South Canterbury Finance Limited

[Balance]

Enumerate, please know that Stat Managers are indemnified by the Government before you carry on any further.

[Enumerate]

Enumerate, please know that Stat Managers are indemnified by the Government before you carry on any further.

That's great news for Mr Hubbard - infinite indemnity.

So you are party to the Terms of Reference between Her Majesty the Queen, in RIght of New Zealand and Grant Thornton?

[Balance]

That's great news for Mr Hubbard - infinite indemnity.

So you are party to the Terms of Reference between Her Majesty the Queen, in RIght of New Zealand and Grant Thornton?

No - have had experience working with SM before. I think you will find that's the case with most receiverships anyway - the receivers are indemnified by the appointing entity, usually a bank or a financier.

[Balance]

Also, please note it is the Government who put AH into SM - then, appoint the Statutory managers.

The Statutory managers are carrying out the government's mandate, not the other way round.

But think about this for a minute - charitable trust borrows money from Aorangi. Aorangi has to pay interest to investors - but charitable trust does not have any income as loans are interest free.

Issues - How can any business survive on a business model like that? Presumably, AH is making up the difference. If so, did he disclose to Aorangi investors? Remember Huljich fund and the top up controversy?

[Enumerate]

But think about this for a minute - charitable trust borrows money from Aorangi. Aorangi has to pay interest to investors - but charitable trust does not have any income as loans are interest free.

Issues - How can any business survive on a business model like that?

Maybe the interest was capitalised in the loan amount. The charitable trust was an investment vehicle to perform some property development. These structures were actually not uncommon - though, these days, very unfashionable.

In fact, I have some Macquarie unit trust investments that are structured along these lines.

I just hope that the Statutory Managers haven't been bamboozled by mini-Macquarie machinations.

[Balance]

Maybe the interest was capitalised in the loan amount. The charitable trust was an investment vehicle to perform some property development. These structures were actually not uncommon - though, these days, very unfashionable.

In fact, I have some Macquarie unit trust investments that are structured along these lines.

I just hope that the Statutory Managers haven't been bamboozled by mini-Macquarie machinations.

No, Enumerate. The loans are INTEREST FREE.

[Enumerate]

The SCFHAs seem to holding up despite all the SCF knocking.

A tiny parcel traded at 15cents, today. There seems to be a big gap between the bid and the ask.

I felt sure that we would see sub-10cents following the release of the Statutory Manager's report.

Perhaps they are all held by canny South Island Scotsmen? Maybe the only ones doing the selling are the Aucklanders? I hope they haven't gone short

[Beagle]

The last financial statements were realeased in early April so it took over three months for auditied interim accounts. Assuming a similar time fram for the end of year accounts that puts the expected audited result at early October, well past the soft deadline of end of August for the resoration of Trust deed covenants.

Thank you Balance for bringing exactly that to the blog. Yes Aorangi was in a most unsatisfactory state in many more ways than one prior to the appointment of SM, that's spot-on.

[Enumerate]

Assuming a similar time fram for the end of year accounts.

Check your assumptions ...

[minimoke]

The Statutory Managers have effectively destoryed Allan Hubbard's business.

I'm not so sure about that - perhaps its a bit too early to be so dramatic. But let look at Allans view of his Aorangi business compared with the Stat Mans view - bearing in mind the Stat Man only has three weeks experience in it.

Alan reckons assets are $128m. The Stat Man reckon its $132m
Alan reckons he has $88m of clients cash. The Stat Man reckons its $96m
Alan reckons hes got $40m of his own skin in the game. The Sta Man reckons its $36m.
Alan reckons its a Mortgage Company. The Stat Man thinks its morphed into a finance company
Alan says it has loans and mortgages. The Stat Man reckons the money has gone, in part, to AH's own financial interests and trusts. Some loans appear not to be secured by land and some loans appear to have no registered security.
Alan is silent on Aorangi money going into Trusts (Otipua Charitable Trust, Oxford Charitable Trust, Regent Charitable Trust, Morgan Charitable Trust, Benmore Charitable Trust, and
Wai-iti Charitable Trust.) formed in March 2010 into which he was transferring his personal assets.
Alan is silent on Aorangi money going to Te Tua Trust. The Stat Man says this Trust was giving interest free loans and it seems some of those loans are in arrears.
Alan says he is NZ's most honorable man. The Stat Man is silent on that.

I think that Alan has been a little conservative with the information he has shared. It appears there are loan impairments and arrears (as one would expect) but I'm not so sure it is reasonable to suggest the Stat Man has destroyed AH's business. Perhaps the train was already heading along that particular track pre June 20