South Canterbury Finance has all but maxed out its ability to borrow funds after Treasury declined a planned equity injection from George Kerr's Torchlight Fund.South Canterbury had hoped to receive an injection of between $22 million and $37.5 million vi
South Canterbury Finance has all but maxed out its ability to borrow funds after Treasury declined a planned equity injection from George Kerr’s Torchlight Fund.
South Canterbury had hoped to receive an injection of between $22 million and $37.5 million via the issue of convertible notes from parent company Southbury Corporation to Torchlight.
However, the deal failed to obtain Crown consent under the extended retail deposit guarantee scheme, which South Canterbury is operating under, according to South Canterbury’s latest investment statement.
Instead South Canterbury borrowed an additional $25 million from Torchlight Security Trustee, replacing an original $75 million loan from New Zealand Credit Fund, another Kerr company.
Torchlight Security is ultimately owned by Pyne Gould Corporation and new the loan means that Torchlight Security now has a prior charge on up to $151 million or 7.2% of South Canterbury's assets under the company’s trust deed.
The company has the ability to borrow up to 7.5% of its total tangible assets. The prior charges rank ahead of all other obligations of the company, including secured and unsecured debenture stock.
As at March 31, the company had borrowings of $461.1 million due by the end of June and a further $1 billion due to be repaid between now and December 31, 2011.
Cash on deposit has increased from $31.6 million as at April 7 to $71 million as at June 2.
South Canterbury continued to pursue a number of initiatives to strengthen its capital position, the investment statement said.
