Published 7 June 2010
A $75 million facility from one George Kerr-led fund to South Canterbury Finance Ltd has been taken over by another of his funds and increased to $100 million.
The original facility was with NZ Credit Fund Ltd (George Kerr & Michael Carolan) and the replacement is with Torchlight Security Trustee Ltd (George Kerr & John Duncan). The term has been extended to 30 November.
The Torchlight Security debt facility direct to South Canterbury replaces the previous agreement for Torchlight Fund No 1 LP to inject $37.5 million of equity into South Canterbury parent Southbury Corp Ltd (headed by group founder Allan Hubbard, with 3 other directors appointed last October). Southbury was then going to pass that money on to South Canterbury.
The restructured facility increases prior charges under South Canterbury’s trust deed to $151 million – 7.2% of total tangible assets, and within the trust deed limit.
The trustee has granted South Canterbury a further waiver, subject to certain conditions, from compliance with the risk-weighted asset covenant which expires on 31 August. The Government has also approved the increase under the company’s Crown guarantee deed.
South Canterbury chief executive Sandy Maier said the new arrangement provided the company with increased liquidity through a simple structure. Torchlight Fund chairman Mr Kerr said the changed arrangements were practical and signified Torchlight’s ongoing willingness to support South Canterbury’s turnaround.
Last week’s further straightening out of South Canterbury – very much under George Kerr’s guidance, with change-agent Sandy Maier supplanting Allan Hubbard on the other side of the deal – followed hot on the heels of a change to the banking proposal by Pyne Gould Corp Ltd, of which Mr Kerr is also a director with a major shareholding.
Pyne Gould was looking at creation of a bank through its own interests, especially Marac, but added 2 building societies to its scheme last week – Canterbury & Southern Cross.
In a separate improvement of South Canterbury’s position, Mr Maier said more than 5000 debentureholders with investments totalling close to $172 million had agreed to roll over investments, taking new debentures with longer-dated maturities.
He said there was also widespread interest from new investors in the company’s 8%/year offer, which has a Crown extended retail deposit guarantee until 31 December 2011.
“This is excellent progress and indicates the competitive nature of the offer and the strong support amongst existing investors for South Canterbury Finance,” Mr Maier says.
The increase in the amount of the funding facility to $100 million replaces the previous agreement between Southbury Corporation Ltd and Torchlight Fund No 1 LP for an additional equity injection of up to $37.5 million which is not now proceeding.
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Attribution: Company releases, story written by Bob Dey for the Bob Dey Property Report.