Kerr boosts support for ailing South Canterbury Finance
George Kerr, a cornerstone investor in Pyne Gould, has boosted his support for the ailing South Canterbury Finance with a $22 million injection.
Thursday, April 1st 2010, 12:06AM
The money will be put into secured convertibe notes in Allan Hubbard's Southbury Corporation. 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 says. "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 December 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.
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