By James Murray
It’s a day of reckoning for South Canterbury Finance after the company announced it was going into receivership this morning.
3news.co.nz is live streaming CEO Sandy Maier’s news conference, where he will talk about the company’s future.
At 1pm we will live stream Finance Minister Bill English, who is expected to announce a government package that may see the Government take on parts of South Canterbury Finance including some of their bad debts in an effort to reduce the payout it would have to make as part of the Retail Deposit Guarantee Scheme.
You can check here for updates on this developing story throughout the day.
9:30am – South Canterbury Finance issue a press release saying they are going to go into receivership.
11:00am - Mr Maier begins his press conference. He discusses the fact that they were unable to secure a deal with a private backer to save the company. Allan Hubbard has done everything he can to keep this business intact, today’s news is not good news for him at all, we should acknowledge that. He thanks SCF staff for their loyalty and says they are in good heart.
11:05am – Praises the Government for its Retail Deposit Guarantee Scheme – says they have been impeccable, but that SCF has never approached govt for a bail out.
11:10am – Says there has been a decided effort to make sure that all investors who want payment will be paid promptly. Makes the comment that one blogger had accused him of talking in riddles and said that was because he was under the bounds of confidentiality at the time. He says he can be more candid now.
11:14am – The groups that could have saved South Canterbury Finance were a large offshore South East Asian and US trust, a consortium of partially overseas, partially local investors who didn’t feel the price was right and another offshore investment group with a history in New Zealand.
11:17am – Says that South Canterbury Finance owes investors $2 billion, as a contra to that will be the assets of the business. Says there will be a massive increase in liquidity in the South Island when investors get their money back – he hopes people will use their money sensibly.
11:20am – Mr Maier downplays links between Mr Hubbard’s other company Aorangi Securities and SCF, says there is a historic link but that it is not strong and he does not know details of other businesses.
11:25am – Says Mr Hubbard has had an unmistakable positive impact on thousands of people’s lives. Says it has been disappointing for him and Mr Hubbard to work through these problems and that he would like to be here today with a better solution.
11:26am – Mr Hubbard has supported this business in a way that no other businessman has supported a business in the history of New Zealand. Has lost $150 million of his own money today.
11:28am – Says they have never run up to the Beehive saying “save us, save us, save us” – they were always looking for a private backer. Says the Government does have a large stake and now only stake in this company.
11:30am – Doesn’t want to cherry pick assets to sell off as this can bring in less money than selling as a whole.
11:31am – Mr Maier makes the point that the media has made some mistakes in valuing the company, especially bloggers.
11:33am – The board did have a preferred buyer but it still didn’t “ring all the bells”.
11:39am – PRESS RELEASE FROM HUBBARD – Mr Hubbard says he is strongly of the view that had he not been removed from the board of the company, and subsequently placed in statutory management, he could have helped the company.
You can watch Mr Maier’s full news conference here.
1:05pm – Bill English announces Govt will move swiftly to repay South Canterbury investors through retail deposit guarantee scheme. Says this is the best option for economy and taxpayers in the long run.
1:12pm – Mr English says the Government has had advisors working with SCF since 2009 – so they have had a long time to work out the best possible solution. Satisfied the company has worked hard to stabilise its own loans, but Govt happy this is the best option.
1:13pm – Mr English says the bail-out will not have a significant effect on the govt’s budget or credit ratings because they had already provided $900 million for this. Reporter says they have very nearly spent all of this fund now, But Mr English says he is comfortable that the fund can cover this as well as other similar payouts.
1:14pm – He says Govt may spend the next four or five years working to earn this money back. The net exposure to the Govt is $600 million.
1:15pm – Reporter asks whether this is actually a receivership? Mr English says it is a receivership where the Crown has acted fast to resolve matters.
1:20pm – What would Bill English say to taxpayers who are upset at so much of their money going on this? He replies that there were good reasons for the retail deposit guarantee scheme to prevent financial systems breakdown. He says we have got through this crisis with relatively small costs – compare to Ireland where they are spending tens of billions on this. He agrees the government would rather be spending the money on schools or hospitals.
1:24pm – Reporter says isn’t it surprising that we are not taking a hit on the balance sheet? Mr English says there will be no further imposition on the Government’s book as it was accounted for in the last budget.
1:29pm – Reporter asks how the Govt plan to sell SCF as a going concern if all investors are going to be paid out. Mr English says this would be an option but that Govt is not interested in running a finance business so would dispose of if they got no offer for a going concern. If the receiver recommends a bid to us we have choice over whether to take that bid, but whatever happens Mr English says there won’t be a position where loans go into meltdown or businesses get cut off from credit.
1:35pm – Mr English says the community around SCF should acknowledge the taxpayer assistance that has stopped the local area from being $600 million short.
1:36pm – Reporter asks whether Mr English is confident no other companies will make a claim on the retail guarantee fund, which is now running very low. Mr English says he is confident this will not happen as the companies involved have all gone under already.
1:39pm – Mr English says the Retail Deposit Guarantee Scheme ends in its current form in October and a new scheme with stricter rules will then come into place.
1:40pm – Mr English dodges questions about whether the Government is now the effective owner of South Canterbury Finance, saying they are a close advisor to the receiver who is the legal owner.
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