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South Canterbury Finance - We are entering a tense month for SCF management, and investors.
Sandy Maier has 26 business days (and a few long weekends!) to negotiate with potential new owners before a waiver from the trust deed expires on 31 August.
Maier is trying to retain the Good Bank, Bad Bank and Non finance related assets together for the sake of the SCF brand, believing it to have a future. I question whether this value is available for him to defend.
Buyers for the whole of SCF do not appear to exist. There may be several buyers for the parts (Good bank, Helicopters, Scales or Dairy Holdings) but sales of these parts may leave current SCF shareholders and lenders (debentures, bonds) only holding Bad bank.
Remember also that Torchlight has prior access to some of the best assets as collateral for its loan that helped repay the USD facility last year.
The sale of the best parts of the business is surely an unacceptable result for the trustee? It certainly would be for lenders.
Given the risk that the government may become one of those lenders it is hard to imagine them being very tolerant of a plan that sells the jewels (cheaply?) to third parties.
We understand the government refused to issue consent for the capital injection offered by Torchlight earlier this year. I hope they exercise the same rights with any new offer.
In my opinion the likely bidders are not businesses from the finance sector with a desire to rebuild the business. I think the bidders are likely to be trade buyers (Helicopters, Scales, Dairy Holdings) or vulture funds (trying to profit from the sale of SCF good loans).
Neither type of buyers are likely to be interested in the outcome for current lenders.
SCF directors, Maier and SCF's trustee, especially the trustee, need to be single minded in their efforts to protect current, and potential, lenders.
You may note that I haven't asked these people to protect the shareholder, Allan Hubbard. I am quite sure he would concur with the need to protect SCF lenders interest first.
Extract from Chris Lee's article today that might interest some here.