{Grin}
Alan.
Printable View
Enumerate, all wonderful theories, I am sure, but theories and historic ones at that.
An alcoholic doesn't think he has a drinking problem, a heavy smoker is I denial it
will affect his health and an AH Cultist thinks everything will be fine and there are
no more problems in SCF's loan book.
Fact is investors simply won't back this company once the Government guarantee
expires and as the pref. shares are perpetual in nature, there simply isn't any other end
game other than them being worthless, unless your counting on an Air N.Z. style equity
injection.
Well summarized, Roger.
The June 30th set of accounts coming out (with the auditors now under the spotlight like never before) will have more provisionings - of that there is no doubt.
You don't have to do more than look at the property listings in the Queenstown- Lakes districts to know that valuations have continued their downward spiral. SCF has lent big into that area.
First of all ... if your understanding is not guided by a theory, you have no understanding at all. Soros has Reflexivity, Buffet has his theory of Value investing, ....
The application of condensed matter physics to self organising financial systems is hardly historical. You really should catch up on your Didier Sornette ...
Cheers Balance. Quite right and its not just limited to that area by any means.
The CEO of one of the major real estate franchise's is a client of mine and also one of N.Z.'s top auctioneer's and i've had quite a number of good chats with him in recent months. I have it straight from the horses mouth with no B.S. that Real estate prices for all sorts of discretionary housing, with special emphasis on holiday homes and expensive property generally, all around the country no matter where you go its the same, prices are under very serious pressure as vendors look to sell non-essential housing to sure-up their business's and balance sheets generally.
Of course none of this, *sigh*, could possibly impact further deliquent loan provisioning in SCF's books, according to the devoted AH fans.
Another good point you've raised is the intense pressure on Auditors, personally I've given up auditing, the risks are simply too great and besides I hate the work and don't need it. That said SCF can expect an even more thorough audit for its full year books.
That guy Hilary reckons Dairy Holdings may not be worth anything to SCF
http://www.lostsoulblog.com/2010/08/...-it-worth.html
Here is a link to the Timaru Herald report of the recent Alan Hubbard supporters group public meeting in Timaru.
http://www.stuff.co.nz/timaru-herald...demand-answers
Boop boop de do
Marilyn
That wouldn't surprise me. David Hillary stikes me as a bright young chap.
The average farm value according to REINZ stat's has fallen from $1.8 million to $1.0 in the last couple of years and as that's a 40% average fall and Dairy Holdings is 60% geared, based on the average farm price slide there's no equity left.
Latest payout forecasts cast a shadow over future trends in farm pricing too, and that's before we even go into the massive overhang of rural land currently on the market.
But I'm sure the "infinite intelligence" of running such high gearing level's in dairy farming is all "kosher", there's no problems regarding marking this asset to market value, YEAH RIGHT !!
The average price for the 6 dairy farms sold in Canterbury during June was $3,389,167 at $32033 a hectare. Average price for milk solids per kg declined to $40 in June. The average price of all farms sold in Canterbuy was$1,250,000 a decline of $10,000 over 2009. But don,t let the facts get in the way of a good story. The value of Dairy Holdings is unknown until it is put up for sale and a willing buyer is found.
Not by the wild and inaccurate speculations of Roger and his fellow crusaders
Westerly
Westerly - I think yoru stats aren't quite right so feel to correct me if I'm wrong. Teh 6 dairy farms you mention were the 6 dairy farms sold in NZ in june, not sold in Canterbury. The average price per hectare was $32,033 but this was down from $39,653 in May. Milk solids were $45 in May down to $40 in June.
In June there were 81 farms sold. In 2009 , in June there were 80, in 2008 there were 216 (how leveraged do your think those 216 buyers are?). In the three months to June there were 45 farms sold in Canterbury down from 132 in 2008.
But its not just Canterbury. What about Otago. In the 3 months to June they fell from $1,240,500 last year to $565,000 this year. And Southland down from $1,175,000 to $1,100,000 and the West Coast dropped t0 $455,000 from $2,900,000.
I think it is very safe to say that we do not need Dairy Holdings to be sold to find out its real value (though that prospect may not be too far away) and we can be absolutely certain the book value has dropped. I don't know how the book value will be arrived at but we can take it average and median farm values based on sales are dropping. We can also take it that banks are not lending and finance Co's like SCF do not have the cash to make loans to make purchases quite so possible. So you have extra supply, low demand, no money to fund that demand, rising interest rates, and a disconnect between Grant Samuels and Fonterras 2010/11 solid prices - I'd say the book value has to be looking a bit glum.
Surprised no one has mentioned the Sunday Star Times article on Terry Serepisos. SCF have the second mortgage on many of his buildings though Marac has a couple and the real surprise was that Hanover might have made an ok loan!
My opinion is that the Wellington commercial property sector is going to be under heavy pressure for the next few years. IRD will be vacating 11 buildings around town by themselves for their new headquarters soon, Asteron are leaving a whole building on the Terrace for 1 floor in the same building. The new Telecom building in Willis Street will see several more older buildings vacated. BNZ's previous tower in Willis Street they left this year for the waterfront is still empty and the for lease sign is up for floors 4-15 in the ANZ Tower opposite me. These are all very large and well paying tenants that will be difficult to replace for the building owners. Needless to say not many government departments are expanding at the moment with most slowly reducing headcount.
Thus lots of reasonable office space available in Wellington with plenty more coming on stream so expect more impairments to come from this sector.
Inside the $230m Serepisos real estate empire
http://www.stuff.co.nz/business/4002...-estate-empire
Oh and if you need further evidence, here's a special I saw on the street outside a prominent cafe on the Terrace (where coffee alone used to be $4.50) this morning....
"Bacon, Eggs & Coffee for $10"
The Horror!
[QUOTE]I'm quoting nationwide REINZ figures buddy, so get with the programme if you want any cred around here you'll have to do better than give small pockets of theoretical evidence and say that's the widespread mean average.
Straight off Chris Lee's weekly mailer this afternoon, he reckons it will take $950 million dollars to put SCF's balance sheet completly right and really make it kosher !!
I see the thread has sunk to new lows ... Roger is quoting Michael Warrington as Chris Lee and using fancy technical accounting terms like "to put SCF's balance sheet completly right and really make it kosher".
Here I thought that "kosher" was something Jewish people did to their food. Now I find out it is in IFRS.
This $950m is a worst case guess involving a near total refinancing and refloating of the business. If you read Warrington - you are not left feeling much deep respect for chrislee.co.nz. This "seat of the pants" fear mongering might work for small town financial advsers but it makes their backing of Strategic Finance look like some kind of cunning plan.
Sharetrader.co.nz did have a better reputation for analysis until the SCF blogosphere circus began - complete with resident clowns and the occasional high wire act.
[QUOTE=minimoke;314475]Westerly - I think yoru stats aren't quite right so feel to correct me if I'm wrong. Teh 6 dairy farms you mention were the 6 dairy farms sold in NZ in june, not sold in Canterbury. The average price per hectare was $32,033 but this was down from $39,653 in May. Milk solids were $45 in May down to $40 in June.
Minimoke
Apologies.The 6 farms were in Southland not Canterbury. In the May - June quarter 31 dairy farms sold nationally at an average price of $3,150,000. None were sold in Canterbury which could mean , none for sale, price too high or no finance available. As dairy farms are still selling in other parts of NZ the problems with water may have something to do with it. As far as SCF goes no news from the board could mean they are still confident or ?
Westerly
I guess that makes you the resident clown as you've been here far longer than I.
You're one of only an increasingly small minority that are still in denial about the extremly grave situation SCF face.
Of course my reference to Kosher was a tongue in cheek remark to how AH sees Aorangi securities and its operational systems, but you knew that.
Just keep buying those preference shares mate...I'm sure AH will see you right.
There seems to be an orchestrated litany of lies being put about concerning SCF. Every possible negative nuance is trotted out as the next disaster.
It seems some kind of weird new spectator sport to lather up with schadenfreude and to cast aspersions on anything SCF does. Of course the ritual crowing about how you exited SCF months ago - is mandatory. It just makes it all the more inexplicable to understand exactly what game these people are playing.
Perhaps these are the dead and dried out husks of former financial advisers who fell off the SCF gravy train. Embittered by SCF contacting clients, directly, to rollover funds. Facing the oblivion of having to pass financial adviser examinations to continue plying the "craft". They prefer to blog, endlessly and monotonously, on subjects they never understood, but really should have, and are now faced with hard graft to get back to the position they had before, but didn't deserve.
All very sad and strange - like something out of Franz Kafka - Metamorphosis.
Yes !! I think Michael Warrington made a really interesting point in his report today regarding the call option SCF010 and 020 holders have if there's an effective change of control at SCF. Basically holders of these notes can ask for their redemption if effective control passes, i.e. Southbury no longer holds a majority shareholding. Its impossible to imagine that SCF ord's have much value at all and only the most extreme cultists fail to realise that SCF needs at the absolute minimum $200 million to at least keep going, so a change of controlling shareholding looks almost certain,. that's if anyone is brave enough, (should that read stupid enough) to step up to the plate, which in my opinion is exceptionally unlikely. Of couse the loss carried forward rules mean that any change of majority shareholding wipes out all those tax losses, so that kisses goodbye to about $100 million of so called asset on the balance sheet. Still that's no real loss as in my opinion, this figure is allready highly questionable.
Enumerate, I think you'll find it was AH himself that introduced the term kosher to this thread.
BTW what happened to your disclaimer?
Realization of NPD per chance?
(jeez must be a slow typist - already at ya ER)
Roger, what are the chances that Torchlight is in talks with the government about paying them to take it off their hands?
http://www.nzherald.co.nz/business/n...ectid=10664377
"Exposing Unacceptable Financial Activities (EUFA), a body which campaigns on behalf of investors burned in finance company collapses."
What are the true values of this crowd?
What if his entities are found to be just like the many others?
Fools rush in......
If you had actually understood the "equity injection" figure of $950million, you quoted earlier - you would find that the bulk of these funds were refinancing of these debt instruments - hardly new equity.
Before you get too paniced - Southbury, itself, could be the investment vehicle that is sold. Sale of the "Good Bank" loan book would also not trigger the Trust Deed covenants. In short, the Warrington scenario and prognosis for refinancing is simply the idle musings of a small town financial adviser. Another trap for those with weak minds and a nervous disposition.
"SCF wanted to sell the business as a whole rather than carve it up" - pretty sums up what SCF is desperately trying to do versus the attitude of the "investors' looking over SCF.
http://www.stuff.co.nz/business/indu...erbury-Finance
Deadline looms for South Canterbury Finance
By MARTA STEEMAN - BusinessDay.co.nz Last updated 05:00 10/08/2010
Cash-strapped South Canterbury Finance will announce in three weeks whether it has forged a deal with investors to inject new capital.
August 31 is the date at which a waiver from breaches of its trust deed by the trustee, Trustee Executors, expires.
The trustee, Yogesh Mody, of Trustee Executors, said yesterday that SCF needed cash to bring it back into compliance with its trust deed.
While SCF had not defaulted on repayments to its debenture holders, it was in breach of its trust deed and had been granted a waiver by the trustee until August 31.
He said the trustee could call a default without a payment default to debenture holders "because currently they [SCF] are in breach of their trust deed in any event".
"They have insufficient capital for the types of business they are operating in, so we are absolutely entitled to take enforcement action and we have chosen not to. We did that back in February fundamentally as a quid pro quo for receipt of the extra assets [Helicopters and Scales Corporation]."
The trustee and investors were now awaiting the recapitalisation plan.
"It would be fair to say they [SCF] are well aware of the time frames, and they are working feverishly towards them."
SCF will also be releasing its financial result for the year to June 2010 on August 31.
SCF chief executive Sandy Maier said yesterday that progress was being made towards recapitalisation.
"We still have a number of parties in negotiations. We haven't lost anybody. We are closing in on time and detail. We are still headed for an announcement on August 31," he said.
SCF was geared up to meet that time frame.
"Part of that depends on the investors themselves but everyone understands the timetable and deadlines," Maier said.
The number of investors interested had increased but he was unwilling to provide the number.
"It's getting to be a pretty solid list and hopefully one of them will come up with something that is doable."
SCF wanted to sell the business as a whole rather than carve it up. One of the factors was to preserve the tax losses that could be used later if there was a certain continuity of ownership but he said that was not the primary driver.
If SCF sells more than $200m of assets, that requires the approval of the Torchlight Security Trustee which has lent SCF $100m. Maier said that was just normal commercial control of an investor. If approval was difficult to obtain then Torchlight could be repaid.
Can't say I'm a follower of Chris Lee so his musings (and those of his staff) are a bit beyond me. However it strikes me Enumerate that you don't rate small town financial advisors. Just so we are clear how do you rate Timaru - I'd always thought it was a kinda small town. Sure it had its own financial advisors but the advantages were plain for investors when they could also rely on that small towns auditors as well as the local friendly accountant. I guess if we are to rate advisors on the size of their metropolis then I'd have to be checking out Forstyh Barr here in Christchurch - except I ditched them many years ago.
Hawera is a pretty small town I think ... whose HQ is there
Just a recurring theme mate ... all the sad action these days seem based around small town disasters ... Allied HQ in Hawera even though Alloway would say as he based in Wellington Corporate HQ is Lambton Quay Wellington
Maybe he should move into offices at the Allied Finance Basin Reserve ... what a waste of money those naming rights are
Alan writes to his investors ..... there is a trust fund available if you need some dosh ... kosher
Plenty of mentions of Jean but nothing about the cat .... hope the cat is alright in the wet and cold conditions imaru seems to be having
http://www.stuff.co.nz/business/personal-finance
How is it that AH is lauded when he offers to spend $29k in trust money (which isn't his money either) to support his investors and throws his own money in (assuming there is any left) should Aorangi go wrong. Yet Hotchin and Watson both offered $5m each to back up Hanover investors if Hanover failed to make capital repayments to investors and they get castigated. Oh I know. AH supporters choose to stay with Call Me Kosher AH; but Hanover investors choose the greener grass in the Allied pasture. Its so much easier to blame another for ones own decisions and losses
By assigning blame elsewhere a common trait of human nature, one doesn't have to fact the reality of ones own mistakes. Living in denial, I can think of one blogger on here that's got that one down to a fine art !!
Yeah I know what SCF and the Trustee said, talk is cheap, most especially so for SCF, lets see when they really deliver their audited accounts and how much of a "shocker" they are.
Perhaps we are being a little harsh. Lets face it, we have had nothing but really quite positive news from SCF of late.
- they clearly have a number of keen parties who are really interested in providing a little extra equity with an announcement promised by 31 August
- the accounts are much tidier so YE result will be released by 31 August and clearly won't present any problems to the much more professional auditors
- Directors (as a result of the Feltex decision) can just take the Auditors at their word and the auditors will have an appropriate disclaimer so there won't be any need for any convoluted audit process.
- the Trustees are quite happy to let the status quo continue with respect to the covenant breach - so no extra bad news there.
- Sandy has got some extra free time to take up a new Director role with Ngai Tahu - so the pressure has to be coming off.
- several highly experienced, talented and qualified senior executives have no concerns for their career prospects and have taken up residence in SCF
- It was announced SCf is at break even for the March quarter
- Their credit rating was reaffirmed but it was only the actions of a non-related party (aorangi) which caused a further downgrade)
- the Crown approved the Deposit Guarantee extension and they are hardly likely to put tax payer money at risk
- debenture holders have been reinvesting quite happily
- The wealthy and grateful supporters of SCF have managed to rustle up the very tidy sum of $29,000 in no time whatsoever to support their brother investors.
- the half year impairments have been dealt with and at a time when the upturn in milk solid prices was looking good
- there has been no negative profit/loss report required to keep the market informed. In the absence of bad news we can assume its only business as usual and thus good news.
- AH will be found to have done nothing of consequence in the court of public opinion and will bring the Saviour to the table in time.
Really its all looking quite rosy!
LOL Yeah Right !! May I presume all the above is tongue in cheek ?
You can take a donkey to water, but you cannot make him drink.
Enumerate in earlier posts was not a supporter of SCF but following some announcements he saw some value with risk in scfha's. He also was not approving of AH 's and Aorangi's statutory management.
Enter the serial posters with a mission to rubbish anyone or anything remotely supportive of SCF.
The fact that the SFO hedged their bets by saying their investigations do not necessarily mean a prosecution will result and they had not even spoken to AH to hear what he had to say was ignored.
Given that all media coverage is basically repetition with very little new information forthcoming and generally unfavourable to SCF it is not surprising anyone with an interest in buying in is delaying decision making to drive as hard a bargain as possible. If SCF goes to the wall they will have certainly
been pushed there.
westerly
Westerly - thats just a nonsense. Wherever SCF end up they will have got their under their own steam. Its worth pointing out though that it is people like me who are helping SCF in a positive sense. I'm after-all out working and paying taxes which is enabling existing debenture holders to be repaid their investments. They get to sleep easy at night thanks to my labour. New investors also get to sleep easily till late next year as I'll continue to work to create the taxes to fund the deposit guarantee scheme. I get to sleep well at night knowing my little bit is being done - so its probably not so much a metamorhosis but a symbiotic relationship.
This is absolutely true. I felt that, at the time, SCF was in denial of the severity of it's problems and that the Trust Deed of the SCFHA was particularly weak in terms of rights of redress in the event the dividend payments were suspended.
My view, now, is that Sandy Maier has galvanised SCF management attention on the core issues. I acknowledge the still significant risks - but I do not assess them to be insurmountable.
SCF is the largest of the NZ finance companies. It's customers and it's community stakeholders see value in it and want it to stand. The combination of size, history, value - all add up to a strong will to see SCF survive. Where there is a will ... there is a way.
The case against SCF, on this thread, is basically unintelligent. Barracking slogans does not defeat a reasoned argument.
It is also not intelligent investment to oversubscribe to risk and fear at the expense of a measured understand of risks.
For those holding SCFHA ... and the trading volumes are completely insignificant compared with the held volumes ... I am very keen to put forward a reasoned cased that selling at 15 cents might fail to acknowledge the likely outcome dictated by cold logic. These are fearful times ... but you fail if you make fear your master.
minimoke - I get the feeling that westerly doesn't really appreciate that SCF prob been going to the wall (won't say insolvent cause that is only conjecture and speculation) for a year or so
I doubt that recent actions by the Stat man, SFO, minimoke, roger and balance have had any bearing on the ultimate outcome - one thing none of those mentioned have paraded down the main street of Timaru
I think Westerly makes some good points.
The Statutory Management of Allan Hubbard has had a material effect on the recovery prospects of SCF. We are now months into the process. Extraordinary powers have been granted to the Statutory Manager - in the defence of the public interest. We have not had any demonstration of any threat to the public interest ... after all this time ... after extraordinary powers of investigation were granted. No charges ... no hint of charges ... just the implication that Simon Botherway might be conducting a personal vendetta and that Jane Diplock is a fool and Simon Power has lost all sense of perspective and Adam Feeley fancies himself as an American style District Attorney summoning Grand Jury inquisitions at even a hint of impropriety.
At one level, I cannot blame the bureaucrats. They reflect the will of their masters. Central government has turned nasty - in terms of prosecution. Even the MED Radio Frequency unit is considering prosecuting a local radio station that inadvertently broadcast on the Police band due to an equipment failure. No deliberate malice ... an equipment fault ... leading to a prosecution ... leading to the shutdown of a small community radio station.
The failure of the first round of Feltex director prosecutions is a signal on how the courts will treat the new political enthusiasm for "shutting the gate after the horse has bolted".
LOL - how did the hundreds of millions of SCF's bad book come about? Nothing to do with AH of course - it's all somebody else's fault.
Those bad dudes should not have borrowed money off SCF - how was SCF to know that the loans will go bad?
And the orgy of related party transactions which took place in 2008 and 2009? Nothing wrong with that too - it's Michael Cullen's fault for giving a government guarantee to SCF so that AH was able to shift money between SCF and related entities.
AH is blameless - everything he does is and has been kosher.
Happy? AH cultists?
Thanks, guys, I just had the best laugh I have had in a while!
LOL - Yeah Lachie McLeod is the best and most astutue lending manager in New Zealand and his world class loan approval and risk management proceedures have nothing to do with the problems SCF are in.
When will people wake up and smell the coffee and realise that SCF have had extremly poor risk assessment and lending management policies and Lachie was completly blind to the impending wall of defaults brought about by the GFC. He thought, here's a wall of money coming in from the GG approval in late 2008, we MUST lend it out, she'll be right and I'll collect my massive bonus for new lending. The fact that the GFC was allready in full effect in late 2008 didn't seem to worry him at all. The on-going effects from all this poorly controlled lending will continue for many reporting seasons to come, if there are any.
Looks like things might be kosher after all? Powerless and Bothersome maybe not so kosher....
"Cabinet is bracing itself for the possibility that the Serious Fraud Office's investigation into the affairs of South Canterbury Finance founder Allan Hubbard will not find any evidence of complex fraud."
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10665155
Hi Hamdrew,
Interesting article - are they 'softening up' the media for a potential back down? If not, what is the purpose of such a statement from the govt when they are only a week away from a preliminary report? Not sure myself.
BTW, be careful when you post links - the interface automatically adds the HTTP:// for you, which means if you then paste in the full URL it all goes pear shaped:
I usually copy the whole URL from my browser, and paste over the pre-populated bit in the web interface to avoid that happening.
Alan.
I note some subscriber only comment in todays NBR. www.nbr.co.nz/ I'm not a suscriber so not aware of the details, but I doubt that it will reveal much.
Below are some key content in the NBR article:
"In a reserved decision just released from the High Court at Auckland, Associate Judge David Abbott said ASB received $540,000 more than it was entitled to under a $3.5 million mortgage priority linked to a multi-million dollar “farm park” development known as Serenity Cove."
"The judge found in SCF’s favour for the $540,000."
this article by Fran Sullivan about the notion of placing Allied into Statutory Management makes comments about Alan Hubbard
Fran says
"But the only player put in statutory management by the state is Allan Hubbard - a businessman who has not defaulted on his investors and in my opinion is not going to go down (I doubt if he will be charged with criminal fraud) as a result of the Serious Fraud Office's subsequent investigations.
http://www.nzherald.co.nz/business/n...ectid=10665123
Some perspective:- If SCF are looking at posting a loss for the six months ended 30 June 2010 of around $100m as Michael Warrinton estimated the other day, $100m/183 days = a loss per day of $546,000, so after deducting lawyers fees they might have recovered about one afternoon's operational losses.....
wonder a low ball heavily discounted offer for SCFHA is?
This is a serious matter .... so seek professional advice
http://www.stocknessmonster.com/news...=NZSE&N=198209
Cabinet is bracing itself for the possibility that the Serious Fraud Office's investigation into the affairs of South Canterbury Finance founder Allan Hubbard will not find any evidence of complex fraud.
Political sources told the Business Herald that Cabinet ministers were briefed this week in broad terms on the investigation's progress.
The Government seized control of the South Island millionaire's finances on June 20 after a recommendation from the Securities Commission.
At the time of the appointment of the statutory managers Commerce Minister Simon Power said the main reasons for applying statutory management were "to prevent fraud and reckless company management, to protect investors and to enable the orderly administration of a company's affairs".
SFO director Adam Feeley would not comment last night on the outcome of his office's investigations.
"I expected a preliminary report will be with me by next week, and I stress preliminary report," said Feeley.
Perhaps we should also recap on what Feely has said previously. Early on he has said that there are three options: (1) Discontinue the investigation, (2) continue the investigation and build a case, or (3) lay criminal charges.
Yesterday he denied briefing Cabinet but was silent on whether he has had a conversation with a Minister. It does appear though that an Interim / Preliminary report is likely next week. He has also suggested that it is likely the SFO would want to talk to Mr Hubbard at some point. So if they want to talk to AH which option do we think the SFO is pursuing? Given the SFO is now tied up also with the $18m Ponzi by the Bradleys (jeez - where do these "investors" come from?) I doubt they have time to be chatting to people unless there was a need.
Some very careful weasels are dropping word clues along this trail.
Reading the rehash in DomPost this morning it seems that he might have 'admitted' having spoken to Crusher Collins, in her capacity as Minister in charge of the SFO - which presumably would be perfectly proper even in the middle of an investigation & before any conclusion is even drafted. Or, it could be proper - how could we know?
Exactly what could they properly discuss at this juncture - purely administrative departmental details of some sort? Completely unrelated to AH's affairs?
Could this be the perfect channel to inform the Cabinet without actually telling the Cabinet anything? Or to receive further guidance from above when the original marching plan has run out too close to a cliff edge?
How all this can happen without Mr F's minions talking with AH boggles the mind altogether.
Well, here's someone sticking his neck out a mile and calling AH to account. The clock is ticking.
http://www.lostsoulblog.com/2010/08/...or-sinner.html
Excerpt : "The third theory is that Mr Hubbard is not a good man, and that he is some kind of financial psychopath, appearing to be a good man on the outside, even building an aura of benevolence, generosity, confidence and modesty. This theory would be that he's been robbing Peter to pay Paul all of his life, and getting away with it until now. He doesn't believe, according to this theory, that it is wrong to misappropriate funds so long as they're going to a good cause.
I believe that the end is near for SCF, Southbury Corp, Southbury Group, Dairy Holdings, North Wind Holdings (2009), South Island Farm Holdings, Commtest Instruments, and the whole Hubbard empire. The SFO is due to report next week, and I wouldn't be surprised if theory three turns out to be painfully close to the truth. The trustee appears to be reading SCF its last rites, with financials due and waivers expiring at the end of this month. The criticism of the government and the authorities for putting Mr Hubbard into Statutory Management and having the Serious Fraud Office investigate him will probably pale into the background of the eruption of finger pointing at everyone involved in the Hubbard empire. The house of cards is beginning to sway."
Here I thought that the weight of evidence that SCF is in no where near as bad shape as interest.co.nz reports, was beginning to dawn on even the village idiots ... I regret we have more lostsoulblog drivel to endure. Fortunately, we do not have much longer to wait. Final accounts are due on the 31st of August - if I am right, then they will be much healthier than the half year.
Factors to consider are:
- Profitability will be weighed by legal costs and the retail deposit guarantee margin. However, I do not expect significant additional loan impairments - indeed I expect what further impairments are recorded will be more than compensated for by loan recoveries.
- Equity levels will prove to be appropriate for the smaller business target (about $1billion loan receivables). However, the type of equity (equity assets such as Scales, Helicopters and Dairy) is likely to remain an issue.
- I do not expect a "deal" by the 31st. How the Trustee reacts will be a major imponderable. However, I do believe that the improving accounts will give SCF room to maneuver.
In terms of the SCFHA ... I believe there might be pressures to deliver a "haircut" to holders, as part of a reconstruction package. However, I believe that AH will hold fast - while I expect there will be some lean years of zero dividend, I do believe the SCFHA will be fully restored in value following the completion of the reconstruction. I am happy to play my part in this.
Allied Farmers/Hanover latest write-downs highlight what has been happening with valuations and loan recoveries since beginning of the year in the commercial and development property sector.
SCF's accounts coming out in better shape will be wonderful and all credit then to Sandy Maier and his new team. I doubt so, unfortunately - SCF carries too much baggage and the new auditors are going to be tough as Waikato shank beef cooked in Rotorua mud in requiring realistic and conservative provisionings.
Previous auditor had no idea what they were doing - as long as AH said so, it was all kosher.
I know little about this, but am quite bemused by the street march and other support for the Hubbards. I am sure most of the public outcry is based on nothing more than the fact that he has given much to charities. In other words, I doubt that these backers know anymore than I do. It could come as a rude shock to some of his supporters, and more-so to the investors, when it is revealed just whose money it was that he donated to the various causes! For their sake - I hope their optimism and faith in AH proves justified.
Enumerate.
How do you get "profitability"? We know at half year there was a $198.6m net loss (up from a preliminary announcement of $154.9m). We know for Q3 SCF "broke even" with a $1.2m loss. So surely its not a question of "profit" but more one of just how big the loss will be?
It looks like loans are being repaid but new money flowing in is being used to pay the "wall of Debt" so the Deposit Guarantee fee (and the higher interest rates payable) has to be hurting.
SCF reckon their impairments were pretty well covered (but due to be reassessed) - I can't see how those levels of impairment can be maintained - I'm picking a worsening. We know, for example, they will take a $14m hit on the low quality frozen pea asset backing.
SCF reckoned the economic environment was improving leading to more lending opportunities. I reckon the environment down south has worsened. As a lender I don't see that SCF would be first cab off the rank with their higher loan interest rates. Banks are very nervous about lending (indeed I am not sure they are lending at all at the moment) so any money lent by SCF may be going into high risk ventures - if SCF is actually lending.
I don't see a "deal" being done by 31 August. If this was likely we would have had news (probably leaked from the overseas investment office) by now but there has been none.
We know that the AH Stat Man has hurt cash inflows. We know Standard and Poors has reduced their credit rating to Short term C on negative credit watch. They were going to review the negative credit watch by mid July but haven't.
We have had no news that Scales or Helicopters are doing any better than planned - so they are either doing either Ok or not as well as expected.
The Stat man is releasing cash to distressed AH / Aorangi Investors with more news out this week. If they were going to discontinue their investigations I don't see that they would be going to the trouble of finding a way of looking after distressed investor - so I'm not expecting positive news there.
We know Sandy has just taken up a Directorship with Ngai Tahu - I'm interpreting that as an income generating backup plan.
The year end accounts may be healthier than half year - but will they be healthy enough? Will they be better than last years? (we know S&P rating has gone from BB+ to C) Will they need revisions (like last year) before we see the final version.
And we know Sandy's contract is up in December. I think Chris Lee and co are about on the money with another $100m in losses for the six months ended 30 June for a total for the year or circa $300m, but it could be much worse than that going by write-downs in ALF's loan book.
Of course I expect the usual "corporate spin" that most of the losses pertain to SCF's so called "bad bank" and the so called core operation is close to breaking even, e.t.c. e.t.c. and anyone who continues to believe that drivel is "at best", in complete denial.
Roger, you have built castles in the air. Inside those castles, you have built dungeons, within which you have consigned AH and all his investments.
You cite every source, including flotsam and jetsam, but you never piece together your own position, from first principles.
As the level of hysteria rises, so you are emboldened in your views. Are you waging some vendetta against Forsyth Barr - well known to be the AH in house broker. Is this some kind of "professional" jealousy?
It all counts for nothing ... we will have the facts, soon enough.
Your position is clear enough - you are out. I am in.
I must admit, on the SCFHA register, the top 100 changes for July make interesting reading.
The one thing you are correct about is we will know the result soon enough and we will see who's credibility goes up and who's goes through the bottom of the floor.
Regarding the Forsyth Barr matter, let me just put it this way and a quote from the movie Wall St says it best, "their analysts wouldn't know preferred stock from livestock" Feltex, Credit Sails, SCF, anyone care to expand upon the wonderful list of stocks that Forbar have sold their clients down the river on ? By the way Enumerate, it looks like I'm not the only one on here that's stopped taking their so called "professional advice.
The SCFHAs are hadly live anymore. Chances are holders won't get anymore dividends ever, and will be told 'payment to preferred shareholders is unlikely' by the receivers in a few months time.
When SCF eventually reports (not likely to be at the stated 31 Aug date):
1. The deferred tax and prepaid tax assets will be gone (about $100m)
2. The loan to Southbury Corp will be written off entirely ($15.6m)
3. The loan to Southbury Group will be written down to a few cents in the dollar or written off entirely(about $100m)
4. Dairy Holdings and Commtest Instruments will be written down severly or written off (about $50m-$80m)
5. The business and property loan books will book big losses (perhaps $100m)
6. The rural lending book could sustain some big losses (South Island Farm Holdings Limited, especially, and I bet the other 'first ranking' secured loans are first ranking GSAs actually ranking after mortgages over their land (perhaps another $50m-$100m).
Meanwhile, in the last 6 months the company has been selling its good loans and using the cash to pay off debentures, so expect SCF's assets and debenture liabilities to be significantly reduced. SCF is a corpse with mostly unquitable rubbish loans, $300m+ of related party loans, Helicopters, Scales, Dairy Holdings, Commtest Instruments and other bits and bobs.
There's a $500m hole in SCF that is so big Enumerate is the only one who can't see it.
If Torchlight has made $4m more than forecast (PGC profit announcement today) does this mean SCF have paid $4m more than the market has been told?
Fascinating - so who is to be blamed? more to the point, who to believe?
http://www.listener.co.nz/issue/3657...781088583EA656
SETTING A COURSE
The article on Allan Hubbard (“A South Canterbury tale”, May 22) contained many inaccuracies about South Canterbury Finance (SCF) and me.
Any loan I may have had to SCF has been fully repaid. I have no liability to SCF. The comments that I owe loans and interest were totally inaccurate and damaging to me and my family.
The finance industry has been in its worst crisis since the 1920s Depression. The chairman and board were fully involved in the running of the company and received remuneration accordingly.
Senior management and I were employed by the chairman and the board to carry out policy, governance, strategy and direction – which were all set by the chairman and board. The board monitored this direction regularly and at all board meetings. Property loans have been a large portion on SCF’s loan book for over 20 years. The board approved all major property loans under the SCF credit process and in many cases introduced them to SCF.
Management team, general managers and all staff worked extremely hard over a difficult two-year period. For this team to have been implicated by the chairman and outside commentators is unfair and inaccurate. This team was one of which any finance company would be proud.
Lachie McLeod
CEO, South Canterbury Finance, 2003-09
I reject the allegation that my article contained “many inaccuracies”. It referred to a 2008 loan from SCF to McLeod for $15.4 million. I reported that this loan had not been repaid and that interest was not currently being paid. I based this information on interviews with Allan Hubbard and SCF director Stuart McLauchlan. Since receiving McLeod’s letter this week, I have checked with McLauchlan as to the status of the loan and again been told that it remains unpaid and that no interest is being paid.
McLeod says “property loans have been a large portion on SCF’s loan book for over 20 years”. In my article I described property lending as a “small” portion of SCF’s loan book prior to its period of rapid growth over recent years. In 2000, for instance, the “property and business” category of loans accounted for about 11% of the total book, and in 2001, 15%. By 2008, property was over 25% of the book. – Rebecca Macfie
If I recall correctly Lachie was said to have "settled" his $15m loan from SCF - at the time (November 2009). It was never suggested he had "repaid" it. It might be conjecture that Lachies obligations to repay the loan were written into a severance deal and remain confidential. So from his perspective he no longer owes SCF $15m.
The "no interest paid" aspect is consistent with AH's approach to giving loans with no interest due - so no surprise there.
However SCF, presumably still has a $15m loan on its books. I don't recall any mention that this is one of the impaired loans - so it looks like we can add another $15m into the pot of impairments. Unless of course SCF are using new depositor money against that loan and if SCF go under the tax payer will repay the depositors who repaid Alan who forgave Lachie his loan obligations.
Let me try and get what you are saying in another way :
Farmer sold land to developer = big profit.
Developer borrowed money from SCF and paid himself big salary = big profit.
SCF borrowed money from public at higher interest rates = better than in the bank for depositor due to govt guarantee.
SCF goes broke = taxpayers suck the lemon.
Farmer, developer, AH and depositors = all very happy.
Taxpayers = bewildered.
Or does it go something like this.
Lend Pea Trader $15m = "good loan" book improves in value by $15m.
In recognition for improving Good Loan book, lend CEO $15m to buy shares in Co. = $15m more added to "Good loan" book.
Tell punters there is $30m in Good Loans and $15m in equity has been put into Co. = good news
Punters deposit $45m = $45m churned through related party loans etc
Related party loans enable second mortgage lending on depreciating assets = "good loan" book improves 10 fold.
Frozen peas don't sell = bewildered tax payers
Aorangi's preliminary report is now written and in front of the SFO and we should know the outcome within the next few weeks.
I'm picking it will show that there is insufficient evidence an offence has occurred because AH relied on the expert advice of his Accountants.
There you are ... your credibility rests on there being a $500m hole in primary equity - which would mean SCF are currently insolvent.
My view is that reconstruction capital of the order of $100m-$150m would be nice to replace the equity assets (Scales, Helicopters, Dairy) as tier-1 equity (thus healing the current covenant breach). Another way of dealing with this is either the sale of the "Bad Bank" loan book or sale of some of the equity assets.
I'd say a $500m hole compared to the $200m they claimed to have 31 March 2010, so minus $300m
This suggested $750m needed:
http://www.nzherald.co.nz/business/n...ectid=10666868
Take it with a grain of salt however as all unsubstantiated.
The interesting bit was this "He (Sandy) said talk of Government involvement in any deal was "an interesting rumour" but there had been no negotiations to that end."
Under continuous disclosure, stating there had been no negotiations would be misleading if proved incorrect. Bill English gave the appropriate comment of "no comment".
Who to believe ? Let me see, first of all do we trust Lachie Mcleod or the Listener journalist, as the main source of information for the listener article is AH, clearly the question becomes who do you prefer to trust AH or Lachie Mcleod, answer, neither.
Today's speculative article in the Herald is clearly of far more interest as the above mentioned matter of $15m is clearly almost completly irrelevant in the context of the circumstances.
I am picking this speculative Herald article will have this blog very active today and some people may even be bold enough to take a new or addittional positon in one or more of the SCF securities. It will be interesting to see how the market reacts today as clearly if there really had been material discussions with the Govt regarding their participation in a recapitalisation, with Sandy's denial that would amount to deliberatly misleading the market and would leave him personally wide open to legal action.
I will await people's personal views on this matter and the market reaction with considerable interest today.
It almost goes without saying the Govt are incredibly motivated to find a solution for SCF, quite how they propose to do this will be very interesting. Maybe they will buy the bad bank at current written down value and inject say $200 million with another party injecting a similar amount of capital ?
What do we make of the article. Hmmm
Chris Lee, as I recall has been quite bullish with SCF so how reliable source is he? I think I should be able to rely on the ongoing disclosure obligations that SCF has so prefer their statements.
Will the Govt bail out SCF? In a sense it could via the Deposit Guarantee scheme. Once this is called on the Govt can do what it likes to recover whatever it pays out to depositors. Alternatively it could bring in the Stat Managers- it has proven it has a bit of an eye on AH and his interests and did this to PSIS. So there are two options there already.
If the Govt was to bail out SCF, what makes it so special. The Govt was steadfast in its refusal to bail out Fisher and Paykel - an iconic NZ brand and innovator; indeed a company that represented what NZ stands for (John Jeys words). It has also refused to bail out other companies harmed by the GFC. So why would it want to bail out a privately held company with lots of related party loans. If it bails out SCF why would it not bail out Hanover, Bridgecorp, Blue Chip et al (in the past) and ALF now? SCF isn't really an iconic national operator like Air NZ nor a national bank like BNZ
If the Govt does bail out SCF, I'm reminded of this advertisement: http://www.youtube.com/watch?v=qDC0q...layer_embedded.
Why would AH trade his company for the dropping of potential fraud charges. Lets face it - its pretty unlikely he'll face any charges and if he does, and is found guilty, the worst he could expect is Home D. Doesn't seem like a fair trade to me.
The good news for SCF is that they have had so many interested equity propositions they have had to take it to a shortlist stage. That suggests a deal is done - its just a matter of which option is better. The market should respond positively to Sandys words.
I think we still need to wait till the end of August - there is still so much speculation and we don't have the accounts. Its only 10 working days to wait - not long now. In the meantime we can rely on Sandy to keep the market appropriately informed.
I'm not so sure I'd bet significant money on that. He's shown himself to have a fair bit of "creative licence" with the truth.Quote:
In the meantime we can rely on Sandy to keep the market appropriately informed. Minimoke
Hey Enumerate,
Not sure if you bought (more) SCFHA at 9c or 10c, but looks like if you liquidate today you could almost double your money (17.5c bids to buy on the board right now).
Perhaps take some profits, and put some of the rest up on offer at 19.9c and see what happens?
I love it when I am already cash positive on a security and still have quite a few left in my hands.
Well done sir!
Alan.