Receivership disappointing but inevitable – Maier
South Canterbury Finance chief executive Sandy Maier said he did everything he could to avoid receivership but once negotiations to bring in fresh capital failed the outcome was inevitable.
“Receivership is disappointing – and we were working very hard up to the last minute to avoid that outcome,” he said.
The company announced this morning it had requested Trustees Executors to call in the receivers. The company said it was unable to certify to Trustees Executors that it was compliant with various financial covenants under the debenture trust deed for the financial year ended 30 June 2010.
Kerryn Downey and William Black of McGrathNicol have since been appointed receivers of the charging group’s secured assets.
South Canterbury is the country's biggest finance failure, with assets of nearly $2 billion.
The company owes more than 35,000 depositors and debenture holders about $1.7 billion, of which about $1.5 billion is covered by the government's deposit guarantee scheme.
Acting Treasury secretary Gabriel Makhlouf said all depositors and stockholders on South Canterbury Finance register of debt securities would be repaid by the Crown. They did not need to make a claim because the Trustee had done so on their behalf.
Mr Malhouf said the trustee had been nominated as eligible creditor and had today been paid in full.
Mr Maier said his main focus over the past nine months had been on re-establishing that element of the business as the “good bank,” with an appropriate capital structure and focused management team.”
“We had largely achieved that goal as well as taking the decisions to deal with the other elements of the business that are non-performing.”
He said South Canterbury had enjoyed the support of its many loyal depositors and new depositors who have taken advantage of the attractive deposit rates offered by the Company.
But in the end it wasn’t enough.
“At the heart of South Canterbury Finance there is a sound business supporting many successful small and medium sized enterprises. That is the core business of South Canterbury Finance and a real contributor to the economic wellbeing of that sector of the economy.”
“We welcome the steps by the trustee and The Treasury to put in place an arrangement for debenture, deposit and bond holders to be paid their full entitlement to principal and interest regardless of their eligibility under the Crown Retail Deposit Guarantee Scheme.
“This is a very satisfactory arrangement for those investors and is recognition of their support for the company.”
Mr Maier said he, the directors, management and staff of South Canterbury will be working closely with the receivers to help achieve the best possible outcome from the receivership.
“There are many people who have gone far beyond what might be expected to create a future for South Canterbury Finance. I thank them all for their contributions and, like them, will look back on our achievements accomplished in a very difficult environment for the finance sector and the economy.”
Earlier today Mr Maier said he had been talking to three parties and was still working on a solution at 4.30am this morning.
The company needed to secure a new investor to bring in fresh equity before waivers for breaching its trust deed expired today.
The company required at least $180 million to keep it going in the short term.
Prime Minister John Key yesterday reiterated that eligible investors would be covered.
While there is about $1.5 billion to be paid out, the government expects to claw back a sizeable chunk based on South Canterbury’s assets.
South Canterbury has recorded provisions for $600 million of impaired loans as at December 2009 but that figure could be more than $700 million now.
Mr Key said the potential liability would be about $600 million for the taxpayer.
READ ALSO: South Canterbury Finance – destined to fail?
RELATED: Treasury site for SFC depositors
Signup to free NBR email alerts here
Back to home
Back to top
Print
Email
Share
Delicious
Digg
StumbleUpon
Reddit
Google
Yahoo
Technorati
Scoopit
NBR SERVICES
SUBSCRIPTIONS
Sign up for NBR subscriber content or email alerts
Latest
Comments and questions63
The best outcome for this smoke and mirrors company. They are no better than Hanover?
What a poor effort from Sandy Maier after so much hype over the past few weeks.
5 bidders, some good and bad news ( not sure where the good new was ? )
Goodbye Sandy - please retire this time and do the country a favour
What are all those supporters of that nice old man, Alan Hubbard, thinking now.
Do you think they might've taken off their blinkers yet ?
Thanks very much Hubbard - you just cost every tax payer in the country several hundred dollars each in bailing out SCF investors.
All so he could make out he was a BIG man.
Oh typical! Now the Hubbard cultists are blaming the demise of SCF on the statutory management! Get real and wake up - SCF was in crisis long before any of that happened - it would have collapsed months ago had it not got into the government guarantee scheme.
You people - you deserve to get shafted by financial shysters if you have that level of economic awareness.
From John Keys recent comments it appears the deposit guranantee is lmited to a quantum of $900M amoung other things.
With the SCF receivership how safe does it leave deposits in other finance companies under the guarantee?
It will be intersting to se what happens when most guarantees run out i October... will there be any still standing?
You only had to look at his track record to know he would fail.
No bank would survive if nobody puts money in and every depositor withdraw his money at the same time. From the time Allan Hubbart was placed in statutory management the government should expect this receivership outcome .
Should all be taxed an extra million a head (they have already had interest free loans from the BIG man) and pay us taxpayers back.
No taxpayer has lost a cent as yet. Assets of near 2 Bln and liabilites of 1.7bln. Not all doom and gloom i would have thought as the recovery process now begins.
History will no doubt show how much dammage Statutory Management played in the process and the demise of a once venerable institution.
Where did Sandy's offers get to?
Sandy and the board of SCF have added no value over the last 9 months after being appointed. All they ahve beeen is one big cost.
Wouldn't have happened if HQ had been in Balclutha.
Although it's a bit late now, it's worth rethinking the worth of the deposit guarantee put in place by the Labour Government and Treasury. Perhaps taking a leaf from US Govt, etc, and using pref shares rather than guarantees wouldn't have allowed a company to be falsely supported by retail deposits.
I assume your name is Alan H
Sandy is the winner. He fleeced the Governement in the wind up of DFC and now he'll get another gig. Selling the company would not help him because he would be out on his bum.
what other skeletons will we discover?
all those who have been protesting against the statutory management, what are we saying now?
Let "Capitalising Interest" and the effect of overstating assets be a lesson to everyone. Especially when going into a an asset bubble!
One would hope that Sandy Maier does not get a bonus or is paid out his contract after such non perfomance.
Maybe he has already sorted that out before pulling the plug?
to be fair to Sandy the damage was done prior to his arrival. Lets face it you can not collect a bad lend or extract face value from it. This damage has been caused by a series of blunders 2 years + ago where greedy managers were getting paid on asset growth with poor governance to manage the risk side because of antiquated processes
Obviously Sandy Maier can't negotiate hios way out of a paper bag.
He had 5 parties at the table and lost them all. Surely they were credible bidders with credible offers.
Sandy hopefully didn't lead them up the proverbial garden path and lost them.
How much was the golden handshake for Lachie Macleod for having led this once great sounding company into the valley of death? Did he come from the same school as Mark Hotchin?
Where is Allied Farmers when you need them?
Looks like the brokers (esp the south island ones) and some small funds managers have won an undeserved victory. They should have known better then investing in SCF and not been bailed out by the tax payer under the govt guarantee, yet they have ! unbelievable.
This is the best outcome for all concerned. Brings this failed entity to a conclusion and the company can be wound down in an orderly manner. It will be the Receivers job to sell parts of the business that are viable.
It was never the Governments job to take ownership of all or part of the assets. Neither was it the Governments job to be involved in dodgy deals that could have benefitted the sharks that were circling..
We have heard nothing of the some of the shysters that had obtained loans from SCF,I hope they now have to pay full value for SCF share of their asssets they borrowed on,and not get SCF share cheap,and once again shaft the financial insitutions,as they have done all their life!!!!
Well for all you doubters the SCF Receivership sweepstake has now been won!
The next and last finance company sweep is of course Allied but sorry to advise there are no dates left within the next 12 months.
An important question to be asked is how did SCF get the govt guarantee if they have been under a watch since 2008.
Something sounds suspicious here???
So I will be paid out in 4 to 6 weeks.
And with interest to 31 August at 10.25%.
Before that it was 8.50%.
Pretty good deal.
Thank you Labout Party
Thank you National Party
Thank You Green Party
As I predicted,A H will be the big loser.
Last time I looked his house was not owned in Trust.
And there is any shortfall in Aorangi and HMF to make up.
Borrowers from SCF are also the big losers.
With the recession at present,some of them will not be able to refinance and will have to sell land,plant and businesses at firesale prices.
Wasn't Sandy Maier and the new board a quasi receivership and they have had 9 months to deliver
Deliver what you may say - exactly - delivered nothing.
Now we start all over again.
Why get nasty and personal? This outcome is the only responsible one.
I presume you are the same bitter poster who commented at 9.54.
The losers are the many businesses and individuals with loand that are not in arrears who will now have pressure on them to repay and they will live in fear of receiving a demand for repayment for the next period. Their businesses and personal lives will suffer as will the local economy. They can't be considered greedy like the investors have been - they are just normal people living normal lives.
They were hoping that Sandy maier and his board would not let them down.
Completely agree.
The people blaming the statutory managers on here are probably the same people whose interest free loans are coming to an end.
This mess has been brewing for years. Blame the man who didn't capitalise the company properly, and continued to make loans to people who were unable to pay.
Stop gloating Red Dog. It is the TAXPAYER who is bailing you out and you should have some sympathy for the many NZ taxpayers who through no fault of their own are contributing to your bailout. A little humility is required at this time. Thank the taxpayer for coming to your rescue.
Which government put this FINANCE COMPANY under GOVERNMENT GUARANTEE? What about the value of the supposedly credit rating? Means anything now?
Mr Maier got his bonus when he achieved a govt guarantee for SCF I am told.
Let's not forget who was in charge at the beginning of the end of this organisation. Now in the market as "consultants" to the rural and business sector.
Good for the investors, enjoying comparatively high returns, and guaranteed by the NZ Government!
This thing was dead long before Sandi Maier's involvement. He had the chance to look like a hero reviving the dead - tough gig at the best of times and he certainly doesn't look like a hero now - but nor is he responsible. this ship had well and truly sailed before his involvement.
Absolutely aggree with your comments,amazing how these people continue,no wonder the mess continues.
The reality is that I chose which Finance Companies to invest in and chose wisely.
You are overlooking the fact that the image that AH portrayed also influenced other conservative people to invest with him,including major sharebroking firms.
That meant when SCF got into trouble,there were lots of olde moneyed people very keen to salvage as much as possible.
And it is who you know in this world that counts.
Those people had political ears at their disposal.
Thus I continued my investment under the original GG,with my debenture to mature on 1 October 2010.
I did not accept the offer from SCF in regard to the extended GG.
I would never invest with Flash Harrys.
The four finance companies I invested with were carefully considered,and I have backed the right horses,simple as that.
My record substantially exceeds the efforts of a long list of financial planners in advising their clients.
Fair enough Red Dog but I was just making the point that the taxpayer is on the hook here for the eventual loss.
Your poits are noted but I think the point Micvk was making was about the gloating. I must admit I thought the same thing before Mick commented.
Lets see if Reddog is still gloating in 6 months when he STILL hasnt got his money back.
Professional BLAME STORMER?? did you need a white board
They'll look to blame every other man and his dog now won't surely you cannot take ownership of this massive failure on so many fronts!!!
Youv'e missed one now Alan!
Please follow the Treasury Link and read their Website.
They also state that the technicalities in regard to the status of Trust Beneficiaries will not be an issue they will be considering in the case of SCF.
Quite clearly Govt wants the funds distributed ASAP.
They do not want any adverse publicity from 28,000 investors because that is a material number of votes.
The precedent has been set.
I believe marriages should now also be allowed to have a Government Guarantee whereby any divorce costs and asset division should now be paid for by the government.
I wish they would also guarantee race horses and Fixed Odd betting.
The message is that if you save and don't have debt and only spend what you earn you are a loser. If you borrow and invest OPM in high risk ventures and BS valuations - thats good and your investors can be bailed out.
Still correct T Lewis.
SCF went into receivership before the issue was tested.
Thus still has not missed a payment.
You present me with a list of which political parties were not in favour of the GG Scheme.
Nats were
Labour was
Greens were.
Tribeless' party were not so I expect more than seven of you to vote for him next time.
Post new comment or question
To share this article, click on a service below