SCF process will take up to five years: English

The government expects to spend up to five years getting as much of its money back as possible from the bail-out of failed financier South Canterbury Finance, Finance Minister Bill English said today.  

Tuesday, 31 August 2010

by BusinessWire

"The receiver and the Crown have time. We're in no rush to realise the value of assets in some kind of fire sale," English said. "If there was an option to sell as a going concern, we'd get it [the money] back pretty quickly, but it will take four or five years to work through all the matters to get our money back."

The receivers' sell-down of SCF assets is still expected to leave the tax-payer short $600 million, English told a media conference in Wellington.

That comes after the government wrote a $1.6 billion cheque to trustee Trustee Executors to help repay debt-holders in the firm within a month, under the government's retail deposit guarantee scheme.

The trustee has also taken out a $175 million loan from the government to repay prior ranking charges, including George Kerr's Torchlight Fund facility to SCF.  

The receivership, which SCF's directors called after failing to secure new funds by a deadline today, triggered the retail deposit guarantee, and the government extended it to include all deposits in the lender.

This includes $20 million of technically "ineligible" foreign and other depositors, on the grounds the government wants unimpeded first ranking status to help sort the SCF mess out. 

English said the government was acting swiftly to remove all other claims on the lender, and will ultimately become the sole beneficiary of the firm.

Receivers Kerryn Downey and William Black of McGrathNicol "will need to consult us on anything significant," English said.  Standard & Poor's downgraded the lender to a ‘D' rating, as expected, after the receivership was announced.  

Chief executive Sandy Maier said the firm received bids in the range of between $100 million and $300 million that would've given it enough capital to keep it ticking, but hit sticking points on the detail of the proposals. 

Though he wouldn't name the parties, he said the last three investors SCF was in talks with were a South-East Asian/U.S. trust, a consortium of local and offshore investors, and an international group with some investment history in New Zealand.  

Maier said he will "go back to a sane and normal life" with his contract having an early out-clause.

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