Hubbard steps down from South Canterbury   28 May 2010

Hubbard steps down from South Canterbury, new equity partner sought

By Paul McBeth

May 28 (BusinessWire) –South Canterbury Finance is seeking an equity partner as part of its succession plan after owner Allan Hubbard stepped down from the board. The firm’s debt rating was cut deeper into junk territory today.

Octogenarian Hubbard, who will take on the title President for Life, said he will work with the new board and management to help the finance company get through its short-term liquidity crisis and find an equity partner for SCF to “achieve an orderly succession and underpin the long-term future of the business.”

Hubbard will continue to attend South Canterbury Finance board meetings in his new role.

The shake-up at South Canterbury Finance comes after Pyne Gould Corp. cornerstone shareholder George Kerr pumped $37.5 million into the Timaru-based finance company via the purchase of convertible notes in parent Southbury Corp.

Ed Sullivan will also step down from the finance company’s board, marking a complete changing of the guard with the remaining directors only coming on board last October.

The finance company's credit rating was cut to B+ from BB-, which was the minimum level the Treasury would accept for the extended guarantee scheme. Treasury officials have previously said a rating downgrade after a company had been accepted to the extended scheme would result in the firm being evicted. The rating outlook is Creditwatch Developing.

SCF chief executive Sandy Maier said the rating agency missed the point of the finance company’s turnaround in fortunes, and stressed the downgrade didn’t impact on its position under the government’s extended retail deposit guarantee, nor breach the trust deed or other financial covenants.

“All along, our aim has been to restructure the business in an orderly way to underpin its long-term sustainability,” Maier said. “Doing so will protect the interest of all investors and stakeholders more effectively than striving to meet the short-term goals and expectations of the ratings agency.”

Last week, the finance company reported a net loss of $1.2 million in the three months ended March 31, including $5.2 million worth of hits on investment losses, impaired loans and forex movements. The result excluded contributions from the Helicopters NZ and Scales Corp. businesses Hubbard injected into SCF to shore up its performance, which Maier said will deliver a significant improvement in the company’s performance.

(BusinessWire)

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