Kerr boosts support for ailing South Canterbury Finance
By Paul McBeth
March 31 (BusinessWire) – George Kerr, a cornerstone investor in Pyne Gould Corp., has boosted his support for the
ailing South Canterbury Finance, subscribing to some $22 million worth of secured convertible notes in Allan Hubbard’s
Southbury Corp.
The cash will be injected into the finance company through a share issue and parent-company Southbury will keep full
ownership of South Canterbury. Kerr’s real estate credit fund Torchlight Fund No. 1 LP has an option to increase this by
$15.5 million by the end of next month.
“This is a substantial amount of progress in a short period of time - a major recapitalisation of the company,” said
South Canterbury chief executive Sandy Maier, in a statement. “We are continuing to consider the various alternative
transactions and structures available to us as we look forward to achieving the requirements for non-bank deposit
takers.”
South Canterbury Finance is still awaiting word on whether it has been accepted into the government’s extended retail
deposit guarantee after it was downgraded to BB and placed on ‘Creditwatch Negative’ by rating agency Standard & Poor’s earlier this month. Since December, some $200 million of equity has been injected into the finance company,
including today’s announcement and ongoing support from Timaru businessman Hubbard.
The finance company faces a tough year with some $1.1 billion worth of stock and deposit offerings coming due before the
expiry of the original government guarantee in October, though Hubbard has consistently provided support for the firm.
Investors have continued to demonstrate confidence in SCF and Hubbard, with about 55% of deposits rolling over after
release of a new prospectus in October. Deposits stood at $34.9 million on Dec. 31, from $29.17 million at June 30.
Kerr has already injected liquidity into South Canterbury, providing a $75 million facility last year, which has been
fully drawn down, after the company had its $100 million banking facility cancelled.
The latest capital raising was arranged by Forsyth Barr, which has been working to strengthen the capital base of the
company.
(BusinessWire)