Shock, tears as SCF fails

BY EMMA BAILEY

There was shock and there were tears, but when the end finally came for South Canterbury Finance, staff said they were not really surprised.

Despite working until 4am yesterday, the SCF team was unable to stitch up a deal with a new equity partner required to inject $300 million into the cash-strapped business. Trustee Executors were instructed to appoint a receiver, which was announced on the New Zealand Stock Exchange at 9.30am.

SCF chief executive Sandy Maier said staff were officially told about the receivership at the same time as it was announced on the market.

`We have told them it is very much business as usual. These are battle-hardened staff who are pretty staunch and have been through a lot."

Seventeen full-time and one part-time staff member are employed at the Timaru office.

A man with decades of corporate turnaround work under his belt, Mr Maier worked up until the last minute but couldn't get a deal together.

"Sometimes you do lose a patient. There were problems and there were things that were not managed well. The board, Allan and management had made poor decisions with $700m of bad loans and hundreds of millions of dollars lost. There were warning signs that should have been taken notice of."

While there was some exposure in the dairy sector, property had been key in SCF's downfall, particularly between 2005 and 2008, he said.

Mr Maier will remain with SCF until the end of the year.

Trustee Executors appointed Kerryn Downey and William Black of McGrathNicol as the receivers, who have taken control and ownership of the group's assets.

The receivers' spokesman confirmed work would continue as normal for staff in the meantime.

"As far as the branches go it is business as usual until the receivers have completed their evaluation. We have only been appointed for a matter of hours and at this stage the business continues to operate."

Timaru District mayor Janie Annear said the news was a shock and huge blow for the community but at least it ended speculation.

"It is a blow for the community. However, we are strong and resilient and we will overcome this.

"Our community feels for Mr and Mrs Hubbard and this receivership will not dim our respect for what they have given to our community over many years and the support of the many new and existing businesses, local charities and sports.

"I think the one good thing is at least the speculation is over and from what the Government is saying there will be an orderly unwinding of South Canterbury Finance over some time."

The long-term risk to South Canterbury is the biggest issue the district faces in wake of the news of SCF's receivership, according to Aoraki Development Trust general manager Wendy Smith.

"It's the loss of that type of (financial) service that has been outstanding for so many years," Mrs Smith said, minutes after learning SCF was in receivership.

She said what was important now, was what the level of government intervention would be.

"It is not about panicking. We just have to see how it rolls out."

"It's beyond belief," Hubbard supporter and SCF borrower Martin Mehrtens said of the receivership news.

SCF has been the Waimate man's "backstop" financier for his contracting and tractor repair businesses for 20 years.

"I know there are some farms that are a bit iffy, but it would just take time for them to come right," he said of the money owed to SCF by farmers. "I thought it (SCF) was too big to let it fall over."

He still does not accept there was a need for the Hubbards to be put into statutory management.

"I can liken it to a brand new diesel engine. I can take it apart and probably find scratches in the fuel injection system and flaws in the engine, but it still goes all right," he said, referring to the discrepancies the statutory managers have found in the companies' books.

With the coming season looking good for farmers, Mr Mehrtens said the rural community should be feeling very positive, but he anticipated unease over the SCF situation could change that.

"This is going to hold things up unnecessarily."

- © Fairfax NZ News