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South Canterbury ceases debenture allotments

South Canterbury Finance, the finance company owned by Allan Hubbard, halted allotments under its debenture programme and plans to issue a new prospectus pending its capital review and the extension of the Deposit Guarantee Scheme.

Wednesday, 16 September 2009

The company ceased allotting securities under its debenture prospectus in August 21 and is holding all funds received after August 20 in trust on behalf of subscribers, chief executive Lachie McLeod said in a statement. He didn't immediately return calls seeking further details.

A new prospectus will be registered after the release of the company's audited accounts around September 30. South Canterbury Finance's owner, Hubbard's Southbury Group, last month hired Forsyth Barr and Harmos Horton Lusk to advise on restructuring the group, which had its credit rating cut to BB+, speculative grade, last month.

When South Canterbury lost its investment grade rating, it triggered an entitlement for holders of notes under its US$100 million private placement facility to seek repayment within three months.

Today McLeod said talks are continuing with the five investors in the facility regarding their intentions.Hubbard injected $40 million of new capital into South Canterbury in July to strengthen its balance sheet against write-downs on the value of its property loans.

Work on South Canterbury's restructuring and capital raising plans is continuing and it expects to make an announcement in coming weeks, McLeod said.

South Canterbury is talking to two potential new independent directors, it said.

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