Loss looms for South Canterbury Finance

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South Canterbury Finance, controlled by the South Island's richest man Allan Hubbard, has hired investment bank Forsyth Barr to source funding to strengthen its balance sheet.

The troubled company also said today as a result of further financial impairments and adjustments it will report a loss for the six months to December 31, 2009.

South Canterbury Finance said it was working through a series of issues with its new auditors after becoming aware that adjustments may need to be made to the valuation and reporting of certain items in its June, 30 2009 audited financial statements.

Furthermore the company now says it used the wrong valuation at June 30 for its preference share investment in South Island Farm Holdings Limited. This should have been recorded at fair value rather than cost, South Canterbury Finance said.

An independent valuation of the South Island Farm Holdings preference shares at the date of their acquisition is being undertaken. 

The company filed an application to participate in the Extended Crown Retail Deposit Guarantee scheme on January 21 and said it had received on average about $1.7 million of new investment money per day during January.

"South Canterbury Finance will announce its preliminary financial results for the six months to 31 December 2009 in coming weeks," the company said. 

"It is now clear that further provisioning will be required in respect of assets previously identified as impaired."

Chief Executive Sandy Maier said the results would not be representative of the historical achievements of the company's business nor of the strength of its future performance.

In December South Canterbury Finance raised $27.5m from investors. 

- © Fairfax NZ News