South Canterbury Finance realises NZ$202 mln from loan recoveries

South Canterbury Finance (SCF) says it has reaped NZ$202 million so far this year from recovering existing loans and has now cashed up about 10% of its total assets since the beginning of 2010. Chief executive Sandy Maier said no "significant" further provisions for assets sold, on top of those revealed in the half-year results to December 2009, had been required so far.

Read SCF's statement below: South Canterbury Finance Limited is making good progress to recover outstanding loans with realisations of $202 million achieved since 1 January 2010. A significant proportion of the recoveries have been achieved by the specialist asset management team working to realise assets in the Company’s portfolio of non-core and non-performing loans. South Canterbury Finance Chief Executive Officer Sandy Maier says a robust process of collecting old loans and making new loans is essential as the Company’s business is restructured. “Ensuring sufficient liquidity for the business is our major challenge and focus and is one of the key metrics for management. Asset recovery complements our efforts to attract new investors and encourage existing investors to re-invest with the benefit of the Crown’s extended retail deposit guarantee. Specialised asset recovery makes a very useful contribution to the overall cash position furthering debt repayment and investment in fresh lending.” The restructuring underway is intended to restore the position of South Canterbury Finance as one of the leading providers of funds for business growth and development beyond the traditional banking sector. “Excellent progress is being made in recovering outstanding loans and the Company has now cashed up approximately 10 per cent of total assets since the beginning of the year. This is in addition to the normal maturing and repayment of consumer and business loans that is ongoing.” Since beginning work on the impaired asset portfolio, the asset recovery team has examined every loan in detail and developed a recovery plan for each. “So far the provisions for impaired assets contained in the results for the six months to December 2009 have generally reflected the market values now being achieved and no significant further provisions for assets sold have been required,” Mr Maier says. “I acknowledge the efforts of all South Canterbury Finance staff and management. These loan realisations and our ongoing attention to servicing our loyal debenture investors are a result of much hard work and dedication in difficult circumstances.” The asset recovery process has been helped by the renewed interest of trading banks in financing sound asset propositions which has further facilitated the sale and recovery process by South Canterbury Finance. “We believe the positive indications that we are seeing in the market and the momentum achieved by the asset recovery team will enable South Canterbury Finance to substantially increase the total cash realised from the asset base this calendar year,” Mr Maier says. “Certainly progress has been assisted by the increase in the forecast payout to dairy farmers. We are also receiving the occasional approach from investors targeting specific assets in the portfolio.” The total recovered includes advances to farms, property developments, vineyards and to corporate entities along with sales of various investment assets.