Shareholders' cupboard bare

Photo / Sarah Ivey

While debenture investors in South Canterbury Finance will be breathing a sigh of relief with both their principal and interest guaranteed the shareholders of the failed company are likely to lose everything.

The finance company collapsed this week with the Government stepping in and paying $1.6 billion to cover debenture holders' deposits covered by its retail deposit guarantee scheme.

The Government also loaned $175 million to the receivers to repay other investors.

The criteria for repayment was to be on the register of debt securities at the date of default, including call deposits, term deposits, non-guaranteed deposits, debentures and bonds.

However, ordinary and preference shareholders of the company - which had assets worth nearly $2 billion - are not eligible for repayment.

It will be no surprise that chairman Allan Hubbard is the biggest loser after the company he founded failed to come up with a re-capitalisation deal and receivers Kerryn Downey and William Black of McGrathNicol were appointed.

South Canterbury Finance, according to the Companies Office, is 79.8 per cent owned by Southbury Corporation, which in turn is fully owned by Southbury Group.

Hubbard and associated parties own 77.1 per cent of Southbury Group, former South Canterbury Finance chief executive Lachie McLeod holds 10 per cent through Dunvegan Seadown and Andrew Borland owns 2.5 per cent through Tullyroan Investments.

A spokesman for the receivers said it was too soon to say if there would be any value left over for shareholders.

FAMILY TREE

SOUTH CANTERBURY FINANCE:
* 79.8 per cent owned by Southbury Corporation.
* Southbury Corporation is fully owned by Southbury Group.
* 20.2 per cent owned by other investors.

SOUTHBURY GROUP OWNERS:
* 77.1 per cent Hubbards and associates.
* 10 per cent Lachie McLeod.
* 2.5 per cent Andrew Borland.
* 2 per cent William Griffin.
* 2 per cent Graham Carr.