Listing Back on the Agenda for SCF

Friday 3rd July 2009

Traditionally conservative South Canterbury Finance is putting stock exchange listing back on the agenda after turning to its shareholder chairman, Alan Hubbard, for a $40 million capital injection after its first loss since 1934.

SCF expects to bounce back in the year ahead after making a $58 million non-cash writedown on bad and doubtful debts against the company's $2.3 billion book.

The company is projecting a $37 million loss for the year ended June 30, 2008, instead of the previously projected $21 million pre-tax profit, and projects an $18 million to $22 million pre-tax profit in the year to June 2010.

SCF has stood out among finance companies for its balance sheet strength and survival while many others have collapsed, and continued to garner credit rating agency support because of Hubbard's personal liquidity and track record of support for the company.

SCF chief executive Lachie McLeod tld BusinessWire the company would seek new sources of equity over the next three to six months.

There were "three or four" possibilities of private placements, as well as active re-examination of public offering.

"It could be quite exciting," said McLeod. "This is a natural time to strengthen the balance sheet and the start of a succession plan with Alan."

Stock exchange listing was "one of the options that could be available".

The legendarily frugal Hubbard, whom McLeod said was "approaching 80", will also support a further legal underwrite agreement to stand as security for any further specific loans that could become impaired.

"The lending environment today is difficult, due to lower condience of lenders, lack of exit strateiges and sale options," said Hubbard. "However, South Canterbury Finance will continue to seek lending opportunities in the next year to backbone businesses and industries.

"SCF is a soiund, profitable business and I am committed to supporting SCF and its 45,000 investors who have loyally supported the group for 83 years."

Investment opportunities would continue to be sought in "backbone businesses and industries", Hubbard said.

Of the projected $2.3 billion in assets at June 30 this year (up from $2 billion), with liquidity of $228 million in cash and listed bonds. Net equity is expected to remain at $236 million."

SCF had at all times complied with its banking covenants and the terms of the government deposit guarantee scheme and the preservation of a high cash balance had been prudent for current circumstances, said McLeod.

With banks tightening credit lines meant SCF we being presented "sound opportunities in core industries leading to further diversification of the group's asset base".

SCF came close to making a public offering earlier this decade, but drew back.

Businesswire.co.nz

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