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