Hubbard's still a winner for Denleys

John Denley has lost money through South Canterbury Finance but still thinks the world of founder Allan Hubbard.

The 74-year-old retired painter from Bishopdale met and engaged Hubbard as his accountant in Timaru 55 years ago.

Denley is one of several thousand investors who will have lost money in South Canterbury Finance's preference shares, which are expected to be worthless.

Preference shares were issued in 2004 and then replaced with new ones at the end of 2006, $120 million of them, to expand the finance company's capital resources.

"He's been a real friend to the family. I feel so sorry for him. I realise we are losing money now but then again a lot of other places have as well."

Denley is baffled at the Government appointing statutory managers before really asking Hubbard what had happened and giving him a chance to explain. Denley is also an investor in Aorangi Securities, which is in statutory management along with the Hubbards, Hubbard Funds Management and seven charitable trusts associated with Hubbard.

"His first thoughts, you always had the feeling, were with us. He helped us so much over the years with different investments and different suggestions and he never had any part of my business whatsoever, no percentage at all. I just paid him a fee. We are quite devastated at what has happened.

"My personal opinion ... he is such an honest man – all over those 50 years."

He had done so much for South Canterbury and had never used much money for himself.

"I've been in his house. It's never been redecorated for years. It's such a shame really, because he just didn't like spending. He used to always say that. Money to him was never personal, that's for sure.

"I always thought his life was Monopoly. It was never money, it was just sitting down playing the game. That was always my thought and I mean that in the nicest possible way. Maybe it just got too much (for Hubbard)."

Denley declines to reveal how much he has lost in the preference shares but he also has SCF debentures and bonds, which are covered by the government guarantee, and he will get his money back and interest owed on those.

The preference shares would have looked attractive to investors in 2006 because they were paying a gross dividend of 10 per cent. The dividend is reset each year and based on one-year wholesale interest rates plus an extra 2.3 per cent.

The dividend (or interest rate) has reduced as interest rates generally have in the past three years, and it was 5.6 per cent when the trading in SCF preference shares was suspended last week.

The shares were also "perpetual" in that SCF never bought them back as can happen with some preference shares. For an investor to get their money out the investor had to sell the shares to another investor.

While investors paid a $1 face value for them in 2006, they sold for between 9c and 17c last week on the NZX.

- © Fairfax NZ News