South Canterbury's board meets without Hubbard

South Canterbury Finance's revamped board meets in Wellington this morning after being forced to withdraw and amend its $1.25 billion offer twice this week and three times this month.

Bill Baylis, the new chairman, said the board would meet at Wellington International Airport because it was the best venue for directors from Auckland, Queenstown and Dunedin.

Allan Hubbard, Timaru-based majority shareholder via his Southbury, will not attend after leaving the board this month and becoming president for life. This will be the first time in decades that Hubbard has not chaired a board meeting.

The business, seeking to raise $1.25 billion to replace a wall of expiring investments, has been forced to pull and change its huge prospectus three times this month.

The first time was when Standard & Poor's re-rated it at the end of May and South Canterbury changed the prospectus on June 4 revealing that slide from BB to B+.

The second time was on Monday, a day after Commerce Minister Simon Power dropped a bombshell announcing statutory management and a major investigation into the affairs of South Canterbury majority shareholder Allan Hubbard, his wife Margaret (known as Jean), alongside other Hubbard entities.

The Serious Fraud Office is this week in Aorangi Securities' offices, copying files from hard disks, seizing documents and delving into transactions. Page nine of the 158-page prospectus disclosed the trouble, saying Jean and Allan Hubbard, Aorangi and seven charitable trusts were in statutory management "and that certain matters relating to Mr and Mrs Hubbard had been referred to the Serious Fraud Office".

Just as the ink was drying on that revised offer, the business was forced into the position of having to amend the $1.25 billion offer again.

Yesterday, South Canterbury issued a further statement saying it had withdrawn the prospectus and revised it after another downgrade from Standard & Poor's.

South Canterbury was on Tuesday dropped from B+ to B- and put on CreditWatch Negative. Sandy Maier, the chief executive, said he recognised the rating was an important factor for investors and remained committed to improving the rating over time.

South Canterbury's $1.25 billion call for funds comprises $1.2 billion first-ranking debenture stock and $50 million unsecured deposits.

Most of South Canterbury's 30,000 investors have the Government's backing after the business qualified for a guarantee protecting most categories of deposits. However three categories of NZDX-listed shares do not qualify for the guarantee.

Suzanne Edmonds, of the pressure group Exposing Unacceptable Financial Activities, said investors who had lost money with about 50 finance companies, including Bridgecorp, Hanover, St Laurence and Strategic, were angry that the Hubbards were singled out for statutory management.

She had called for other businesses to get the same treatment from the Government, but that fell on deaf ears.

"Why [is] only one finance company singled out and been put into statutory management? Mr Hubbard, an ill senior citizen, cannot be singled out when others have been allowed to go into moratorium and receivership under similar circumstances.

"Investors believe this latest move by Government proves the authorities have been negligent," she said.

"The authorities have evidence that many finance companies have committed offences. Not one of the failed finance companies have been put into statutory management since the finance collapse began."

Allan Hubbard's statutory manager, Grant Thornton, said yesterday letters were being sent to the more than 400 investors in Aorangi Securities to confirm details of their investments. In a statement, Grant Thornton partner Richard Simpson said good progress was being made in understanding the business interests of the Hubbards.

FINANCE FIGURES

South Canterbury Finance board:

* Bill Baylis, accountant and chairman, Queenstown based
* Stuart McLauchlan, accountant and director, Dunedin based
* Denham Shale, lawyer and director, Auckland based

Senior management:

* Sandy Maier, chief executive, Auckland based
* Warrick Baxter, general manager lending, Christchurch based

Source: South Canterbury Finance