by Sophia Rodrigues
It is unclear when the repayment happened but South Canterbury's receiver Kerryn Downey of McGrathNicol said the company had borrowed $150 million to repay the $175 million loan, and subsequently generated enough cash to repay the $150 million borrowing.
For South Canterbury this was a big achievement, says Downey. The company now has a sound cash flow and is flush with cash which it is investing through the banking system, Downey said.
At the time of receivership, the government paid $1.6 billion to repay all depositors and stockholders of South Canterbury Finance. In addition, the government also lent $175 million so the company could repay all its prior ranking debts thus enabling the Crown to take a first-ranked creditor position in the receivership.
For Downey and for South Canterbury Finance, "business as usual" has been the mantra even after the finance company went in to receivership. The company has been lending to its existing customers and even to new borrowers who meet the company's lending criteria.
Plant and equipment lending which was deemed as one of the main growth areas of the business, has been moderate while consumer lending is taking place at the rate of around $1 million a month. More importantly, the receivers have managed to stabilise a lot of business, says Downey.
South Canterbury conducts its plant and equipment lending business though subsidiary FACE Finance which is now up for sale. FACE Finance has its own branch network and infrastructure network which could also be bought by an interested vendor, says Downey.
FACE Finance's net loan book as of August 31, 2010 stood at $196.9 million which included plant and equipment loans of $199.4 million and business loans of $5.9 million, according to the receivers' first report. Impairment provisions stood at $8.5 million. Net assets stood at $8.2 million after deducting $197 million loan from South Canterbury. However, the loan book may be looking different now as South Canterbury has continued to do its plant and equipment lending business through FACE even after the receivership.
South Canterbury is also currently marketing for sale 62.5% shareholding in Dairy Holdings out of which its share is 33.6%. The process has now reached a shortlist stage.
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