South Canterbury Finance hopes to enter into due diligence this week with "one or more" parties as potential investment partners - possibly injecting several hundred million dollars of equity into the reconfigured finance company.
Any decision to accept an offer will come down to South Canterbury founder, and until last week, chairman Allan Hubbard, who will have to estimate the total value of parent Southbury Corporation, of which he is the dominant shareholder.
South Canterbury is in the middle of a massive restructuring and recapitalisation programme and further shored up investor confidence yesterday by announcing it had appointed its Queenstown-based independent director Bill Baylis as its new chairman, replacing Mr Hubbard, who was made president for life.
Since February, a "master list" of about 15 potential equity partners had been pared down to a final few, chief executive Sandy Maier said when contacted yesterday.
"Some were obviously more capable and interested than others; that has been whittled down to five.
One or more may enter into due diligence this week," with a final decision and negotiations beginning by August, Mr Maier said.
He said it was "more than likely" any future deal with a new investment partner would go through Hubbard-controlled Southbury Corporation, as had recent loans totalling $100 million from South Island businessman George Kerr's Torchlight fund.
The 84-year-old South Canterbury has traded on its southern identity, loyal customer base and local emphasis for decades, a position it is reiterating to investors and advisers in a country-wide roadshow beginning this week.
On the question of how investors might respond if an overseas applicant was chosen as a new investment partner, Mr Maier said Mr Hubbard would "only look at someone compatible, who knows where South Canterbury has come from, and where it is going".
"It's unthinkable that this will be on a first-come, first-served basis," Mr Maier said of any potential suitors.
Craigs Investment Partners broker Peter McIntyre said up to $400 million was likely to be sought, and that his first choice as an overseas partner would be an Australian company.
While South Canterbury has various "very distressed" loans, it also carried a lot of "attractive assets" for buyers to consider.
"This is 'the' bridging gap for South Canterbury. It will be the breaking or making of them in the face of forthcoming renewals," Mr McIntyre said of about $1.13 billion in bonds and debentures coming due by October.
Mr Maier declined to comment on market speculation an equity injection of $300 million to $400 million would be sought for a share in South Canterbury, whose loan book and investments total around $2 billion.
However, he said it was "almost certain" seats on the board would be offered.
South Canterbury today begins its country-wide roadshow in Christchurch, where it will talk to financial advisers and investors on "finding, isolating and fixing" the problems which have beset the company during the past 18 months.
The "critical focus over the next few months" for South Canterbury was to manage its current receivables book, maximise cashflow from interest and principal payments and address its bonds and debentures renewals "as we reshape the business for the long term".
