An eleventh-hour $75 million funding line to beleaguered South Canterbury Finance could be the first tentative step towards creation of a major South Island-based bank. In the short term, South Canterbury, which is in the throes of launching an urgent recapital- isation programme, has confirmed it has secured the $75 million loan through Torchlight Credit Fund LP, a fund administered by Perpetual Asset Management, which is a subsidiary of Pyne Gould Corp reports The ODT. Torchlight was set up by South Island businessman George Kerr's Equity Partners Asset Management, which he sold to Pyne for $18 million recently. Torchlight raised the $75 million from a syndicate of New Zealand and Australian investors, which was arranged by brokerage Forsyth Barr, of Dunedin, understood in recent weeks to have been working hard behind the scenes to ignite support for South Canterbury. SC Finance, to steady itself in the face of growing bad debts, losses, debenture matur- ities and concerns over its related party lending, proposes to seek up to $75 million from private placement, more from a wider placement, and possible sale of dairy assets in the form of company shareholdings. Last weekend, South Canterbury paid the first tranche of $US50 million owed to a consortium of United States investors who exercised their right to call in US100 million ($NZ $138 million), plus a $US15 million penalty, because of a Standard & Poor's rating downgrade in August. In the longer term, the tie-in between Pyne Gould, which raised $270 million recently and paid down debt, and South Canterbury, could come from Pyne's subsidiary, Marac Finance, which it wants to take on a banking licence, Craigs Investment Partners broker Peter McIntyre said yesterday. "There's been [general] talk of the emergence of a South Island bank. While Marac is known to be after a banking licence, there have been calls for South Canterbury to begin acting more like a bank," he said. "Marac and South Canterbury [as a combined bank] would be a big operation," he said.
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