South Canterbury receivers claw back $300m

Receivers for South Canterbury Finance have released their second report on the Timaru-based company showing nearly $300 million of collections.

South Canterbury collapsed last August, triggering a $1.58 billion payout to debenture holders under the Crown Retail Deposit Guarantee Scheme.

The Treasury also lent $175 million to the receivers (McGrathNicol) to repay prior charge holders.

This loan has now been fully repaid plus interest of $4.12 million.

Since August the company has made loan advances of $50 million under new, more stringent lending criteria.

Other outgoings included operating expenses and employee expenses of $13.2 million, investment banking and due diligence costs of $3.36 million and Inland Revenue preferential payments of $5.5 million.

Receivers’ fees totalled $3.7 million with additional legal fees of $1.92 million.

Since August the receivers have recovered $299.69 million in receipts, including $238.7 million of loan book realisations.

Collections came from scheduled principal and interest instalments, early repayments and settlements.

A further $59 million of intercompany loans were recovered. NBR is seeking details of these payments. A proportion will have come from charging group subsidiaries also in receivership such as Face Finance.

[UPDATE] Kerryn Downey of McGrathNicol confirmed most of the inter company advances came from Face Finance, South Canterbury's plant and equipment financing subsidiary, which contributed $50 million. Face Finance had a total loan book of $205.43 million at the time of receivership. The unit is for sale as a separate entity.

South Canterbury’s balance at February 28 was $53 million, with $40 million in term investments and $12.84 million in long-term investments.

South Canterbury’s loan book at the time of receivership totalled $1.56 billion, less impairment provisions of $446.27 million

Investments totalled 235.78 million.

Earlier this month McGrathNicol announced the sale of 100% of Helicopters NZ to a Canadian company for a sale price (less debt) of approximately $160 million.

The sale was due to be settled in three months but it is still unclear whether there will be a net return to the crown will be once all debts have been repaid.

McGrathNicol said a sales process for the core finance book had recently commenced.

Binding offers for a majority shareholding in Scales Corporation were received earlier this month, while indicative bids for 83.3% of the shares in Dairy Holdings are expected in May.

Last month the government said the net cost of theRetail Deposit Guarantee Scheme had been raised to $1.2 billion from an earlier estimate of about $900 million, mainly due to lower-than-expected recoveries from related party loans at South Canterbury.

In its report McGrathNicol said it did not expect there to be any surplus funds available to meet the claims of unsecured creditors or preference and ordinary shareholders.

South Canterbury had $120 million of preference shares on issue.

Ordinary shareholders include Southbury Corporation (in receivership), majority owned by Allan Hubbard.