Balance do you consider things have got considerably worse since you wrote the above post?
If you held 2011 and 2012 debentures, would you get out of them now?
Printable View
Things have definitely got better for SCF - but there is still a long road ahead for the company.
I would not get out if I had the bonds. Not at this kind of yield if you have them. Watch for the next piece of good news and then, look to get out.
Money is too hard earned to leave it in a company which totally ignored market reality. I still cannot get my mind around how the related party transactions kept growing in the last year when the market clearly said it did not want to see such transactions. Something stinks very badly.
Thanks Balance.
Balance, the issue of related party transactions is also my major concern - as you say, smelly and probably nest feathering.
I also thought the announcement saying Southbury had injected 40m in equity, but failing to directly mention that Southbury had also sold 75m of dairy farms to SCF was disrespectful and arrogant.
Any thoughts that SCF was a 'conservative South Island lender' went flying out the door when they 'loaned' CEO McLeod $15m to buy SCF shares ...imo
The reported interest rate is 6% , so where does he find $900kpa to fund this ...?? Capitalised no doubt ,, just gets worse.
M
They should buy Crafarms, amalgamate it with Dairy Farms and do an IPO. There's demand out there for food/protien, especially out of Asia. The cash would help them get their books in order. Anyway, that's the jist of an article I read in the mag. section of the local supermarket.
I'm with Balance on this now.
I bought the prefs at 23c last week, giving me a yield (on cost) of more than 25%.
I could sell out 2/3 of them now and have no net cost (if you want to look at it that way).
If they get back up to the dizzy heights of a 50% discount, then I will have doubled my money, and still be getting the 25% yield (on cost).
I suspect I'll wait for the next bit of good news and bail out in the high 30s or low 40s, but either way it seems very unlikely they'll go below the 23c I paid unless the whole thing goes totally belly up.
Alan.
Sounding confident. Wishful thinking - current management team knows as much about banking as Colin Meads about 'Solid As'.
SCF 'to become a bank'
The Press Last updated 05:00 19/10/2009
Long-standing Timaru finance company South Canterbury Finance could become a bank within five years.
South Canterbury Finance's chief executive, Lachie McLeod, said it would make sense for the company to become a bank.
"In the timeframe, yes there's no doubt about that [possibility of moving to bank status]. It certainly hasn't been on our short-term radar," Mr McLeod said.
"With the (tougher) non-bank regulations coming in, it's certainly an option."
The finance company is also held up by some as a necessary competitor to the Australian-owned banks, giving affordable loans to the small and medium operators in the towns and rural hinterland of the South Island.
Financial commentator and SCF investor Chris Lee added that down the track he saw SCF and perhaps other "best quality" non-banks (like Marac) joining together to be a South Island bank: "Ultimately [I hope] the South Island brings together some very decent organisations to provide a facility New Zealand badly needs, which is a South Island bank."
Last Thursday SCF announced it had been given some breathing space in its long-awaited recapitalisation plan by being allowed to make gradual repayments on US$100 million owed to US investors. The in-principle agreement means five noteholders who invested in the US$100m private placement facility will be paid back over 5 1/2 months, with the first unspecified payment due next week.
International ratings agency Standard and Poor's put SCF's already downgraded BB+ rating on creditwatch negative, meaning a one-in-two chance of a further lowering of its credit rating in the three months to December 21.
Meanwhile, SCF continues to look to claw back loans that have gone sour. The company as mortgagee was in possession and looking to sell the old Dunedin Post Office building for about $7m, Mr McLeod said.
It is also yet to disclose firm options on a recapitalisation that could raise between $150m and $400m.
The market has speculated that SCF owner, the Southbury Group, could float part of its business, with another option being capital input from new investors. A beefed-up management team is also likely, Mr McLeod confirmed.