting in the wings to snap up any of the better loans South Canterbury may want to sell.

Stock Takes understands Torchlight has raised close to $100 million from institutional investors in preparation for taking advantage of the fallout from the finance company crisis.

[Balance]

From todays Herald:

Meanwhile Torchlight, Pyne Gould Corporation's vulture fund which has a $75 million first ranking security over South Canterbury, also appears to be waiting in the wings to snap up any of the better loans South Canterbury may want to sell.

Stock Takes understands Torchlight has raised close to $100 million from institutional investors in preparation for taking advantage of the fallout from the finance company crisis.

Convincingly answering the question of what PGC (post its own capital raising) can take advantage of and do in the post-depression market.

Article in Dom Post from Bruce McKay shows that SCF is going to have to raise $400m of new capital or get rid of all of its equity investments to be able to even remotely qualify for government extended guarantee scheme. Guess who is on the sideline waiting for the plump assets to fall into its laps?

[minimoke]

Sorry, Mouse, would like to help but I have no access to the Press.

Maybe you scan and post?

How is this

[mouse]

How is this

Brilliant Minimoke. It says it all. SCF has to move its capital cash from shares etc into Govt securities. A major sell-off.

[Balance]

Agreed - a major sell off is the only way out for SCF.

For a finance company, SCF sure has a lot of non finance assets - $639m worth!

And what on earth is tax assets?