About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Tuesday, November 19th, 7:20AM
rss
Latest Headlines

S&P take a wait and see approach to South Canterbury

Ratings agency Standard & Poor’s will retain its ‘wait and see’ attitude around South Canterbury Finance as the finance company undergoes an overhaul with Timaru-millionaire Allan Hubbard’s Southbury Group.

Monday, January 11th 2010, 11:28PM

by Paul McBeth

South Canterbury has been pulled under the new umbrella of Southbury Corp, along with Hubbard's Helicopters NZ and Scales Corporation, and received a $27.5 million injection after the parent company raised capital through a private placement to institutional and private investors.

S&P primary credit analyst Derryl D'silva told www.depositrates.co.nz the capital raising was one of the first steps for the company to get off its negative outlook, which gives it a one-in-three chance of being downgraded from its current sub-investment grade BB+.

"The money was pushed into the finance company, making it directly available for debenture holders," D'silva said. "There's negative pressure around the company's liquidity, asset quality and related-party investments" and these need to be addressed before the negative outlook can be removed, he said.

S&P removed its creditwatch negative rating last month after the company announced it would undergo a major restructure and lodged a new prospectus to take on new deposits. Hubabrd appointed Sandy Maier to head up his Southbury Group and South Canterbury Finance to affect change over the coming year.

Hubbard was forced to inject funds into his finance unit and underwrite bad loans in 2009 after it posted a net loss of $69 million in the year through June, and was forced to negotiate repayment terms with a group of US investors after it lost its investment grade credit rating.

Milford Asset Management analyst Alan Moore, said the $2.8 billion of total assets in the new Southbury was interesting, though its net assets of some $300 million as at June 30 could be of some concern.

If Southbury  was to list on the stock exchange, the company would have to crack down on its related-party transactions, Moore said, though Maier was more than capable of achieving this.

When S&P removed their creditwatch outlook for South Canterbury last month, its report said "any recapitalisation plans favoring debt rather than equity - or involving a complex reorganisation of business units within the Southbury Group (unrated) - which may weaken the interests of SCF debenture or other liability holders will likely trouble the rating."

Its immediate concern is the company's need to maintain higher liquidity ahead of its restructuring, and it warned failure to do so would probably lead to another rating downgrade.

Paul is a staff writer for Good Returns based in Wellington.

« Strategic's future in the balanceRates Round Up »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
Today's Best Bank Rates
Rabobank 1.75  
Based on a $50,000 deposit
More Rates »
News Bites
Latest Comments
  • When is a client really a client?
    “And this subtle upgrade to the understanding of a complaint. Which changes the ISO definition from an expression of dissatisfaction...”
    20 hours ago by JPHale
  • When is a client really a client?
    “Just released additional standards from the FMA. Record keeping potentially until 7 years after the death of the life...”
    20 hours ago by JPHale
  • When is a client really a client?
    “@ReganT interesting that the two life advisers involved with the code working group discussion are the ones being argued...”
    1 day ago by JPHale
  • When is a client really a client?
    “In a previous reply I responded to the concept of payment as a trigger. I actually agree it’s not. While we don’t often...”
    2 days ago by regant
  • When is a client really a client?
    “Tash are you being deliberately obtuse? I didnt say you have to keep sending/giving disclosure every year, I said you have...”
    2 days ago by regant
Subscribe Now

Deposit Rates newsletter

Previous News

MORE NEWS»

Most Commented On
News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com