South Canterbury Finance is likely to remain in a trading halt into next week as it awaits fresh capital.

The company has set a deadline of August 31 to have a recapitalisation package in place and Trustees Executors has waived South Canterbury's breach of its Trust Deed until then.

South Canterbury Finance has about 40,000 investors and about NZ$1.3 billion worth of debentures on issue.

SC Finance founder Allan 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.

Today a spokesperson for the company, John Draper, said South Canterbury Finance was close to an arrangement with new investors.

"We're just putting a halt in place while the arrangements are finalised," said Draper.

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

Meanwhile, supporters of Hubbard have expressed disbelief at a second report by statutory managers which predicted a slow return of capital for investors in one business and a shortfall of at least 25 per cent in another.

On a Facebook page, supporter Paul Carruthers urged investors to remain calm.

"We have significant concerns about the veracity of the statutory manager's report," he said.

The report by Richard Simpson and Trevor Thornton of Grant Thornton New Zealand released today said that investors in Aorangi Securities were highly unlikely to receive significant amounts of capital back before Christmas and interest payments to them remained suspended.

About 300 investors in Hubbard Management Funds (HMF) were told that the company overstated its value by at least 25 per cent on March 31, reporting non-existent investments and cash balances.

Aorangi received $96 million from investors and $34m of equity from Mr Hubbard. It invested $130m, comprising $83m in farms, $24m in the Te Tua Charitable Trust and $23m in mortgages to a range of business of which $10m is to Southbury Group, a company associated with Mr Hubbard.

Of the $83m invested in farms, $59m is invested in farming businesses associated with Mr Hubbard. The statutory manager said many of the farms are struggling and only 17 of 51 of the loans on them will be able to meet their obligations on September 30.

"Many of the farming businesses invested in are highly geared, the dairy farm sales cycle is currently at a low, and in the case of the charitable trust, many of the loans are interest free and some will not be recoverable," Simpson said.

The total value of HMF was at least 25 per cent less than reported by Mr Hubbard to investors in March.

"The investment profile is not consistent with what would be appropriate for a typical investor in HMF. There is a lack of blue chip investments and the composition of the fund's portfolio generally means that the fund is high risk in nature."

Mr Simpson said today's news about HMF and Aorangi would be a shock and a disappointment to the many people who have invested in these businesses operated by Mr Hubbard.

The report today came after a group of 71 investors had written to Commerce Minister Simon Power asking him to terminate the statutory management of Mr Hubbard's companies.

The letter said it was unfair to prolong Mr and Mrs Hubbard's humiliation and distress.

An investigation by the Serious Fraud Office is continuing.

Separately, South Canterbury Finance, a finance company associated with Mr Hubbard which is not in statutory management, placed a trading halt on its listed securities pending an announcement. It is covered by the Crown Deposit Guarantee Scheme and has been in talks with potential new investors.

NZ HERALD ONLINE with NZPA