Increased debt funding provided for South Canterbury Finance, Early debenture rollovers top $170 million

South Canterbury Finance Limited announced today that it has reached agreement for an increase in the amount of its $75 million funding facility by $25 million.  The $75 million facility, initially with New Zealand Credit Fund Limited, has been taken over by Torchlight Security Trustee Limited which has agreed to increase the facility by $25 million to $100 million and to extend the term of the facility to 30 November 2010.

South Canterbury Finance Chief Executive Officer Sandy Maier says the new arrangement provides the Company with increased liquidity through a simple structure. 

“The willingness of existing debenture holders to extend the maturity dates of their investments is further underpinning liquidity by significantly reducing our forward funding requirements. There is also widespread interest from new investors in the Company’s 8% per annum offer which has the benefit of the Crown’s extended retail deposit guarantee for eligible investors until 31 December 2011.”

More than 5000 debenture holders with investments totaling close to $172 million had, by 3 June 2010, agreed to roll over investments maturing in the coming months.

“This is excellent progress and indicates the competitive nature of the offer and the strong support amongst existing investors for South Canterbury Finance,” Mr Maier says.

The increase in the amount of the funding facility to $100 million replaces the previous agreement between Southbury Corporation Limited and Torchlight Fund No 1 LP for an additional equity injection of up to $37.5 million which is not now proceeding. The Trustee has granted South Canterbury Finance a further waiver, subject to certain conditions, from compliance with the risk weighted asset covenant in clause 16.1(c) of the Trust Deed which will expire on 31 August 2010.

Torchlight Fund chairman George Kerr says the changed arrangements are practical and signify the ongoing willingness of Torchlight to support the turnaround of South Canterbury Finance.

The restructured facility provided by Torchlight Security Trustee results in an increase in the amount of prior charges under the Company's Trust Deed to $151 million which equates to 7.2% of total tangible assets and is within the Trust Deed limit.  This increase in the amount of prior charges has been approved by the Crown under the Company’s Crown guarantee deed.