By Gareth Vaughan Torchlight Fund No 1 LP, the Pyne Gould Corporation-owned (PGC) property funds manager run by significant PGC shareholder George Kerr, has agreed "in principle" to invest up to another NZ$15.5 million in South Canterbury Finance's parent company Southbury Corporation. Kerr told interest.co.nz Torchlight had agreed to take up an option, open until the end of April, to increase its investment in Southbury from NZ$22 million to up to NZ$37.5 million. "In principle the answer is yes, but we're just working through the details," Kerr said. He said these should be finalised soon. The equity injection will bring South Canterbury in line with one of its Trust Deed financial covenants - clause 16.1 (c) - that it would have been in breach of at December 31 without a waiver. The breach was due to provisions made for impaired and other non-performing assets with South Canterbury's trustee, Trustees Executors, granting the waiver so long as the breach was was fixed by May 31. South Canterbury's prospectus issued last month, seeking up to NZ$1.2 billion worth of debentures and NZ$50 million of unsecured deposits, noted it was expected that the Torchlight deal would provide South Canterbury with the equity needed to bring it into compliance with the covenant. The money received will be used by Allan Hubbard's Southbury to subscribe for South Canterbury ordinary shares. Maier said South Canterbury had sent documentation to Torchlight and it appeared everything was agreed. He said he didn't yet know the full extent of Torchlight's additional investment, but he hoped it would be the full NZ$15.5 million. Maier anticipated knowing definitively any day and said South Canterbury would make an announcement once everything was finalised. Kerr declined to say whether Torchlight would stump up all of the potential NZ$15.5 million in additional funding saying private equity funds didn't normally discuss details of a negotiation with journalists. In the initial deal between Southbury and Torchlight, Southbury issued NZ$22 million worth of secured convertible notes to Torchlight on March 31. It used the proceeds to subscribe for NZ$22 million of new ordinary South Canterbury shares. This was first published this morning in our Daily Banking and Finance newsletter, which is for our paying subscribers. Find out more here.
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