South Canterbury Finance wins extended Government Guarantee

South Canterbury Finance has announced it has been approved by Treasury to be in the Government's extended Retail Deposit Guarantee Scheme until the end of next year. This gives it some breathing space from a looming wall of maturing debentures set to expire ahead of the end of the current guarantee scheme on October 12. South Canterbury's owner and chairman Allan Hubbard said the extension was a major milestone. It followed the announcement late on Wednesday of a fresh NZ$22 million cash injection into South Canterbury after Hubbard's Southbury Corp borrowed NZ$22 million from Pyne Gould Corp's Torchlight, which is run by George Kerr. “We regard acceptance into the extended guarantee scheme as a seal of approval. It is the next step in the journey back towards the Company’s traditional role as a source of funding to support economic growth,” Hubbard said. Chief Executive Sandy Maier said the guarantee extension would give investors extra comfort. "These will provide an orderly transition for the Company, investors and the Crown from the guarantee scheme and provide a stable long term funding base," he said. Treasury later confirmed the extension and announced that PGG Wrightson Finance had also been granted an extension. Here is a link to the full 32 page deed of guarantee with South Canterbury Finance. Here is the full release from South Canterbury Finance below:

South Canterbury Finance Limited has today been approved to participate in the Crown’s Extended Retail Deposit Guarantee Scheme. The scheme will provide all eligible investors with the benefit of the Crown guarantee until 31 December 2011. Welcoming the Crown’s decision, South Canterbury Finance Chairman Allan Hubbard says a major milestone has been achieved. “We are pleased we have met the qualifying criteria for inclusion in the extended guarantee scheme. It is a further acknowledgement of the strides the Company has taken in recent months to retain a Standard & Poor’s “BB” credit rating, increase capital, restructure, improve governance, purge the loan book, and reorganise the business into three divisions covering performing loans, impaired assets and investments. “We regard acceptance into the extended guarantee scheme as a seal of approval. It is the next step in the journey back towards the Company’s traditional role as a source of funding to support economic growth.” South Canterbury Finance Chief Executive Officer Sandy Maier says the acceptance of the Company into the extended guarantee scheme will allow the offer of a diversified suite of longer term and new deposit products. These will provide an orderly transition for the Company, investors and the Crown from the guarantee scheme and provide a stable long term funding base. “The essence of South Canterbury Finance’s success has been its very loyal investor base. Acceptance into the extended guarantee scheme will allow the Company to provide attractive investment opportunities that meet their requirements,” Mr Maier says. “The extended guarantee provides additional comfort to investors. That said, we are confident South Canterbury Finance can return to its long-term position of being a successful and profitable leader in the non-bank sector. The recent recapitalisations of South Canterbury Finance have resulted in the Company having $253 million of equity capital providing us with a solid base from which to achieve our objectives.” The extended guarantee scheme makes a number of changes when it comes into effect at the end of the current Retail Deposit Guarantee scheme. The most significant of these for eligible investors is a reduction in the maximum sum covered for each investor to $250,000.