South Canterbury Finance says the company is eligible for the extended retail deposit guarantee scheme and expects a decision from Treasury shortly.In a letter to investors yesterday, chairman Allan Hubbard sought to assure investors the company was sound
South Canterbury Finance says the company is eligible for the extended retail deposit guarantee scheme and expects a decision from Treasury shortly.
In a letter to investors yesterday, chairman Allan Hubbard sought to assure investors the company was soundly based and could meet the challenges ahead.
He said South Canterbury had taken all necessary steps to be accepted into the extended scheme from October 12 through to December 31, 2011.
The company expected a decision from Treasury on its application shortly.
“Regardless, all eligible existing, and new, depositors and investors continue to have the benefit of the current retail deposit scheme through to 12 October 2010.”
Investor nervousness about acceptance into the extended scheme has seen higher than normal trading in South Canterbury’s longer dated 2012 bonds this past week.
Earlier this month Standard & Poor’s lowered South Canterbury’s credit rating to BB from BB+ and changed the outlook to creditwatch negative from negative outlook, indicating the possibility of a further review.
A BB rating just qualifies for acceptance.
Fresh approach
However, South Canterbury Finance may face further hurdles to comply with the new regulatory environment under amendments to non-bank deposit rules set by the Reserve Bank.
Mr Hubbard said further raising of capital by the company and possible sale of non-core assets could be required to ensure compliance.
Mr Hubbard’s Southbury Corporation recently announced it had injected $152.5 million of new equity into South Canterbury from the sale of Helicopters NZ and a majority stake in Scales Corp, both profitable companies.
South Canterbury has flagged a loss of $154 million for the six months to December, reflecting $180.3 million of losses on impaired or non-performing assets.
The company has about $1.1 billion of debt to roll over this year.
