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)

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