South Canterbury Finance's plans for its owner Southbury
Corporation to list on the stock exchange faces headwinds on
several fronts, while the listing remains crucial for it to
maintain its Standard and Poors rating in coming months.
The 85-year-old South Canterbury Finance is in the midst of a
recapitalisation and stock market listing through its parent
company Southbury Group, via Southbury Corp, and has more
than $1 billion coming due for payment during the next eight
months.
Craigs Investment Partners broker Peter McIntyre estimated a
stock market listing, by packaging up all its assets under
the banner of parent Southbury Group, would have to be
undertaken in the next three months and would look to raise
$250 million-$350 million, "more likely towards the upper
end". It was a "less than ideal time" for South Canterbury to
be going to the market, given heightened concerns about the
liquidity of several European countries and New Zealand
investors' sentiment following several finance company
failures.
"South Canterbury have some parts of the jig-saw, but there
are other parts yet to arrive," he said yesterday on the lack
of detail on recapitalisation.
In its six-month report to December, released on Monday,
South Canterbury said its equity ratio was about 11.8% of its
total assets of $2.15 billion.
Mr McIntyre said a successful capital raising, towards the
upper $350 million estimate, would place South Canterbury on
a better footing with its equity ratio of about 20%.
It was crucial it maintain its S&P rating of BB+.
A fall of two notches would exclude it from the replacement
government guarantee scheme, and South Canterbury would have
been working closely with S&P.
The Reserve Bank of New Zealand announced that credit ratings
were now mandatory for non-bank deposit takers, which include
finance companies such as South Canterbury.
Reserve Bank governor Alan Bollard said credit ratings were
useful as they helped investors compare the relative
riskiness of deposit taking institutions when deciding where
to invest their funds.
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