Failure to be included in the scheme would have meant certain receivership for the company and the Crown picking up a liability of about $1.8 billion in deposits covered by the current scheme.
SCF has managed, just, to meet the Government's minimum criteria for inclusion by achieving a BB credit rating from Standard and Poor's, albeit with a creditwatch negative outlook from the ratings agency.
Craigs Investment Partners broker Peter McIntyre said the announcement was very good news for the South Island.
"It's positive news for debenture and bond holders and it buys the company more time to sort out how to restructure the business and attract extra capital.
"SCF was too big to fail and the Government was aware of that."
Treasury announced on Thursday that Vision Securities depositors would get back all of the money they were entitled to under the retail deposit scheme.
The Auckland-based financial institution, with about 1000 depositors and about $30 million in deposits, went into receivership on Thursday.
Treasury financial operations director Brian McCulloch said the Crown stood fully behind its guarantee commitments and he expected an orderly process of payment to eligible Vision depositors.
However, $30 million was a drop in the bucket compared to the $1.8 billion the Crown would be liable for if SCF went under, Mr McIntyre said.
Listing the company no longer appeared to be an option and an internal operational division of activities had been undertaken, he said.
The division of assets was: the core well-performing finance assets; the impaired or non-performing loan book, including the majority of the property portfolio; the investments group, which included Scales Corp, Helicopters NZ and South Canterbury Finance's extensive dairy industry assets.
Mr McIntyre had earlier estimated that 25% of SCF's property portfolio was impaired but he said that was probably a bit light in regard to current circumstances.
On Wednesday, Torchlight Fund No 1 LP, the company associated with Christchurch businessman George Kerr, agreed to inject $22 million of additional capital into SCF. The fund had an option to increase that to a total of $37.5 million by April 30.
Southbury Corporation, the parent of SCF, would issue secured convertible notes to Torchlight and use the proceeds to subscribe for the same dollar value of new, fully paid ordinary shares in SCF.
That would allow SCF to retain 100% ownership of SCF Finance.
Mr McIntyre said SCF would need all of the wealth of its chairman Allan Hubbard to survive.
"They are included in the scheme but there is still a lot of work to do. But this gives them time to sort out their loan book," he said.
Mr Hubbard said in a statement a major milestone had been achieved.
"We regard acceptance into the extended guarantee scheme as a seal of approval. It is the next step in the journey back towards the company's traditional role as a source of funding to support economic growth."
SCF chief executive Sandy Maier outlined the company's achievements since the appointment of new independent directors and a new management team late last year.
Those achievements included a significant group restructuring with the provision of $152.5 million of new equity in February and the acquisition of two businesses with a record of strong earnings, including Helicopters NZ.
Also, SCF purged its loan book and increased provisioning for impaired assets totalling $203.7 million.
It had also improved its liquidity to make an early repayment of a $US100 million facility to United States lenders.
"The essence of SCF's success has been its very loyal investor base. Acceptance into the extended guarantee scheme will allow the company to provide attractive investment opportunities that meet their requirements," Mr Maier said.
• Treasury also approved the inclusion of PGG Wrightson Finance in the extended scheme.
