South Canterbury bids confidential - Govt

Details of South Canterbury Finance (SFC) bids can not be released because of confidentiality reasons, the Government said today as Labour called for proof that the company's collapse was unavoidable.

Government accounts for the eight months to February released yesterday showed the deficit $1.7 billion higher than forecast at $9.2b, which was put down to the Christchurch earthquake and a $331m increase in the Government's expected loss from the Retail Deposit Guarantee scheme.

Finance Minister Bill English said the increase was mostly attributable to the receivership of SCF.

Labour's finance spokesman David Cunliffe today called for Mr English to resign over what he said was a "scandal of epic proportions".

"The Government could have placed South Canterbury Finance into statutory management in 2009, it could have traded through, it could've accepted one of a number of recapitalisation offers in 2010," Mr Cunliffe told Radio New Zealand.

"The Government for some unknown reason decided to plough ahead with a receivership which has left assets rotting away on the vine and has resulted in a $1.2b loss to the public."

Mr Cunliffe said he had seen an offer for SCF where bad debt would be taken on if the Government underwrote up to $500m.

Prime Minister John Key yesterday reaffirmed there were no credible offers made.

"If there was a decent bid out there, we'd take it," Mr Key told reporters.

"But the bids were, 'we are taking the upside, you wear all the downside, we can't quantify it and by the way there's no cash up front, you have to fund the entire transaction'. Well, it doesn't sound like a very good deal."

Mr Key said today that the Government was unable to release the papers regarding bidders for confidentiality reasons.

"I understand for commercial confidentiality reasons we can't, but the bidder's put in the bid if he wants to put it in the public domain he should feel free to do so."

Kerryn Downey of McGrathNicol, the SCF receivers, said he had seen one offer for the company within 24 hours of being appointed, and later in the week the same party had come back with a more formal offer.

It was a serious offer, but had a number of fish hooks, with huge uncertainty about whether the party involved could complete the deal, and in measuring what the outcome would be if the offer was accepted.

Mr Downey said he also doubted the outcome would have been much different had a receiver been appointed to SCF six months earlier, given the severity of SCF's problems.

The receivers now had a good handle on the state of the company and how much could be recovered, Mr Downey said, however, he would not speculate on what the final bill to taxpayers would be.

"We believe that the provisioning with respect to related party loans is as accurate as we can get it."

The provisioning for the other assets was sensitive to the receivership and the Government, he said.

"To disclose what we think we will recover from the other assets, in fact, would be clearly prejudicial to our sale process."

The receivers would look at indicative bids this week for SCF's commercial plant and equipment finance business Face Finance, while other sales processes for major investments were under way and largely on schedule.

The sales processes would run for the next six months, perhaps longer, depending on the complexity of deals put together and time taken to settle.

He expected the taxpayers' final position would not be known for a year or more.