New Zealand's South Canterbury Finance collapses
WELLINGTON Aug 31 (Reuters) - One of New Zealand's largest finance companies, privately-owned South Canterbury Finance, has collapsed after a bid to recapitalise failed, the company said on Tuesday. South Canterbury Finance, which has listed debt, had a deadline of the end of August to secure new capital, or face the threat of receivership.
It has been granted a temporary waiver for breaching its banking covenants earlier this year, and has been seeking a capital injection to bolster its balance sheet. It said it had tried to find extra funds or restructure to comply with its covenants, but been unable to do so.
"Accordingly, South Canterbury Finance Limited has requested Trustees Executors Limited to appoint a receiver in respect of the whole of its undertaking and assets, and Trustees Executors Limited has done so," the company said in a statement.
The non-bank finance sector in New Zealand has been hit by a stream of failures since mid-2006, as the sub-prime crisis, credit crunch and a slowdown in the New Zealand economy impacting property values, hitting debt-laden developers and consumers.
South Canterbury Finance has assets of around NZ$1.9 billion, including subsidiaries in property development, vehicle leasing and insurance, and reportedly owes 20,000 investors as much as NZ$1.7 billion. The 84-year old company had its credit rating lowered to CC from B- by Standard & Poor's on Aug 20, with a one-in-two chance of being lowered to D within the next three months.
South Canterbury Finance investors are covered by a government retail deposit guarantee scheme.
Over the past four years New Zealand's non-bank finance sector has had around 60 companies and investment funds liquidated, wound up or collapsed involving nearly NZ$7 billion of investor funds.
South Canterbury Finance is majority owned by 82-year old millionaire Allan Hubbard, who has had other investment interests and his personal finances placed under statutory management while he is investigated by the Serious Fraud Office.