The deal increases the total Torchlight stake to $37.5 million, while another Torchlight fund still has a $75 million loan sitting with South Canterbury from October last year.
The Torchlight funds of Mr Kerr, who is chairman, specialise in lending to distressed companies, often as a lender of last resort, where the risk factor warrants a high interest cost, often above 10% - prompting the "vulture fund" description in business circles.
The announcement yesterday came a day after South Canterbury told the markets it had recovered $202 million of outstanding, distressed loans since January, or about 10% of the company's assets.
Craigs Investment Partners broker Peter McIntyre said as with the October loan of $75 million, the latest loan has been granted "a prior-ranking charge over its assets in support of the guarantee", meaning Torchlight's latest loan ranked ahead of all other obligations, including those to debenture and deposit holders.
Mr McIntyre said the $75 million October loan was still on South Canterbury's books, with no timeline for repayment announced, and "generally", such loans would not be repaid for two or three years.
"This is part of the stabilisation South Canterbury requires, the main reason being the large amount of repayments coming due during the year which may have to be repaid, if they are not rolled over," he said.
In mid-April, South Canterbury launched a $1.25 billion prospectus to investors, offering $1.2 billion in registered debenture stock, which comes under the Crown's extended retail-deposit guarantee scheme, and $50 million of unsecured deposits, which is not covered.
But in the six months ahead, South Canterbury must have funds to deal with $1.13 billion of bonds and debentures coming due; $491 million by June and a further $640 million by October.
The rollover rate by existing investors will be crucial, South Canterbury chief executive Sandy Maier having said he hoped at least 50%-55%, in line with traditional patterns, would be rolled over.
South Canterbury chairman Allan Hubbard yesterday said in a statement the additional $15.5 million from Torchlight was a further endorsement of the repositioning of the business in the past six months.
"Strategically, South Canterbury Finance is one of only a handful of finance companies with the ability to provide funds for business growth and development beyond the traditional banking sector," he said.
In late October, Torchlight Fund No 1 LP, a company associated with Mr Kerr, agreed to inject $22 million of additional capital into South Canterbury, the fund holding an option to increase that to a total of $37.5 million - which it did yesterday.
Mr Kerr yesterday said Torchlight was committed to helping South Canterbury Finance to execute its strategy of moving towards three distinct business groups: traditional finance, private equity, and real estate and asset management.
About the same time last October, South Canterbury confirmed it "has secured the $75 million loan through Torchlight Credit Fund LP, a fund administered by Perpetual Asset Management, which is a subsidiary of Pyne Gould Corp".
Torchlight was set up by Mr Kerr's Equity Partners Asset Management, which he had earlier sold to Pyne for $18 million. Mr Kerr is Pyne's largest shareholder.
Torchlight raised the $75 million from a syndicate of New Zealand and Australian investors. The funding, arranged by brokerage Forsyth Barr, of Dunedin, was used to pay some of a $138 million debt to United States investors, which also attracted a further $21 million penalty payment.
This was because of a Standard & Poors rating downgrade on South Canterbury in August, meaning the consortium of US investors could exercise their right to call in the loan and seek a penalty fee.
