Wealthy investors pulling money out of South Canterbury Finance (SCF) to get below new limits for the Government's deposit guarantee scheme appear to have compounded the woes of the Timaru-based finance company.From October 12 the limit on the amount prot
Wealthy investors pulling money out of South Canterbury Finance (SCF) to get below new limits for the Government's deposit guarantee scheme appear to have compounded the woes of the Timaru-based finance company.
From October 12 the limit on the amount protected by a revised scheme will be $250,000, down from the present limit of $1 million for each investor.
Trustee Executors regional manager Yogesh Mody said "many investors" with deposits above the $250,000 limit in SCF had been "rearranging" their investments to get below that figure ahead of the deadline, media reported today.
"In some ways, this contributed to one of the core problems the company had been facing -- the lack of confidence by investors to reinvest or invest larger sums this year, notwithstanding the extended government guarantee."
SCF collapsed on Tuesday triggering a $1.6 billion payment to 35,000 depositors, and more to other lenders, which the Government will now try to retrieve from the sale of a business comprising $900 million performing loans, toxic loans and investments in Scales Corp, Helicopter Line and Dairy Holdings.
Meanwhile, The New Zealand Herald reported a source had seen SCF chief executive Sandy Maier on a flight on Tuesday evening leafing through a document which was identified as an "agreement for sale and purchase to sell South Canterbury Finance Ltd to Permanent Investments Ltd".
The newspaper said the document indicated a sale price of $2.65 a share, which was equivalent to $1.57b -- more than the amount Mr Maier yesterday said the company might fetch as a going concern.
Permanent was registered with the Companies Office in early August.
Mr Maier declined to discuss the document, saying he was bound by confidentiality.
The Herald reported businessman Duncan Saville, a former protege of corporate raider Sir Ron Brierley, had emerged as the frontrunner to buy SCF.
Mr Saville was said to be one of the three parties shortlisted as possible buyers of SCF before it went into receivership.
