The Dim-Post

August 31, 2010

Timaru Lost

Filed under: finance — danylmc @ 9:46 am

Stuff reports that SCF is going into recievership. Should be a fun day on the currency market.

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25 Comments »

  1. Really? I woulda thought that the currency market was pretty much independent of what happens in NZ, and that it would’ve been priced in already as it was virtually a foregone conclusion – nobody wants to buy toxic debt at the moment cos no-one knows what it’s worth.

    Comment by gazzaj — August 31, 2010 @ 9:56 am

  2. Hahaha gazza, maybe go check the graphs before making economic pronouncements. Freefall right now

    Comment by garethw — August 31, 2010 @ 10:10 am

  3. I’ll beat the rest of you too it and say yes freefall was emotive hyperbole :-)

    Comment by garethw — August 31, 2010 @ 10:20 am

  4. Quoth the server, 404… here’s the Herald article on the receivership: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10670071

    Comment by Sam Finnemore — August 31, 2010 @ 10:24 am

  5. Haha, yeah I’m assuming no-one’s gonna make the mistake of thinking I know what I’m talking about :-)

    I think it’s a bit early to say “tumbling” though.

    Comment by gazzaj — August 31, 2010 @ 10:24 am

  6. whoops by “tumbling” I of course meant “freefall”. Damn typos.

    Comment by gazzaj — August 31, 2010 @ 10:25 am

  7. Another spectacular example of NZ managerial incompetence that has just cost the NZ taxpayer $1.7 billion dollars.

    I am glad we are punishing these clowns by handing over Auckland to corporate control.

    Comment by Sanctuary — August 31, 2010 @ 10:47 am

  8. I think the max liability for the taxpayer is around $600 million.

    Comment by danylmc — August 31, 2010 @ 10:51 am

  9. Ah! I just read in the Herald that the government had pumped in $1.7 billion.

    Comment by Sanctuary — August 31, 2010 @ 10:55 am

  10. I heard some commentary yesterday that suggested that receivership might be the best thing. The receivers might take a gently gently approach, whereas a new owner might have called the loans and a number of diary farms might have not survived. According to the reports I have seen (note the proviso – not sure how accurate some reporting is), most of those were apparently new ones, people jumping onto the diarying bandwagon without the necessary experience and backup financing. Also second mortgages that the banks wouldn’t fund.

    Comment by David in Chch — August 31, 2010 @ 10:57 am

  11. Further to the $1.7 billion – that’s the total liability of SCF, apparently, but the assets are substantial, and Danyl is correct.

    Comment by David in Chch — August 31, 2010 @ 10:58 am

  12. Depositors are owed $1.7 billion. But the government now owns SCF’s assets which are worth some x hundred million dollars.

    There’s $900m set aside to pay depositors and Treasury is saying they’ll pay out all deposits as quickly as possible.

    So I assume that means they’ve got the other $800m just sitting around somewhere too.

    The total cost estimate being thrown around is $600m so I guess that means SCF’s assets are worth ~ $1.1 billion.

    At least that’s what it looks like to me… someone correct me if I’m wrong!

    Comment by gazzaj — August 31, 2010 @ 11:01 am

  13. the $1.7b is the Govt payment to cover the Crown Deposit Guarantee.

    The early reporting on this has been shoddy. The process here is exactly the same as that which occured for, for example, Strategic Finance.

    Comment by Phil — August 31, 2010 @ 11:14 am

  14. Gazzaj – the Government doesn’t own anything of SCF. All that has happened is SCF’s liabilities (which used to be to the debenture holders) are now to the taxpayer.

    Comment by Phil — August 31, 2010 @ 11:15 am

  15. Right, but the proceeds of the liquidation now go to the taxpayer, because they’re the collateral for the Crown Deposit Guarantee. So that’s all I meant by “own”… could’ve been clearer.

    Comment by gazzaj — August 31, 2010 @ 11:22 am

  16. I’m lost. Treasury have announced they’ve paid SCF $1.7 billion, even though yesterday the Prime Minister specifically said that taxpayer liability was limited to $600 million.

    Comment by danylmc — August 31, 2010 @ 11:35 am

  17. Yeah – I don’t get that either. It also states that the scheme set aside $900 million – “calculated to be enough to cover all the companies which signed up to it”…!?

    Comment by Sam — August 31, 2010 @ 11:37 am

  18. Maybe it depends on which ‘billion’ we are talking about…?

    Adjective
    S: (adj) billion (denoting a quantity consisting of one thousand million items or units in the United States)
    S: (adj) billion (denoting a quantity consisting of one million million items or units in Great Britain)

    Comment by Sam — August 31, 2010 @ 11:40 am

  19. Actually, scratch that, it still wouldn’t make sense either way… d’uh

    Comment by Sam — August 31, 2010 @ 11:40 am

  20. Actually, Timaru won. Those folks have benefited from Canterbury dairying speculation, at the expense of the rest of the country.

    L

    Comment by Lew — August 31, 2010 @ 11:41 am

  21. According to Scoop
    “The collapse means the government faces a net liability in the ball-park of $600 million to cover SCF’s 35,000 eligible investors, once the receiver has clawed back cash from asset sales.”

    So that $600m apparently isn’t a firm limit and it’s the end-point. The upfront cost to the taxpayer is $1.7bn

    Comment by gazzaj — August 31, 2010 @ 11:49 am

  22. Those folks have benefited from Canterbury dairying speculation, at the expense of the rest of the country.

    Businessmen, they drink my wine. Plowmen dig my earth.
    None of them along the line, know what any of it is worth.

    Comment by Phil — August 31, 2010 @ 2:02 pm

  23. And after a while, you can work on points for style
    Like the club tie, and the firm handshake
    A certain look in the eye and an easy smile
    You have to be trusted by the people that you lie to
    So that when they turn their backs on you
    You’ll get the chance to put the knife in

    You gotta keep one eye looking over your shoulder
    You know, it’s going to get harder, and harder, and harder
    As you get older
    Yeah, and in the end you’ll pack up and fly down south
    Hide your head in the sand
    Just another sad old man

    Comment by gazzaj — August 31, 2010 @ 2:31 pm

  24. OMG, garethw is right: the currency is back to where it was a week ago! Jump from the rooftops, we are all doomed!

    Comment by Clunking Fist — August 31, 2010 @ 7:01 pm

  25. Timaru lost a few hundred years ago. Anyone actually been there? Ew yuk.

    Comment by dribble — August 31, 2010 @ 7:10 pm


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