South Canterbury Finance Limited

[westerly]

[QUOTE=COLIN;308928].

Something that alarms me is the following quote in today's "Press" from Feeley, the SFO guy:

"We have reasonable belief an offence may have been committed but that is quite different from saying there is a case to be answered and charges to be laid. IF ANYTHING, THAT BELIEF COULDN'T BE FURTHER FROM THE TRUTH". If that is the case, then why the blazes have they gone about this in a way that, in all probability, has dealt a mortal blow to any chance that SCF can be placed on an even keel. Sure, the Registrar of Companies should investigate any perceived non-compliance with the law, but why announce to the world that they suspect SERIOUS FRAUD until such is proven, if in fact it does exist?

One of the ironies is that the Government says it has taken these moves "to protect investors in Aorangi Securities"; but what about the thousands of Mums and Dads and Grandmas and Grandpas who hold investments in the SCF 2012 bonds and the perpetual prefs; these are not protected by the Govt Gtee, and the SFO's actions have virtually now guaranteed that they will be deeply out of pocket, whereas probably not one cent of Aorangi investors' interest or capital will be at risk.


Couldn't agree more Colin

As someone who usually believes -"always expect the worst and you won't be disappointed" I am on Allan Hubbards side in this.
However until the whole business is clarified there is this lingering doubt?

Westerly

[Enumerate]

There is a piece by veteran reporter Vernon Smellie on www.stuff.co.nz (Business Wire) today which is worthwhile reading.

Very good article - had to dig it out - it is syndicated across a number of publishers - here is a one that came up on google:

http://business.scoop.co.nz/2010/06/...reeze-what-if/

I have read quite a bit today about Hubbard, Aorangi, etc. etc. One point that struck me (that I now can't find and properly attribute) is that SCF traded in the space of emerging and developing business. This sector of the economy is vital to the vibrancy of the economy - because this is the crucible of new investment - in which tomorrows growth companies are shaped. Hubbard's style was perfect for the nurturing and growth of these companies.

The haunting conclusion was that the failure of SCF would see these companies starved of cash at a vital stage of their development. The banks aren't interested ... the government has no clue ... other finance companies are too small or too weak to fill the void.

When you read about the Hubbard legends ("Hubbardology") - I get the sense that SCF was seminal in arranging so much productive investment, in the South Island, that the place would be significantly poorer without his financing vision.

I think alot of people recognise this contribution to their well being. It was achieved without government intervention or support, without bank support, even when the people beneficially effected couldn't share the vision, at the time.

I just wish I could remember the article and author who made these points - to cite properly.

[COLIN]

Very good article - had to dig it out - it is syndicated across a number of publishers - here is a one that came up on google:

http://business.scoop.co.nz/2010/06/...reeze-what-if/

I have read quite a bit today about Hubbard, Aorangi, etc. etc. One point that struck me (that I now can't find and properly attribute) is that SCF traded in the space of emerging and developing business. This sector of the economy is vital to the vibrancy of the economy - because this is the crucible of new investment - in which tomorrows growth companies are shaped. Hubbard's style was perfect for the nurturing and growth of these companies.

The haunting conclusion was that the failure of SCF would see these companies starved of cash at a vital stage of their development. The banks aren't interested ... the government has no clue ... other finance companies are too small or too weak to fill the void.

When you read about the Hubbard legends ("Hubbardology") - I get the sense that SCF was seminal in arranging so much productive investment, in the South Island, that the place would be significantly poorer without his financing vision.

I think alot of people recognise this contribution to their well being. It was achieved without government intervention or support, without bank support, even when the people beneficially effected couldn't share the vision, at the time.

I just wish I could remember the article and author who made these points - to cite properly.

I haven't read that article but, yes, I think the thrust of your recall does capture the setting. One has to live in the South Island to fully appreciate the intensity of feeling there is, in these parts, about the perceived harm and injustice arising from last weekend's developments. I have little doubt that it could do electoral harm to the ruling coalition; South Islanders, rightly or wrongly, tend to regard North Island "suits" with a certain amount of suspicion and even disdain. And when one of their own is perceived to have been treated shabbily, they react.

It is, of course, a great pity that Allan had not moved years ago to make proper succession plans for his booming business interests. When he first talked about going to the capital markets a few years ago, it was going to be on the basis of a public float of part of the company. But, unfortunately, he then decided to pull back and, instead, went with that preferential share issue (SCFHA). If, instead, he had admitted other ordinary shareholders, along with some independent directors, and then gradually reduced his own percentage ownership, I think the present situation might have been averted.

[CJ]

In the Independent (i think) it said he was relunctant to move to electronic records as he was a technophobe (rightly so for someone his age). Apparently he also keep a private book of loans for those he knew (ie the personal touch).

Agree with Colin, this could have significant impact on investment in the South Island. There is no doubt he helped a lot of people get to where they are today.

[Enumerate]

Timaru shows support for Allan Hubbard:

http://www.nzherald.co.nz/business/n...ectid=10654352

Amazing! Vox populi, vox dei. It is quite clear that a significant body of NZers believe that an injustice is brewing ...

Given the demonstration that our politicians cannot behave with integrity with their expenses, that our public officials have a very patchy record in enforcing our finance and securities laws ... I don't think there is much public patience with the direction the Minister has taken.

People will be long suffering in terms of being ripped off by Petricevic, Watson, Hotchin and Bryers (and a host of others). However, they will not stand for the perceived injustice against Hubbard.

What a wonderful country.

[Alan3285]

If they are right (and I would currently be very surprised if AH is guilty of 'theft' of funds or anything close), then I think this reaction is exactly right.

It is one thing to lose (or see others lose) out to a con-man, but seeing an innocent man be dragged through the mud is much worse and makes most decent people quite angry.

We'll see, but if this is just a 'paperwork' issue then I think the administration will have mucho problemo.

On a separate note, I thought it was interesting that John Key was so strong in his backing of Simon Power. He could easily has said, "I won't comment on an ongoing investigation" and left it at that. Why go further ahead of any findings / investigation?

Alan.

[GTM 3442]

Were SCF to be put into Statutory Management, would that make it ineligible for the Government guarantee ?

[Enumerate]

Were SCF to be put into Statutory Management, would that make it ineligible for the Government guarantee ?

Complex question.

Effectively, the RDGS applies to organisations that have met the RDGS terms, been approved, payed the costs ... and continue to meet the terms of their lending trust deed.

The powers of Statutory Management are detailed in the Corporations (Investigation and Management) Act 1989 ("CIMA"). Statutory Management is a measure of last resort to be used if:

* The affairs of the corporation cannot adequately be dealt with by any other formal and collective insolvency regime; or
* The public interest requires it to be used.

Could you envisage a situation in which SCF maintains the integrity of it's Trust Deed - but is put into Stat Mgment .... why yes!

Could you envisage a situation in which SCF violates the integrity of it's Trust Deed - and is put into Stat Mgment .... why yes!

In the first situation, the guarantee is applied to the retail depositors. In the second situation, it is not.

[COLIN]

If they are right (and I would currently be very surprised if AH is guilty of 'theft' of funds or anything close), then I think this reaction is exactly right.

It is one thing to lose (or see others lose) out to a con-man, but seeing an innocent man be dragged through the mud is much worse and makes most decent people quite angry.

We'll see, but if this is just a 'paperwork' issue then I think the administration will have mucho problemo.

On a separate note, I thought it was interesting that John Key was so strong in his backing of Simon Power. He could easily has said, "I won't comment on an ongoing investigation" and left it at that. Why go further ahead of any findings / investigation?

Alan.

I am in the process of drafting a letter to the Chairman of the Securities Commission, which I will be copying to Simon Power, expressing my alarm at the content of the following statement by the SCOM spokesperson, Roger Marwick, quoted in today's Press, in relation to the alleged conflict of interest arising from the fact that Simon Botherway's brother's business was placed into receivership by SCF last year. For those who haven't seen the article, I quote as follows:

"Securities commission spokesperson Roger Marwick said chairwoman Jane Diplock was made aware of the connection yesterday, five days after the recommendation was made to the minister to put Hubbard's business interests into statutory management, but did not believe there was a conflict of interest.

"There is no conflict of interest in this issue BECAUSE THE STATUTORY MANAGEMENT DOES NOT AFFECT SOUTH CANTERBURY FINANCE." (my capital letters.)

I am incredulous that such a ridiculously naive statement could be made, on behalf of the body that is supposed to be overseeing the conduct of the securities market in this country. The Statutory Management notices might not have included South Canterbury Finance in word, but they certainly have in effect, as borne out by Standard and Poor's immediate downgrading of their credit rating. And, if SCF is not part of "Hubbard's business interests" then I'm a Martian.

This whole fiasco deplores me.

[Enumerate]

A couple of months back, Percy made the following observation:

I spoke to Paul Preston one time.I asked him why he worked to save Smiths City.He told me he sorted out The Farmers after Chase Corp ran into troubles.
He said he saw the same customer,supplier goodwill with Smiths that he found was the key to saving the Farmers. Possibily Maier,Kerr and others see this with SCF.?

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 ...

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%.

Please, do your own research on this ... there are still very significant risks with credible people saying SCF failure is a certainty. SCFHA holders share Allan Hubbard's fate if it turns pear shaped - there will be minimal chance of a recovery on default.