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South Canterbury Finance's Scales stake sold for $44m

South Canterbury Finance's (SCF) receivers have sold its 78.7% stake in Scales Corporation to Direct Capital for about $44 million or $2 per share.

Tuesday, 3 May 2011

by Jenny Ruth

The sale is subject to a number of conditions, including Scales' shareholders' approval, and is expected to be completed "in coming months," receivers Kerryn Downey and William Black of McGrathNicol said in a statement.


Direct Capital, a local investment firm established in 1994, will complete the purchase through its current fund, Direct Capital lV, and with co-investment from the NZ Superannuation Fund and ACC.

"We have worked very effectively with the company and our advisors and this is an excellent result," Downey said.

"It will provide increased certainty to Scales Group's stakeholders, customers, suppliers and minority shareholders. It's very pleasing to have found credible New Zealand buyers for this leading multi-industry business."

Scales owns Mr Apple, the largest grower, packer and exporter of apples in New Zealand, Meateor Foods, which exports processed meat used in the world's leading pet food brands, New Zealand's largest cool store network, a bulk liquids storage business and a logistics business.

SCF went into receivership in August 2010. The sale of the Scales stake is the second major asset sale since then. Last month, the receivers sold Helicopters New Zealand for about $160 million.

SCF's owner, Allan Hubbard, whose affairs have been in statutory management since the middle of last year, sold Helicopters New Zealand and a majority stake in Scales Corp. to SCF for a nominal $162.5 million in March last year (all but $10 million was paid with new shares in SCF) as part of a rescue attempt.

The government, which has already paid out $1.7 billion to SCF investors, now expects its retail deposit scheme will cost it about $1.2 billion, largely because of lower than expected related party loan recoveries from the receivership of South Canterbury Finance.

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