SCF appoints restructuring specialist

Last updated 05:00 30/12/2009

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South Canterbury Finance has appointed corporate fix-it specialist Sandy Maier as chief executive to bring urgent change.

His appointment was announced yesterday to the New Zealand Exchange.

It comes a few days after Standard and Poor's warned SCF that it still had urgent problems to tackle even though it was removing SCF from "creditwatch negative" and was confirming its BBplus credit rating.

Maier, 58, who lives in Auckland, has a contract for a year with the new board of directors of Southbury Group, a group of companies including SCF, controlled by Timaru's Allan Hubbard, to be the chief executive of Southbury and SCF.

Hubbard welcomed Maier's appointment yesterday and thanked interim chief executive Nigel Gormack, appointed four weeks ago.

Maier said SCF was a well-respected company that had encountered problems as other finance companies had but because of its better health had put off tackling them. Now the job was "reasonably urgent".

Maier's brief will be to restructure the troubled finance company, sort out the huge loan book, loan by loan, and lead change. He will also rearrange which companies will be within Southbury.

A great deal of investor funds is at stake in the continuing health of SCF. It has not defaulted on payments to investors and Maier said he hoped to keep it that way.

SCF's $1.55 billion of deposits and debentures are covered by the Government guarantee till October next year.

Maier is a restructuring specialist whose most well-known appointment was as statutory manager 1990-92 of the failed Government development fund, Development Finance Corporation.

Christchurch sharebroker and director of Hamilton Hindin Greene, Grant Williamson, said the appointment of someone of Maier's stature would give confidence to investors in SCF.

Maier has had his feet under the table a few days and said his appointment was announced once the NZX resumed trading after the Christmas break. He completed some consultancy work for the board recently.

Changes at SCF have been slow and its recapitalisation plans are still unclear.

Two months ago it received emergency funding of $75 million from Pyne Gould Corporation's Torchlight Credit Fund, colloquially described as a vulture fund which lends to troubled entities.

SCF used that to repay US$50m to American investors and still has to pay them another US$50m in four instalments by the end of March. US$12.5m is due at the end of this week.

Maier said there was a capital raising closing at the end of the week to raise $25 million through the issue of convertible notes to habitual investors.

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This is less than indicated in a debenture prospectus released in October which said $40m to $75m would be raised.

Standard and Poor's warned SCF last week it needed to be "more urgent and assertive" in reducing non-performing loans, related party investments and non-core assets.

SCF needed to maintain higher cash-like assets leading up to plans for recapitalisation and failure to do that would lead to a downgrade.

Maier said SCF had started some management changes, was reviewing its credit processes and these things would continue and "intensify".

"At heart this is an operation of going through the loan book item by item, and looking through the collections and seeing which are healthy and which are not and taking appropriate steps.

"All this has been under way for some time. I do it my way with certain processes, other people do it other ways. That's just an intensification of a review of the credit process."

He believed he could do his job with existing staff. It would take a year "to get things back on a good footing".

Asked about a wider capital raising through selling shares in Southbury to the public, as hinted in a SCF debenture prospectus in October, Maier said: "There could be. The board hasn't decided and I haven't decided." That would be looked at. Maier said the prospectus was still "broadly accurate."

"I've been up and down to Timaru but I haven't moved there yet. And it remains an open question as to where I base. I'll obviously be spending time there".

- The Press

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