SCF repays US$50m to investors

The funds have been drawn down to repay US$50 million of South Canterbury's US$100 million private placement facility, whose investors had the right to demand repayment when the finance company lost its investment grade credit rating. The remaining US$50 million is to be repaid over five months.

The transaction fits with part of Perpetual's strategy of taking on investments deemed too risky for traditional lenders but which offer the prospect of high returns for sophisticated investors willing to take a longer-term view. Forsyth Barr arranged the new facility.

"Investments that are perceived to be too difficult for banks often create opportunities for fund managers," said George Kerr, Perpetual's chairman and a major shareholder in Pyne Gould. "The fund has been established to focus on exactly this type of situation."

Perpetual is in the process of taking impaired loans off the books of Marac, the Pyne Gould finance arm that it aims to transform into a bank. Perpetual's chief executive John Duncan has said Torchlight may grow into a fund of about $500 million.