S&P downgrades South Canterbury Finance
Standard & Poor’s has cut South Canterbury Finance’s short-term credit rating to C on the back of concerns that statutory management of Allan Hubbard’s business interests will likely erode debenture investor confidence.
South Canterbury’s long term rating has also been downgraded from B+ to B- with both ratings now on credit watch negative.
S&P said debenture investor confidence is critical to South Canterbury’s ability to manage its liquidity and its significant debenture reinvestment requirement.
“South Canterbury’s experience of managing forward maturities for the months leading into October 2010 has improved from previous months but will likely be more difficult to maintain from now on,” Standard & Poor’s credit analyst Derryl D’silva said.
“SCF’s ability to raise new debentures could also be at risk.”
The downgrade comes after Mr Hubbard’s personal interests, including Aorangi Securities and seven charitable trusts were placed in statutory management on Sunday.
Mr Hubbard is South Canterbury’s principal shareholder through Southbury Group.
“We are also now concerned that the company’s recapitalisation efforts could be compromised or delayed,” Mr D’silva said.
“In our view, SCF’s recent momentum of improvement in its management of forward maturities and new debenture inflows will materially weaken because of this announcement.
“Additionally, SCF’s cash balance has not increased as rapidly as factored into the previous rating, and there is now greater uncertainty around the support from SCF’s key shareholder.
South Canterbury Finance chief executive Sandy Maier said the government’s appointment of statutory managers in respect of Mr & Mrs Hubbard had created uncertainty for the rating agency.
He reiterated that South Canterbury was excluded from the statutory management order and Treasury had reaffirmed that the extended retail deposit scheme continues to apply to eligible investors.
“For eligible investors, nothing has changed regarding the Crown’s extended retail deposit guarantee scheme which remains in place through to 31 December 2011,” Mr Maier said.
South Canterbury has again pulled its prospectus while it makes necessary amendments.
S&P said it would review its ratings over the next few weeks pending some clarity around investor reaction to the Hubbard news.
The rating could be lowered to the ‘CCC’ category if general debenture investor support were to materially weaken.
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Comments and questions39
Gone gone gone
Sad but time to move on and complete the turnaround in the financial markets.
Sad for Alan Hubbard - a good bloke with good intentions - hopefully the SFO will take that into account and let him go with dignity.
Where are all the people that he helped when he needs them???
Look, this is like death by a thousand cuts. Time to face up to the inevitable. The whole sorry SCF saga is now getting to the embarrassing stage. You just can't keep pulling the prospectus and making amendments and expect investors to continue to believe in the SCF story. The rating agency has been too slow to move up until now and even blind freddy could have seen that they should have issued their last downgrade prior to the issuance of the new taxpayers guarantee but this would have upset the applecart. To their credit though, S&P has moved quickly and appropriately this time.
Now they're making up for lost time
http://www.lostsoulblog.com/2009/11/south-canterbury-finance-credit-rating.html
Bankrupt by end of next month.How long would it take for investors to gett there money back when this happens?
Wonder if the fraud office will lock up this disgraceful human for as long as maddoff?
The government, Simon Power and the SFO had better be right. To have besmirched a good bloke's name like this is nothing short of disgusting.
Add to the fact that SFC and Aorangi haven't even defaulted yet!
Shame on all of you for kicking a good man when he's down.
I'd love to know who the Hubbard whistleblower was and how real his complaint is - sounds like it might be a case of sour grapes to me.
Who knows what the future will hold for SCF - to be fair it doesn't look good - but can any of you lot jumping on the 'crucify him' bandwagon tell me what Lehman Brothers rating was with Standard and Poors 4 years ago?
Or what Enron's was a year prior to it's collapse?
Just curious
I'll bet it was an estate situation where one of his friendly parties died and his family sought to retrieve the money.
When Allen Hubbard or whoever manages it said they couldn't repay immediately they probably paniced and went to the Commerce Commission
SCF have been in default since 31 Dec 2009, as they've been in breach of their financial covenants since this time (which is an event of default with the meaning of the Personal Property Securities Act 1999) and the only reason they're not in receivership is because the trustee is granting them waivers (just to make sure they're really dead?).
C RATING: : highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations
Goodbye bankrupt hubbard
Quite correct Barry.I know a person who has a substantial sum invested through Aorangi.He has been receiving a sound fixed interest return,and after some time a portion of the funds was invested in the sharemarket,with very good results through cherrypicking stocks.
The issuing of a prospectus does not guarantee a successful investment,just as the non-issuing of a prospectus does not mean an unsuccessful investment.
The person I know gave Aorangi funds to invest based on Allan Hubbard's reputation.
There is no evidence that investors will lose any funds.
I am confident that it is a matter of technicalities.
Some of your expert comentators should find out when a prospectus is require, it would appear that Aorangi did not!
Mmm. I agree with Red Dog here. Who'd a thought.
I doubt it was a whistle blower, loyalty to this man is legendary. I suspect that the first thing Sandy did was complete a chart of the complex web of entities in the hubbard group. This is something that no one out side the group has ever achieved but many have tried.
Sandy and the forensic boys will have realised that Hubbard and his right hand lads at H &C have been shifting funds for peter to pay paul for the past 25 years.
The new maddoff of nz is allan hubbard. Shame you on hubbard.
I think there is more at stake than we realise with our personal freedom.
Simon Power’s appointing of a statutory manager on these honourable people, IMHO smacks of Nazi Germany.
one dollar short and a day late !
Have you met this disgraceful human personally? If not then I suggest you shut up and actually learn some facts before jumping to conclusions
Have you met this disgraceful human personally? If not then I suggest you shut up and actually learn some facts before jumping to conclusions
There's more to be unravelled, here --- all of it bad.
While Mr Hubbard may not run all his companies by the book, tell me which bank or finance company has?
He does not deserve this treatment. I'll bet my house the complain has come from a disgruntled (ex) client who has had their loan called in...
Give the guy a break...No one has lost any money, & the situation was improving daily. Business is largely built around creditability, & Mr Hubbard has plenty of this.
What he doesnt have is liquidity, which has been largely manpulated by overseas bank forces, & this will improve with time. As with all business cycles, markets tend to overplay the situation. Remember supporting the locals is a much better than outside the area, as profits/returns tend to be invested locally
Well said Richard S. But what Mr Hubbard has found out is that we are largely a country of socialist envy ridden pricks, right to the top and including every damned bureaucrat. Just look at these threads. They're disgusting. And they disgust me.
What disgusts me is how people stand up for this corrupt businessman. He hides behind his happy charity giving image but in truth he just rips off mum and dad investors like most of the other finance companies (bridgecorp, bluechip etc). Lets hope the fraud office dont let him off lightly like byers and lock this dirtbag up for life!
See what happens when you trust in God**
This was coming. Its serious when the sfo gets involvded. Shame on your allan for being a greedy piece of scum
At last. Everyone knew this was coming. I feel for for the guy but then again he should have not invested all the money with his mates risky developments and his own ventures. What a conflict of interest. He deserves to go bankrupt. Bugger his charitable givings, his $2b loss to the tax payer is the biggest disgrace a NZ'er have even done to the country. In my opinion this guy is the most horrible, dirtiest person in NZ history.
Having dealt directly with SCF some time ago I found the decision making processes somewhat surprising and a little loose. The public face often reflects the internal machinations.
The venomous comments coming from so many people reminds me of the horrible attacks made on the Jews.
The tragedy with this dastardly deed done by a socialist national government is that knowing how our judicial system works, the Hubbards will have a very hard time. The 'powers' that be will make sure that natural justice is not dealt out .
The man is a workaholic accountant who I am informed does actually drive his VW around Timaru,and lives in a dwelling with a 2008 rating valuation of $265,000.
He is not driving around in a Lamborgini,building a $30million mansion,quaffing champagne on a multimillion dollar yacht or laying around in a luxury penthouse.
His values reflect the depression years,not the corporate lifestyle of today.
That is my viewpoint until someone can give me tangible evidence to the contrary.
Some of the posts being made here are clearly made from a jealous viewpoint.
They underline the type of behaviour we will see when the world does enter its next major crisis,whether it be from warfare or major shortages of essential items such as food,water or oil.
To Anon at 9.18pm,why are you so anti the man ?
Robert quotes an amount of $2 million which the taxpayer will have to supposedly pick up,on no factual evidence.
I would suggest that you have a read of the website operated by the Sensible Sentencing Trust before you make such inane libellous comments.
You note that he "should not have invested with his mates risky developments".Please clarify "mates"
Anon at 8.49pm posts like yours deserve legal action taken against you.
JJ you jealous guy if you intend to do something which would bring criminal charges laid against you,don't put your intents on a public forum where you can be traced by the authorities.
Will states "In truth he just rips off mum and dad investors like most of the other finance companies]...If you are going to make these nonsensical comments,at least provide me with some examples.
Your comparison with Bridgecorp and Blue Chip reveals that you know nothing.
By comparison I could spend a day talking about how I have seen people lose money in shonky investments .
These threads badly need a moderator to erase the numerpus trash posts.
I can't believe the viciousness of many of the posts on here. The guy hasn't even had a trial.
Shame on you NBR for letting some of these posts remain.
I think people are grumpy at this guy coz he will be taking the taxpayer out big time, while hankering back to some glory days when maybe he was honest. What will he quote from the bible when you and me get the $1Billion dollar bill for the dep gurantee?
I am not convinced it isn't a big Ponzi scheme.
I thought he seemed like a good dude supporting local businesses - then he put $15M into a joke flop shopping mall here in Upper Hutt and I knew the guy was a lightweight on the analysis side or just an old fool. Probably both.
I think people are grumpy at this guy coz he will be taking the taxpayer out big time, while hankering back to some glory days when maybe he was honest. What will he quote from the bible when you and me get the $1Billion dollar bill for the dep gurantee?
----------------------------
I hope this is the case. Comments made out of jealously wouldn't be good.
Maybehe is a workaholic who didn't know when best to get out of his business completely. he appears honest and for 80 years had a decent reputation. Haven't got any inside info but know of one investment SCF has money in and it should have been wound up a year back at least. It seems an unfortunate saga that is going to be drawn out.
I hope he is innocent and his companies get back on ther feet.
If it costs us tax payers a billion it will be dreadful, maybe those he loaned money to that don't pay it back should go to jail,wish they did, especially if they have been fraudulent/illegal in their actions.
To Anon at 11.35pm you are making a supposition about something that has not happened.
It is pessimists such as you who make such things happen.
In stating that "I am not convinced that it isn't a Big Ponzi Scheme" you actually know nothing and are talking hot air.
You are also implying that the change of auditors from local to National allowed the latest set of financial statements to be published representing a Ponzi situation,and that the reputable people who have recently accepted Directorships,are fools.
"When hankering back to some glory days when maybe he was honest."
What waffling garbage.
And as for D Thomas suggesting that Hubbard has sole decision for every lending decision.
This kind of nonsensical statement reflects that you have no understanding in regard to how large financial institutions make lending decisions.
What proof have you got to present to support your assertation that SCF have lost $15m of invested funds in the shopping mall in Upper Hutt ?
How can anyone who has made as much money as he has,be a fool ?
You are the fool.
Whatever happens there is zero chance the deposit gurantee won't be called up. This will be between $500M and $1B in all likelyhood. SCF manipulated the books to qualify for it - and you South Ilsanders wonder why the rest of us are grumpy? If its $1B then that is $600 for every household in NZ.
Of the old man with the bible and the VW came knocking on my door for his $600 I would politely tell him to go back to Cantebury and find it.
I'm not sure what most people have to get upset about, or the need to damn the man. Mr Hubbard conduct and motives are difficult to discern at this point in time, and whatever he has done it needs to be viewed in the context of his old age, ill health, stress and the trust so many people have put in him. You also have to wonder who's been egging him on or manipulating him -- I had the idea a while back that perhaps some govenment agents had been manipulating him to put his fortune on the line to save taxpayers some losses, even if it was throwing his good money after bad, however I later concluded that the Helicopters NZ and Scales corp transaction was worth only $11m to SCF by my reckoning (see http://www.lostsoulblog.com/2010/06/rubbing-gloss-of-big-south-canterbury.html ).
Mr Hubbard is not responsible for causing any loss to tax-payers: we can thank Dr Cullen for that. We might also attribute to Dr Cullen and his deposit guarantee scheme the consequences of them if they have corrupted a man: a moral hazard as some other have pointed out.
If Dr Cullen had have let the rest of the weak financial institutions fail in late 2008 and during 2009, we wouldn't be chasing 8% government guaranteed returns or throwing mud at Mr Hubbard, instead we'd be concerned about being prudent investors and operating financial institutions that have better business models.
The prognosis for SCF is very weak. Why would investors make deposits for 12 months @ 8% if, chances are, within a short time they'll be locked up not earning interest while they wait 6 weeks for treasury paperwork? S&P are right to bring them down to C, their lowest rating, because they have a high chance of running out of cash in the next few months, if the trustee or the directors don't pull the plug in the next few weeks.
I think when people say this guy is better than Hotchcin etc cos he only drives a Beetle, gos to church and lives in a $265K house have missed the point.
Its all about ego and arogance and he has plenty - even dismissing the Govt action as the wim of a misguided official. I don't buy the whole thing at all.
Its going to cost us all plenty and people have a right to complain. I think his actions will cost us the same as Tranmission Gully road or 3 new regional hospitals. I don't find that all that funny.
If his supporters here want to chip in something I think that will be great. Maybe just south islanders should have to pay?
Theres a strong temptation during this part of the capitalist cycle to blame our money woes on particular people.
This may be appropriate however our lifestyle is derived from capitalism which must bleed out from time to time. This is such a time.
The forces that bring this about are much more powerful than any one man or business. Similar to the force of that oil leak.
The role of government and laws can become stretched under the pressure of competing interests.
It is critical to maintain composure both as individuals, organisations, and also society as a whole.
It is important to insist on justice. Not merely compliance with rules but the promotion of right principles and outcomes which are fair to all.
There needs to be room in our hearts for both the rich and the poor.
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