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Financial developments in NZ as South Canterbury Finance gets $100 million loan from Torchlight Security

Pyne Gould corporation announced that it nows holds additional sway over South Canterbury Finance after its subsidiary, Torchlight, accepted a revised $100 million funding facility. In its announcement today, South Canterbury said that its existing $75 million facility provided by New Zealand Credit Fund has been replaced by a $100 million loan from Torchlight Security Trustee Limited (TST).  


TST is owned by PGC’s asset management company, PAM whose chairman is MR. George Kerr.  In this new funding deal, a previous deal between the two companies, South Canterbury’s parent, Southbury Corporation, and Mr. Kerr’s Torchlight Fund No 1 LP for an additional equity injection of about £37.5 million that was suspended, has been replaced.


South Canterbury’s trustees granted a further waiver but subject to specific conditions, from compliance with the risk weighted asset covenant in clause 16.1(c) of the Trust Deed that is expected to end on 31st August this year. Sandy Maier, South Canterbury chief executive, said that the new deal will provide the company an increased liquidity via a simple structure. Over the same, Torchlight Fund Chairman, Mr. Kerr, said that the changed terms were practical and signified the ongoing willingness of Torchlight to support the turn around of South Canterbury Finance.


However, the two companies didn’t disclose the ranking of the new debt in the statement given to the stock exchange, but according to a previous issued statement, Torchlight had senior lending status in the deal. Subsequently, Torchlight is thought to currently have a prior charge on up to £151 million, about 7.2% of South Canterbury’s assets under the company’s Trust deed, but is still within the deed limit and was approved by the Crown under the company’s Crown guarantee deed.


Initially, South Canterbury had withdrawn its current prospectus while the financing arrangements were being completed. The company said this week that, over 500 debenture holders that have cumulative investments of $172 million had, by June 3rd 2010, accepted to roll over the investments that will mature in the coming months. The debenture holders in the company have the support of the extended Crown retail deposit guarantee scheme and the facility’s term has been extended to November 30th, 2010.


In this deal, Pyne Gould Corp’s Torchlight Security trustee will lend an extra NZ$25 million to South Canterbury Finance, increasing its total loan to the Timaru based finance company to NZ$100 million. However, PGC’s controlling shareholder, George Kerr, decided against investing NZ$37.5 million in equity in South Canterbury owner, Allan Hubbard’s personal company, Southbury Holdings.

June 6, 2010.


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