South Canterbury delays new prospectus and extends capital raising talks

South Canterbury Finance said the company now plans to register a new prospectus following the release of its audited accounts on or before September 30. This extends the time-frame of a week South Canterbury set at the end of August for registering a new prospectus and investment statement. South Canterbury also said it was in discussions with its US bond holders and potential new investors and would have more information in 'coming weeks.' South Canterbury said on August 28 it would make an announcement on its planned capital raising within 3 weeks. On August 28, South Canterbury said it expected to release a new prospectus and investment statement within a week. However, this has now been extended to as late as September 30 as the company engages in talks with US bond holders, searches for two new independent directors and tries to raise fresh capital from new investors. South Canterbury said it had had "constructive discussions" with bond holders in the US who subscribed to a US$100 million private bond placement in 2008. South Canterbury's credit rating downgrade in mid-August from BBB- to BB+ meant the bond holders were eligible to seek repayment within three months of the downgrade. The talks are continuing, South Canterbury said. South Canterbury also said it was in advanced discussions with two potential new independent directors and that it would make a further announcement on the restructuring and capital raising process in coming weeks. South Canterbury is currently holding any new investments in trust on behalf of subscribers and not allotting securities following its credit rating downgrade, pending an amended prospectus or registration of a new prospectus. Yesterday the Southland Times reported that Wanaka's largest resort had been put into receivership and South Canterbury Finance was the lender involved. Here is the full statement below from South Canterbury.

Further to the Company's market announcement of 28 August 2009, South Canterbury Finance provides the following update. The Company has had constructive discussions with investors holding notes issued pursuant to the US private placement in 2008 regarding their intentions following the Company's credit rating downgrade in August. The rating downgrade entitled those investors to require repayment after the expiry of three months following the downgrade. These discussions are continuing. The Company is in advanced discussions with two potential new independent directors regarding their appointment to the Board and will make an announcement to the market once confirmed. Work related to the Company's restructuring and capital raising initiatives continues and the Company intends making a further announcement on these matters in coming weeks. The Company is also assessing the details of the recently announced extension of the New Zealand Deposit Guarantee Scheme. Given the relevance of these matters, and other matters previously announced by the Company, to the Company's debenture stock prospectus, the Company ceased allotting securities under that prospectus on 21 August 2009 pending registration of a memorandum of amendments to the prospectus or registration of a new prospectus in its place. Accordingly, all funds received by the Company after 20 August 2009 have been placed in trust on behalf of subscribers. The Company now plans to register a new debenture stock prospectus following the release of the Company's audited accounts expected on or before 30 September 2009.