MEDIA RELEASE 1 NOV 10 - Receivers post first statutory report

1 November 2010

Kerryn Downey and William Black of McGrathNicol were appointed receivers and managers of South Canterbury Finance (SCF) and its charging subsidiaries on 31 August 2010 by Trustees Executors Limited. The action was in response to a request to appoint a receiver by the directors of SCF.

The receivers emphasise that all figures in this first report rely on information provided by SCF which has not been independently verified or audited. There are 14 reports comprising SCF and its 13 subsidiaries. (Full list attached).

As receivers, they say, their initial focus was to stabilise the business and operations, including retaining the management team and all staff, and continuing all branch operations in order to preserve value for all stakeholders.

The receivers are also focused on maintaining ongoing trading and, in that regard, the SCF Group has recommenced lending to approved customers.

SCF will continue to actively manage defaulting borrowers, in line with usual business practice for a finance company. This is important to ensure that value to the ultimate creditors of SCF is preserved and may well include appointing receivers or sale of the underlying assets securing the lending, if circumstances mean that is the most appropriate course of action.

McGrathNicol’s Kerryn Downey said that the receivers are well advanced in developing appropriate strategies for preserving and protecting the value of investments and ultimately selling them.

Goldman Sachs & Partners New Zealand has been appointed for the sale of SCF’s 100% shareholding in Helicopters (N.Z.) and SCF’s majority shareholding in Scales Corporation Limited, which have leading positions within their respective industries and are not themselves in receivership.

Deutsche Bank AG New Zealand has been retained to advise on the sale of the core SCF finance business which has been separated into good bank and asset management (bad bank) units. This process could take up to five to six months.

The receivers reported that the company’s records show SCF’s major asset – its loan book – comprises net advances of $1.1 billion, after impairment provisions, at the date of receivership.

Among preferential creditors of SCF are employee claims of $901,000 and IRD claims totalling $5.6 million. The receivers expect preferential creditors to be paid in full.

SCF bond and debenture holders covered by the Government’s Guarantee Scheme were paid $1.6 billion and prior chargeholders received $109 million - the major payment to Torchlight Security Trustee Limited.

The South Canterbury Finance receivership is the largest and one of the most complex in New Zealand’s history. It is also the only finance company in receivership where the company and its 13 subsidiaries have continued to trade.

Although the receivers say that at this stage it is too early to assess the likely outcome for unsecured creditors, preference shareholders or ordinary shareholders they say that the second phase of the unwinding and sale and realisation of assets is proceeding at a responsible pace to deliver the optimal outcome for the Crown and other creditors.

The next statutory report will be released in the first quarter of 2011.

Ends

Media Enquiries:

This release issued on behalf of McGrathNicol by:

Kate Alexander
Alexander Communications
Tel: +64 9 524 4957
Mob: +64 27 244 6094
kate@alexandercomms.co.nz

About McGrathNicol

McGrathNicol is an independent advisory firm specialising in corporate advisory, forensic, transaction services and corporate recovery. It is a market leader in Australia and New Zealand, with more than 300 people across the region, including more than 31 partners. McGrathNicol New Zealand was the receiver for Feltex and managed the high-profile HIH Insurance liquidation. Kerryn Downey and William Black of McGrathNicol were appointed receivers and managers of South Canterbury Finance (SCF) and its charging subsidiaries on 31 August 2010 by Trustees Executors Limited. The action was in response to a request to appoint a receiver by the directors of SCF

Note to media

The SCF Receiver’s report can be accessed on the Company’s Office website. Each company’s report is individually posted.

Charging Group Entities (collectively “the SCF Group”)

South Canterbury Finance Limited (In Receivership)

Belfast Park Limited (In Receivership)

Braebrook Properties Limited (In Receivership)

Face Finance Limited (In Receivership)

Fairfield Finance Limited (In Receivership)

Flexi Lease Limited (In Receivership)

Galway Park Limited (In Receivership)

Helicopter Nominees Limited (In Receivership)

Hornchurch Limited (In Receivership)

Rental Cars Limited (In Receivership)

SCFG Systems Limited (In Receivership)

Sophia Investments Limited (In Receivership)

Southbury Insurance Limited (In Receivership)

Download PDF version here.