South Canterbury Finance posts $69m loss

South Canterbury Finance Group has reported an unaudited annual loss of $69 million, and says it has increased a provision for non-performing assets.

The finance company says the loss in the year to June 30, 2009 has forced the group to be in technical breach of the interest coverage covenants on its banking facilities.

South Canterbury Finance's principal shareholder Allan Hubbard said as the New Zealand economy transitions from recession, there would inevitably be additional stress in some sectors.

To provide further for those events, the group had acted conservatively and increased the provision for non-performing assets in the financial year to June 30, 2009 and created a general collective provision, Hubbard and the company said in a statement.

However the company did not give detail of the size of these provisions that had led to the $69 million loss, which compared to a $68.9 million net profit in the June 2008 year.

NBR Rich List member, Hubbard had executed a $25 million underwrite of specific non-performing loans at book value, the company said.

The loss for the year to 30 June 2009 caused the group to be in technical breach of the interest coverage covenants on its unused banking facilities.

"These facilities have never been utilised over the last three years," Hubbard said.

Talks were also under way with the five subscribers to the US$100 million private placement facility who are entitled to seek repayment within three months following the resetting of the group's credit rating by Standard & Poor's at a junk rating of BB+.

SCF welcomed the Government's decision this week to extend the Crown deposit guarantee scheme as it will remove a level of uncertainty from the future of the finance industry.

Hubbard also announced the retirement of Bob White and Stuart Nattrass from the SCF board.

- © Fairfax NZ News