South Canterbury Finance had its securities halted from trading on the NZX debt market pending an announcement on a new investor.

"We are close to an arrangement with new investors, and we're just putting a halt in place while the arrangements are finalised," said John Draper, a spokesman for the company.

"I can't go beyond what is in the statement."

Another Allan Hubbard company, Hubbard Funds Management, has been the subject of a statutory managers' report, which was released this morning, and said the value of some investments in the company were overstated by more than a quarter.

Richard Simpson and Trevor Thornton, of Grant Thornton, also said Hubbard's Aorangi Securities has too much exposure to the dairy sector leaving "significant risks" for investors.

A statement on South Canterbury Finance's website says its investment statement and prospectus are "currently being amended".

Hubbard has been seeking a new equity partner with deep pockets for the firm, after he poured in assets from his own holdings in exchange for more shares.

"If you look at what has been written in the press over the last week, Sandy Meier said he wanted a recapitalisation package in place by August 31, and we have a waiver until then," Draper said.

"We are just in the final throes of that process."

On Aorangi, Simpson and Thornton say the problem they face is that Hubbard let the vehicle accept on-call deposits and invested that cash almost exclusively in long-term loans and investments, with much of the money going into about 25 dairy farms. That created an "alarming gap" between the company's loan income and repayments to investors.

The government appointed statutory managers over some of Hubbard's interests on the advice of the Securities Commission after a complaint was made by an investor in Aorangi who claimed not to have been given a prospectus.

Since then, the decision has polarised the investing community, with South Islanders rallying around the man who has propped up much of the region's economy, while others have bayed for blood in the wake of the finance sector's collapse several years ago.

- WITH NZ HERALD ONLINE