Wellington, Aug 28 NZPA - South Canterbury Finance today reported a $69 million loss, its first bottom-line loss since 1934.

A loss was signalled and has already been called disappointing by shareholder and chairman Allan Hubbard, who has injected new capital in the business.

The company said today that Mr Hubbard had executed a $25m underwrite of specific non-performing loans at book value.

In July the Timaru-based company said there would be $58m of provisions for bad debts in the year to June 30 and did not update that figure today.

Mr Hubbard said that as the economy transitioned from recession there would inevitably be additional stress in some sectors.

The company said the loss put it in technical breach of interest coverage covenants on unused bank facilities.

"These facilities have never been utilised over the last three years," Mr Hubbard said.

The finance company welcomed the Government's decision this week to extend the Crown deposit guarantee, saying it would remove uncertainty from the industry.

South Canterbury's owner Southbury Group, a company associated with Mr Hubbard, has appointed Harmos Horton Lusk and Forsyth Barr as advisers to assist in the capital restructuring of the group. An announcement is expected in the next three weeks.

A previously reported downgrade of South Canterbury Finance's credit rating to BB-plus by Standard and Poor's triggers a review of a $US100 ($NZ147) million private placement facility in the US.

The US investors have the option of requiring South Canterbury Finance to repay the facility.

The company said today that talks were under way with the five subscribers to the facility who were entitled to seek payment within three months.

Mr Hubbard also announced the retirement of Stuart Nattrass and Bob White from the board and thanked them for their contribution.

The board is in the process of finalising the appointment of new independent directors.

"As acknowledged by Standard and Poor's in its recent report, South Canterbury is one of the stronger finance companies in New Zealand, underpinned by a sound business profile and broad geographic portfolio of diversified assets," Mr Hubbard said.

He said the business and rural sectors needed a strong finance industry to provide resources for growth.

"We are positioning, as one of the leading players, to fulfil that role," he said.

South Canterbury had total assets of $2.3 billion at June 30 and loans and receivables of $1.63 billion. It had cash in hand of $123.3m, down from $402.8m last year.

Mr Hubbard, who is 82, was estimated to be worth $550m by the National Business Review Rich List. The Sunday Star Times reported that he is the country's biggest private dairy farm owner but he lives modestly. The company's credit rating is now non-investment, or junk grade.

All debenture holders with deposits are covered by the Crown deposit guarantee.