SCF receivers field inquiries over assets

The receivers of South Canterbury Finance Ltd (SCF) are continuing to receive inquiries from prospective purchasers of the collapsed finance company's assets and are reassuring qualifying customers of ongoing funding.

The inquiries are being recorded in registers of interest held by the Crown and the receivers. The receivers this week called for expressions of interest from possible buyers of SCF's assets.

The receivers said today that funding lines would continue to qualifying customers.

Confirming the continuity of funding lines for qualifying customers would help maintain the group's ongoing business operations and preserve the value of its assets.

SCF collapsed last month, triggering a $1.6 billion payment to depositors under the Retail Deposit Guarantee Scheme. The Government hopes to recover between $1 billion and $1.2 billion through the sale of the company's assets.

Receivers Kerryn Downey and William Black, of McGrathNicol, said today that since their appointment on August 31 they had made considerable progress in stabilising the group's operations.

"Over the past week, SCF group senior management and staff have contacted the SCF group's major customers to determine their funding requirements and make the necessary arrangements," the receivers said.

"We recognise the importance of stable ongoing funding to SCF group's customers and we want to reassure customers that funding will continue where lending criteria are being met ."

Finance Minister Bill English said in a statement this week that the ultimate cause of SCF's collapse was insolvency, not lack of liquidity.

The Government then moved promptly to ensure that depositors could be repaid swiftly. As well as repaying $1.6b of remaining depositors, the Government extended a loan facility of $175m to the receivers to ensure prompt repayment of prior charge holders, and extended the guarantee to a small number of previously ineligible depositors.

Mr English said that at the time of admission to the guarantee scheme SCF appeared sound.

In the four and a half years to December 2008 SCF's assets had almost doubled from $1.1b to $2.16b.

As 2009 evolved, it became clear that much of this additional lending was not high quality.

The June 2009 Crown accounts included a provision of $831m for the Deposit Guarantee Scheme. The majority of this related to SCF.

Mr English said that when the fees collected from the wholesale and retail guarantee schemes are included, the net cost is likely to be between $300-$400m.

- AAP