Sale plan for SCF's commercial assets well advanced

Sale processes for South Canterbury Finance's commercial assets were well advanced, Finance Minister Bill English said yesterday, through a spokesman.

The commercial assets included stakes in Helicopters (NZ), Scales Corp and Dairy Farms.

The Otago Daily Times asked Mr English whether he had received any advice on the likelihood of the SCF assets selling any time soon and what sort of value would they be at, compared to earlier forecasts.

"The loan book is problematic because, as events show, for large parts the loan quality is both poor and hard to assess.

"It's not appropriate to comment on value, though the updated Crown accounts are a good indication of the extent to which asset values have been written down," the spokesman said.

The Crown accounts released on Monday showed a $331 million spike in the cost of the retail deposit guarantee scheme due to the collapse of SCF.

The Government now expected a net loss from the scheme of about $1.2 billion compared with earlier estimates of about $900 million.

SCF, the company founded by Timaru businessman Alan Hubbard, was put into statutory management and receivership last year.

Mr English came under fire from Labour on Tuesday for his handling of the SCF issue. The Labour finance spokesman called for Mr English to resign, something Mr English told the ODT he had no intention of doing.

Asked if he had any regrets about not selling off the SCF assets earlier when it was understood that several interested parties were asking about buying them, Mr English's spokesman said, `No'.

"Treasury officials were in discussion with various parties about options to recapitalise the firm.

"All entailed large costs and risks to the taxpayers. In most cases because the `acquirer' could put any bad assets back to the Crown. At no stage did Treasury recommend accepting any of these offers."

Having signed the deed of guarantee in November 2008, the Crown became overwhelmingly the largest creditor - almost sole creditor - in the event of the failure of SCF, the spokesman said.

For a long time, there was a belief by SCF management that they might be able to trade through their difficulties, or else recapitalise the business on commercial terms.

"In the event, this did not happen. Once the company failed, a normal receivership process has followed," the spokesman for Mr English said.

Kerryn Downey of McGrathNicol, the SCF receivers, said the receivers now had a good handle on the state of the company and how much could be recovered.

However, he would not speculate on what the final bill to taxpayers would be.

"We believe that the provisioning with respect to related-party loans is as accurate as we can get it."

The provisioning for the other assets was sensitive to the receivership and the Government, he said.

"To disclose what we think we will recover from the other assets, in fact, would be clearly prejudicial to our sale process."

The receivers would look at indicative bids this week for SCF's commercial plant and equipment finance business Face Finance, while other sales processes for major investments were under way and largely on schedule.

The sales processes would run for the next six months, perhaps longer, depending on the complexity of deals put together and the time taken to settle.

He expected the taxpayers' final position would not be known for a year or longer.


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