South Canterbury Finance's McLeod resigns

NATASHA MARTIN/ The Timaru Herald

SPECIAL GESTURE: At the South Canterbury Finance annual meeting yesterday, shareholder Albert Makary presented a number plate for Allan Hubbard's VW showing shareholders' trust in the company. Mr Hubbard told the meeting his car is to be gifted to the Fairlie Museum on his death.

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South Canterbury Finance (SCF) chief executive Lachie McLeod has stood down because he has "run out of petrol", not because he was pushed.

He resigned yesterday at the Timaru finance company's annual meeting, after a turbulent six months for the company, which had been hit by bad debts and funding issues.

Mr McLeod will step down at the end of the month to focus on farming interests and family. Nigel Gormack will take over as interim chief executive until a permanent replacement is found.

At a time when the 83-year-old institution is under the microscope by international ratings agency Standard & Poors and being told to reduce its debt, Mr McLeod said his decision would hopefully open the door to fresh ideas.

"I've run out of petrol, basically. It's been a very, very tough nine months and I believe it's time to pull back and give someone else a go."

He would continue to work with SCF as a consultant until a replacement was found and then as a consultant to the other business interests of the firm's main shareholder and chairman, Allan Hubbard, who is also standing down in the next year.

Mr Hubbard said his number two man would be missed.

"Lachie has provided leadership to guide the company through this difficult period and worked tirelessly to achieve a positive outcome for investors, shareholders and staff."

SCF's loan book is just more than $2 billion and Mr Hubbard said the aim now was to reduce that to a "more manageable level" of about $1.5b.

Sharebroker and finance company analyst Chris Lee said the change would be positive for SCF and a great start for new cornerstone shareholders who would want the company to take a new direction.

He said one of the company's worst mistakes in recent years was lending Mr McLeod $15 million to buy shares in the company.

"He's a good bloke and a good dairy farmer, but that loan meant the company was required to take risks that were not appropriate in the last few years."

Mr Hubbard was reluctant to go into details about the $15m loan yesterday, but said "that's all resolved now".

His chief executive was equally reserved.

"It's a confidential agreement and it always has been," Mr McLeod said. He would not give details about when it would be repaid, other than to say it was "still there".

At yesterday's meeting auditors Ernst & Young were appointed, replacing Woodnorth Myers. Three new directors were also appointed: Arthur Baylis, Stuart McLachlan and James Shale.

Mr Hubbard said he hoped the appointment of the new directors would help the company return to profitability after its poor result this year.

He took full responsibility for the result and said that SCF's decision to finance property development had proved "unwise".

The company has withdrawn from financing property developments and has not had a sour loan for 18 months. The focus now would be on financing small businesses, plant and equipment and consumer loans, Mr Hubbard said.

Timaru financial planner Stephen McFarlane said later that changes in personnel were the reality of business life.

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