I say good on the whistle blower.
Whether SM is the right thing or not is a matter for debate - what is not at dispute is that there are serious problems and issues at the house of AH which required proper investigation to protect investors.
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I say good on the whistle blower.
Whether SM is the right thing or not is a matter for debate - what is not at dispute is that there are serious problems and issues at the house of AH which required proper investigation to protect investors.
Sorry if I change the subject but there is a great story adout the sharebroker in London who brought up all the shares he could just at the hight of the Cuban affair when there looked as though there was going to be a Nuclear war.If there was he would not have to pay for them.If there was no war then the markets would recover and he would make a fortune,which he did.Heads he won!!
Thanks for the warm welcome guys.
Unpacking the "gambling" a little, really its an "all or nothing" situation with the key apparent question being, are all the deliquent loan skeletons out of the closet, or is there significant further provisioning forthcoming once the Auditiors run their ruler over the end of year financials ?
I'm in the latter camp and the double dip camp for that matter also. One of the key reasons is that small business in N.Z is finding things very very tough, I know this from my practice and if the majority of my clients are struggling, (and we know from the recent Institiute of Economic Research report that they're not alone), its widespread throughout N.Z., in effect many of SCF's customers must also be struggling.
I think its worth pointing out that the last thorough "independent" provisioning was as at 31 December 2009 and clearly the economy has been far from robust since then. SM himself has pointed out that further provisioning may be necessary, to exactly what extent is clearly the key question.
Regarding the preference shares, as has been astutely pointed out the dividend rate is re-set each year, but its reset based on the interbank 1 year swap rate plus a margin of 2.5%. Unpacking this, firstly in my view interest rates will remain low for a protracted period of time so its unlikely the current woefully inadequte dividend will increase much in the forseeable future. Secondly for a perpetual secuity the margin was set at a time when margins for this type of security were very low. A brief review of other perpetual securities listed on the market shows that SCF's margin was not the only one the market now considers grossly inadequate for the new, shall we say "enlightened" market conditions and there's a number trading well under par, who arn't trading under anything like the same cloud as SCF.
For what its worth Forbar, and they would be the most one-eyed and biggest backer of SCF, believe fair value over swap for a perpetual preference share of this nature is now 9% !! Even if SCF can be fixed, and that's a huge "IF", 2.5% over swap is never ever going to cut the mustard in the new environment we're in, so as mentioned yesterday I see the maximum upside as about 60 cents from here.
On the other side of the ledger, if SCF can get past the wall of maturities coming due in October, perhaps with a little Govt assistance ?, there's the liklyhood of getting three dividends, Oct 2010, April and October 2011, before the next wall arrives, so about 7.5 cents of dividends potentially forthcoming even if they do fail after October 2011.
So are the pref shares a fair "bet", it all depends whether you think SM has been straight up with his declarations regarding loan provisioning or is their another nasty surprise lurking just around the corner when the Auditors take an independent look at the situation, which might effectivly eliminate some or all of the "so called" equity AH recently introduced ?
What about them carrying over $100m in tax losses as an asset on their balance sheet, (the test here is probable utilisation of same), some would say that's very creative accounting.
Minimoke .... that nattrass fellow gets around a bit .... I see he is a director Pike River as well
Roger, we have a rule on this thread that new participants have to be doe eyed optimists ...
Here you are predicting further SCF loan impairments and a double dip recession. This will not do!
It is usually left to Winner, Mini, Colin and Balance to strip any trace of optimism from a new poster and to leave dreams of a recovered SCF and 3% economic growth shattered in the ditch.
You are not giving these fine gentlemen much material to work with (starting off with such a depressing prognosis).
Alan, Percy and Mouse are obviously too well bred or finely mannered to engage in such repast. However, Roger, your pessimistic views could turn these gentlemen into confirmed "gold bugs". The last postings we will see from them will be in the ASX forum - about how the world will end soon and why they are thankful they own junior Aussie gold stocks.
;-)
OK, I'm going to speculate and this thought has no substance based on fact. Perhaps someone could see that with the year end coming up the Accounts were going to be looked at closely. Perhaps the proverbial was going to hit the fan so an insider, or closely related party thought "best to fess up now" and do some back room deal with the Authorities to avoid or mitigate any future legal action.
theres a rumour going around that the Authorities have hired out Shed 10 to have it relocated to a secret location. Its needed because there is no space in Wellington large enough to lay out the paper needed to draw up the web of related people and companies. And when its reported that the Shed has been burnt down on "mysterious circumstances" you'll know why!