Despite failing to conclude a deal through a nine month sales process South Canterbury Finance (SCF) chief executive Sandy Maier still thinks the group should be sold as a whole rather than be broken up piecemeal.
Speaking to interest.co.nz after SCF’s receivership was announced yesterday, Maier said he still believed the best value in SCF was as one. This includes its “Bad Bank” which holds about NZ$700 million worth of loans, and its “Good Bank” which holds about NZ$900 million of small ticket rural lending. Then there’s Helicopters NZ, a 79.7% stake in Scales Corporation and 33% stake in Dairy Holdings which were tipped in by owner Allan Hubbard earlier this year.
Maier said after trying, with the help of Forsyth Barr, to find a buyer for the group for nine months he had a good sense of where value was.
“Combined as a group there were tax losses and loan relationships,” Maier said. “They’re really not stand alone, separate assets. They’ve been closely intertwined for a long time.”
That said, the Crown would have more options than SCF because it wouldn’t be facing the same funding pressure. And although tax losses had played a significant role on SCF’s balance sheet including helping it to meet Trust Deed ratios, the government wouldn’t be so keen on these as they’re effectively a claim against itself.
However, the Crown, even though it wouldn’t be a distressed seller, was unlikely to be able to attract higher offers and SCF had received offers for some of the assets priced at just 35 cents in the dollar.
“It’s just a truism that most assets that go through a receivership do not gain in value, to put it mildly,” said Maier.
The government has signalled it expects to get back around NZ$1 billion of the taxpayers' money spent on SCF.
Maier said over the nine months SCF had talked to at least 15 parties as it sought a white knight and had received other expressions of interest on top of that.
“There wasn’t one in there that was made for us,” said Maier. “I don’t know what was missing. We gave the assets wide circulation, we gave them as much time as we had.”
Three bidders
Latterly SCF had been in talks with three parties. Citing confidentiality, Maier wouldn’t name them. However he described them as:
1) A large South East Asian/United States Trust. He said it had entered the process late and was in talks up until early yesterday morning.
2) A consortium, partially overseas and partially local with an “excellent” quality of people. Maier said it was “interested in things but we didn’t think the price and terms were right.”
3) Another offshore group that has some investment history in New Zealand. This group also negotiated right up till the bitter end.
Maier said striking a deal with any of the three had proven elusive because of lack of agreement on a combination of price and terms.
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