Three bidders but deal proved too hard

Sandy Maier says a great deal had been achieved in his nine months as CEO. Photo / Simon Baker

South Canterbury Finance was in talks with three bidders before its collapse but could not reach a deal because the price was either too low or the conditions too onerous, chief executive Sandy Maier says.

South Canterbury yesterday asked its trustee, Trustee Executors, to appoint a receiver after it failed to finalise a recapitalisation deal that would have allowed it to meet its trust deed.

Yesterday was the last day of its trust deed waiver and without a recapitalisation it was unable to meet various financial covenants that would have allowed it to meet the terms.

Maier, who took over management of the struggling firm in December, said he always knew it was going to be tough.

"When I came in nine months ago it was a turnaround job. A great deal has been achieved in that time."

Maier said the company had worked hard to manage through a wall of maturing debentures but some of its problems had turned out to be "deeper and more entrenched than we expected".

The placing of Allan and Jean Hubbard into statutory management in June has also not helped South Canterbury. "It had an impact on popular perception." Maier said the company had started off talking to about a dozen parties for the recapitalisation deal and had then whittled it down to three.

The potential bidders involved a large Southeast Asian and United States trust that entered the bidding late in the piece.

A second party had been a consortium of part overseas and part local bidders which had good-quality people involved but the company "didn't feel the price and terms were right".

The third was another overseas group which had a history of investing in New Zealand - talks with them had gone down to the wire but had also failed.

Ultimately a deal could not be done because the company was not able to "get the price and terms together".

Issues came over valuation, due diligence and the cost of some bidders undertaking due diligence, Maier said.

South Canterbury was a very big, diverse vehicle that contained a good bank, a bad bank and the assets of the country's largest apple producer Scales as well as a helicopter business and a stake in dairy farm owner Dairy Holdings.

"A deal that would have kept it whole has proved very difficult."

It had also tried to market individual assets but had been offered as low as 35c in the dollar which would not have been right for shareholders.

Maier said the company could have been saved with capital of between $100 million and $150 million.

"We had offers in that range but the other terms and concerns prevented us from getting over the line."

Maier said it had not considered trying to extend its waiver with the trustee.

"It didn't look to be a productive thing to do. I don't know if they would have turned us down because I didn't ask."

As well as the waiver being up, the company's accounts were also due.

Maier said South Canterbury's failure was not the fault of the Government, which has now been left with $1.77 billion to pay.

"It is the result of its own activities and poor choices in past lending. South Canterbury's fate is of its own doing."

Maier said that despite speculation, there had never been an appeal for additional equity from the Government. "We have never asked for special treatment."