Govt won't help SC Finance Hubbard says
The fate of South Canterbury Finance hangs in the balance this weekend, with just four days until a waiver on its trust deed expires on Tuesday.
Saturday, August 28th 2010, 7:29AM
According to Hubbard himself, the issue is whether or not the government will support a rescue package that creates a "bad bank" to take on SCF's dud assets, and the Treasury is advising it should not.
"We thought they would take up a bad bank offer," Hubbard says. "They have to make a decision over the weekend."
The issue will reportedly go to the Cabinet on Monday, for consideration because SCF is covered by the government's bank deposit guarantee scheme, rather than because Hubbard and his wife, Jean, were placed under statutory management in June, a rare use of the draconian legal process that allows state control of private assets.
Hubbard said last night the Treasury is advising against the taxpayer taking up the liabilities of SCF's non-performing assets. Yet this is a crucial element of the bail-out proposal favoured by the statutory managers, Grant Thornton, Hubbard says.
The bid was "contingent on the government making a contribution toward a bad bank and they rejected that," Hubbard said.
"The people running the process favoured this first bid even though it was a lower number," said Hubbard. "I don't know the reason for that."
He declined to name either the favoured bidder or the bidding party he wants to bring to the table.
"That would be difficult."
Hubbard said that he still hoped to help recapitalise SCF through the unidentified foreign bidder, whom fervent Hubbard supporters say is offering $300 million.
Hubbard hoped, if a deal was in the wind, that Trustees Executors, the trustee, might give a few days further extension to a waiver on a breach of the trust deed that has been running since March, and reflects the distress in the Hubbard financial empire.
Hubbard's supporters also say the favoured bid is offering only $150 million, half the amount available from Hubbard.
"Yesterday the board of South Canterbury Finance received two investment offers, the first of which was significantly higher than the other offer," Paul Carruthers, head of the 'Stand by Hubbard' campaign said in an email.
"The higher offer was declined by the board of South Canterbury Finance in favor of the significantly lower offer.
"The higher offer, which was significantly higher than the offer the board of South Canterbury Finance accepted, would have been very beneficial to South Canterbury Finance and its investors," Carruthers claimed.
The SCF empire is not part of the Hubbards' personal statutory management, although its fortunes are closely tied to Hubbard's. Corporate resuscitator Sandy Maier is chief executive of SCF now, and focused on getting a new capital partner into SCF ahead of next Tuesday's deadline.
SCF bonds and preference shares, listed on the NZDX, were placed on trading halt Friday pending an announcement about a new and unidentified investor.
Sources close to the process ruled out South Island investor George Kerr and his Torchlight group, who last month confirmed they had raised $150 million to take advantage of stressed company opportunities, and which already have substantial exposure to SCF through a series of capital support payments over the last year.
Hubbard himself scotched rumours running among his many supporters that Russian investors were involved. "Not Russian," he said, declining to identify the nationality of the proposed investor. The Russian suggestion is credible because of Hubbard's long association with supplying Russian Antarctic bases, using ice-breaker ships and the helicopter fleet in which Hubbard still has interests.
Officials in the office of Justice Minister Simon Power, who invoked the statutory management, directed enquiries to the office of Finance Minister Bill English as the Minister responsible for issues relating to the deposit guarantee scheme.
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