Finance firm to push new investments

South Canterbury Finance chief executive Sandy Maier. Photo / Supplied

South Canterbury Finance plans to start raising money from the public this week after qualifying for the Government's extended retail deposit guarantee scheme.

The troubled finance company was accepted into the extended scheme by the Treasury on Thursday and yesterday said the move paved the way to offer a "suite of longer-term and new deposit products".

Chief executive Sandy Maier said a new prospectus would be issued this week which would offer both guaranteed and non-guaranteed deposits.

Maier said the company was not after a specific sum of money but would be "pretty aggressive" in its marketing of the investments.

So far only four finance companies have qualified for the extended scheme.

Marac was the first to meet the criteria last month, followed by Equitable Mortgages. PGG Wrightson Finance was approved on Thursday.

Maier said he expected about 90 per cent of the money raised would still come under the guarantee but the company would begin offering non-guaranteed investments because it recognised that it "had to start sometime".

Maier said South Canterbury was looking at ways to wean itself off the extended guarantee which rolls over on October 12 and finishes at the end of 2011.

"We plan to break the business into divisions with a good business and bad business split. We have already started doing that internally."

The company would try to sell some of its assets and may take up a partner to help with its bad assets.

Maier would not say who the potential partner could be but did not rule out the likes of George Kerr who last week helped boost South Canterbury's equity by another $22 million after his Torchlight Fund bought preference shares in parent Southbury Corporation.

"We have done business with George, he has been extremely supportive. I wouldn't be at all surprised if we had more interaction with George."

But Maier said there was no deal in the pipeline at the moment.

Maier said it planned to raise money to help extend its deposit profile as many of its investments were due to be paid back around September or October.

As of June 30 last year South Canterbury had $2.108 billion in borrowings of which $1.55 billion were from debenture investors and $350 million were owed to bond investors.

A $153 million private placement from US investors was repaid at the end of March, several years earlier than expected, after South Canterbury's credit rating was downgraded.

A further $919 million is due to be repaid by the end of June this year.

Maier said the company would also ensure its half-year results were made public this week.

South Canterbury missed the March 31 deadline to publish its six months to December 31 results as part of the requirements of its listing on the NZX debt market.

It has been given until Friday to do so or it will face suspension from the exchange.

Maier said it had hoped to file its results last week but had been caught out by the short week and the work involved with getting the Government's extended deposit guarantee.

Standard & Poor's credit analyst Peter Sikora said South Canterbury's inclusion in the extended guarantee scheme was positive but was not enough to take the company off credit-watch negative.

The negative outlook means the company has a one in two chance of being down-graded from its BB rating over the next three months.

"Notwithstanding this news, resolution of the credit-watch negative rating action will require further evidence that investors will continue to support South Canterbury Finance into the longer term and greater visibility that liquidity concerns have moderated such that the company has sufficient excess cash to meet its business needs into the medium term," he said.

A BB rating is the minimum requirement for being included in the extended deposit guarantee.

A Treasury spokesperson said once the application had been approved any drop in rating would not affect the inclusion of the company in the scheme.

Firms qualified for the Government's extended retail deposit guarantee:

* Marac

* Equitable Mortgages

* South Canterbury Finance

* PGG Wrightson Finance