Published 5 June 2012
Crown Asset Management Ltd has acquired South Canterbury Finance Ltd’s remaining non-cash assets from the company’s receivers. They include the portfolio of remaining loans in the “bad bank” loan book, sundry equity investments and the remaining property investments.
Crown Asset Management is the company the Government set up to manage the recovery of the remaining assets of 6 finance companies placed in receivership while they had Crown guarantees.
Finance Minister Bill English announced the proposal last October, saying all the readily marketable assets had been sold and, by taking over the wind-down, the Government expected to halve the costs of managing the recovery of remaining assets, saving about $13 million over 2 years. The realisable value of the residual assets held by these companies was about $350 million.
Since that announcement, South Canterbury Finance’s receivers have paid the Government $116 million, and the other charging companies in the group $9 million, through to the end of the February. That reduced South Canterbury’s bill by $470 million from the original $1.58 billion owed under the retail deposit guarantee scheme.
Crown Asset Management chairman Gary Traveller said on Friday no cash would be paid to complete the acquisition, with settlement by way of the Crown releasing some of the debt that South Canterbury still owed.
He said the company would follow this transaction by starting negotiations with receivers of the other 5 finance companies in the scheme where the Government was the sole creditor – Allied Nationwide Finance Ltd, Vision Securities Ltd, Mascot Finance Ltd, Mutual Finance Ltd & Rockforte Finance Ltd.
Mr Traveller said Crown Asset Management would use premises in Christchurch previously occupied by South Canterbury and would continue to use staff who had been working for the receivers on loan recoveries. General manager Sharon Burleigh will run its day-to-day operations. The Crown company will be self-funding, with operating costs covered by the revenue it generates from realisation of assets and from repayments of loans it has acquired.
South Canterbury Finance was admitted to the Crown retail deposit guarantee scheme in November 2008. The extended scheme was closed on 31 December 2011. Kerryn Downey & William Black (McGrath Nicol & Partners (NZ) Ltd) were appointed receivers of the finance company headed by the late Allan Hubbard on 31 August 2010.
In their most recent report, on 3 May, the receivers said they’d realised $62.8 million in loans in the 6 months to the end of February, and $56.5 million from the sale of investment shares, mostly in Dairy Holdings Ltd, which were sold in February.
Helicopters (NZ) Ltd’s business has been sold, with distributions to South Canterbury and group company Hornchurch Ltd as shareholders. Helicopters (NZ) was wound up on 1 June as a solvent company.
28 October 2011: Background on South Canterbury’s admission to guarantee scheme
28 October 2011: South Canterbury Finance receivers pay Government $395 million
1 September 2010: Receivers enter South Canterbury Finance after it fails to secure backer
9 June 2010: South Canterbury Finance announces roadshow
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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.