Hubbard sure firm will gain approval

Allan Hubbard. Photo / Supplied

South Canterbury Finance chairman Allan Hubbard says the company has taken all the necessary steps to get into the Government's extended retail deposit guarantee scheme and will gain approval soon.

Hubbard sent a letter to investors on Monday reassuring them of the company's financial position and its application to be included in the guarantee scheme extension which rolls over on October 12.

"I want to assure you that the company is soundly based and well positioned to meet the challenges ahead," he told the company's 40,000 investors.

Hubbard said the company had met the eligibility criteria for participation in the extended retail deposit guarantee scheme.

"A decision from Treasury on our application for participation ... is expected shortly."

This month Hubbard tipped $152.5 million in new equity into the business by transferring Helicopters NZ and a 64 per cent stake in Scales Corporation from his Southbury Corporation into South Canterbury.

The move came days before Standard & Poor's downgraded South Canterbury's credit rating from BB+ to BB and placed it on credit watch negative, signalling the company has a one-in-two chance of a further downgrade in the next three months.

If it drops to BB- the company will no longer be eligible for the extended guarantee.

The yield rate on the company's longer dated bonds has also blown out in recent weeks showing some investors have been prepared to make a loss on the bonds just to get their money out before the Government guarantee runs out.

Yesterday Hubbard said the company was working on a number of proposals and it expected to make an announcement before the end of June on further recapitalisations of the business.

Chief executive Sandy Maier said the company was focusing all its attention on getting into the extended guarantee scheme.

Asked when he believed South Canterbury would be accepted, Maier said: "That is really a question for Treasury. Hopefully we are close."

Maier said South Canterbury had completed the provisional numbers for its December year end accounts and was waiting for its final audited accounts to come through. "We hope to wind that up some time between now and the 31st [of March]."

A spokesman for the Treasury said it did not comment on applications for the extended deposit guarantee scheme.

So far only two companies have qualified for the extended guarantee scheme.

Marac Finance was the first to be included two weeks ago followed by Equitable Mortgages last week.