South Canty chief in gun

Sandy Maier says South Canterbury has kept its end of the bargain, paying out dividends of just over 5 per cent. Photo / Steven McNicholl

Huge losses made on preference shares in battling business South Canterbury Finance came under fire at a meeting for investors in Auckland yesterday.

About 70 investors gathered at the Hyatt for the final meeting of the finance company's nationwide roadshow which saw chief executive Sandy Maier in the gun.

Boyne Shaw of the North Shore said he owns 20,000 of the penny-dreadful preference shares and demanded to know about the future of his investment.

"The preference shares have been a disaster. I feel I have been used unnecessarily. What's the future of getting the capital back?" Shaw fired at Maier who admitted the shares were trading at a fraction of their 2006 listing price.

The non-voting shares were issued for $1 each four years ago but were yesterday trading on NZDX for just 27c.

Maier said South Canterbury had kept its end of the bargain, paying out dividends of just over 5 per cent and he was doing all he could to put the larger business to rights so the share price rose. The company was being restored through restructuring and recapitalisation so the shares stood a chance of returning to par value.

South Canterbury wants to raise $1.25 billion from investors in debenture stock covered by the Government's deposit guarantee scheme.

Describing the business as the "gorilla" of the finance sector, Maier has fronted investor meetings around New Zealand and those close to him said he had expected to come under heavy fire in Auckland. The meetings were set after UMR Research held focus group discussions in Auckland, Christchurch and Timaru where people cried out for information.

"We heard that people not only wanted to meet us but they wanted an up-to-date picture of the business. They wanted it explained," Maier said.

He spoke for more than an hour and then the Auckland investors demanded to know about the role of president for life, Allan Hubbard, how Fonterra payouts affected Dairy Holdings' fortunes and its 58 farms, how many capitalised-interest loans were made, the role of investor George Kerr, and whether Maier would continue after December when his contract ends.

Maier said Hubbard was busy, still in the Timaru office at 6.30am to open mail and correspond with people. He is undergoing dialysis so had retreated from day-to-day involvement in the business, he said.

"Many investors look to Allan for comfort. In finding new equity and capital, Allan has to make that decision - who he sells South Canterbury to. He's focused on that decision and is actively engaged with an investment bank. Allan is savvy commercially and I can only assume he has made arrangements to deal with the assets and the future. His wife Jean is somewhat younger than him and no ninny."

Maier said Fonterra payout rises were a big boost to Dairy Holdings, which is one-third owned by South Canterbury Finance. Capitalised-interest loans were mainly property-related and Kerr should speak for himself but represented investors in partnerships typical of private equity, Maier said.

As for his own future, Maier said he signed up for 12 months with the aim of rescuing South Canterbury. "If you do a turnaround, you should be able to do it in a year or you will never get it done. We're considerably through the process, we're getting to the bottom of the pile."

Murray Weatherston, a director of Financial Focus New Zealand, said after the meeting no hard questions were asked and people seemed generally satisfied because they had the Government's guarantee behind them until 2011's end.

"This is the mum and pop stuff, it's warm feeling stuff. Maier is fluent. There's no huge anger about what's going on. But my biggest concern is what if South Canterbury limps on and fails by February, 2012? Without the Government guarantee, these guys would fail.

"Maier may not be appointed by the Government but he's got Treasury's imprimatur on him," Weatherston said.

FOUR HURDLES

Sandy Maier said South Canterbury's main problems were:
* A wall of maturities expiring.
* Need for new capital injection.
* Standard & Poor's credit downgrade.
* Crown retail deposit guarantee expires at the end of next year.