Kerr boosts support for ailing South Canterbury Finance

The money will be put into secured convertibe notes in Allan Hubbard's Southbury Corporation. Kerr's real estate credit fund Torchlight Fund No 1 LP has an option to increase this by $15.5 million by the end of next month.

"This is a substantial amount of progress in a short period of time a major recapitalisation of the company," said South Canterbury chief executive Sandy Maier says. "We are continuing to consider the various alternative transactions and structures available to us as we look forward to achieving the requirements for non-bank deposit takers."

South Canterbury Finance is still awaiting word on whether it has been accepted into the government's extended retail deposit guarantee after it was downgraded to BB and placed on creditwatch negative by rating agency Standard & Poor's earlier this month. Since December, some $200 million of equity has been injected into the finance company, including today's announcement and ongoing support from Timaru businessman Hubbard.

The finance company faces a tough year with some $1.1 billion worth of stock and deposit offerings coming due before the expiry of the original government guarantee in October, though Hubbard has consistently provided support for the firm.