South Canterbury Finance is seeking to raise up to $1.25 billion of money from the public with a new batch of deposit products – on the back of its increased half-year loss.
The government-guaranteed financier, which owes more than $1.9 billion to investors, issued its new prospectus for a mix of guaranteed and non-guaranteed debenture stock today.
It includes up to $1.2 billion of first-ranking debenture stock, offered at $1-a-unit with the benefit of the government guarantee.
It is also offering up to $50 million of unsecured deposits that do not carry the guarantee.
The prospectus follows the company’s acceptance into the government’s extended retail deposit guarantee scheme just before Easter.
The acceptance provides a safety net for investors and chief executive Sandy Maier said it was key to enable the company to raise new money from investors.
Today’s offer comes after the company opened its books to reveal a half-year loss of $198.6 million for the six months to December – $43.7 million worse than the $154.9 predicted last month.
The accounts, released nine days late, show South Canterbury Finance was still a going concern despite the loss and its equity position was about the same as it was in the previous reporting period,
with enough resources for the business to continue “for the foreseeable future”
Further loan impairments (now totaling $194 million), an early settlement fee to US investors of $20.9 million and losses on financial instruments of $10.8 million contributed to the increased loss, which compares with a loss of $52 million for the same time last year.
While equity had shrunk from $244 million in July 2008 to $55 million, most of that difference has been recovered from equity injections this year. These included the recent $152.5 million put in by founder Allan Hubbard and $22 million investment by George Kerr's Torchlight fund.
However, it is understood the company still needs about half its exiting debenture base to roll over their investments as they mature
SCF chief executive Sandy Maier said he was pleased to have the new prospectus registered and the half-year results announcement behind the company.
The half-year results brought to account a wide range of impairment provisions on largely discontinued activities in the company’s loan book and stripping out the restructuring and non-recurring charges, the company was close to a break-even result, he said.
South Canterbury Finance chairman Allan Hubbard said investors, the finance sector and the Government would benefit from the transition to an orderly market facilitated by the extended Crown guarantee.
“The silver lining from the global financial crisis will be a soundly based finance sector with integrity that supports economic growth and delivers reliable returns for investors from a competitive range of products. South Canterbury Finance has consistently done that for more than 85 years and I am confident that it will continue to do so.”
Mon, 12 Apr 2010