South Canterbury Finance is excluded from the SFO investigation and the statutory management of eight Hubbard entities announced on Sunday, but the blow to investor confidence manifested itself yesterday in a decline in value of its $100 million worth of $1 preference shares.
Its preference shares, which for any company reflect investor sentiment and perceived value, resumed trading yesterday about 24c, but soon fell to a four-year low of 20c a share.
South Canterbury Finance chief executive Sandy Maier yesterday said the announcements concerning Mr Hubbard's financial affairs could affect the company's liquidity, investment roll-overs and ability to find new cash.
Investors were "shocked and surprised".
"While this is awkward and not a plus for [SCF], the effects on [the company] are not intended.
"But there will be some collateral damage," Mr Maier said when contacted yesterday.
The Government on Sunday enforced a statutory management order over Mr Hubbard (82) and his wife, Margaret, their 36-year-old mortgage company Aorangi Securities and seven trusts, placing them under the management of accountancy firm Grant Thornton.
South Canterbury Finance yesterday removed its 10-week-old prospectus from its website for amendments, having launched it in mid-April to raise up to $1.25 billion from investors.
The 85-year-old company was offering $1.2 billion in registered debenture stock and $50 million in unsecured deposits.
Treasury has reiterated South Canterbury's investors remain covered under the Crown's deposit-guarantee scheme, extended until December 2011.
Mr Maier stressed the company was "specifically excluded from the statutory management order".
The SFO investigations cover about $130 million invested on behalf of about 400 Otago and Canterbury investors in Aorangi Securities.
"Potential breaches of the Crimes Act" will be scrutinised.
During the weeks ahead, South Canterbury Finance must continue to promote investor confidence in rolling over debentures and bonds, and also secure capital from a new equity partner - possibly up to $400 million.
