Wellington, June 4 NZPA - South Canterbury Finance said Torchlight Fund No 1 LP, a fund associated with businessman George Kerr, is no longer investing equity but is increasing a funding facility to South Canterbury Finance by $25 million to $100m.

In April, South Canterbury said its parent Southbury Corp would issue $22m of secured convertible notes to Torchlight Fund No. 1 LP and Torchlight had an option to increase this to $37.5m by April 30.

The company said three days ago that Southbury and Torchlight remained committed to completing the equity injection and were working to obtain consents required for it.

It said today that the agreement between Southbury Corp and Torchlight for an additional equity injection of up to $37.5m was not proceeding.

It was being replaced by the increase in the funding facility to $100m.

South Canterbury Finance has a waiver from its trustee until August 31 which effectively gives more time to find new equity.

The $75m facility, initially with New Zealand Credit Fund Ltd, has been taken over by Torchlight Security Trustee Ltd, which has agreed to increase the facility to $100m and to extend the term of the facility to November 30, 2010.

Torchlight chairman Mr Kerr said the changed arrangements were practical and signified the ongoing willingness of Torchlight to support the turnaround of South Canterbury Finance.

South Canterbury Finance chief executive Sandy Maier said the new arrangement provided the company with increased liquidity through a simple structure.

South Canterbury Finance has been accepted for the extended Crown deposit guarantee scheme, which runs until December 31, 2011. It is currently trying to manage a large volume of deposits maturing around the time the existing scheme ends in October.

More than 5000 debenture holders with investments totalling close to $172m had, by June 3, agreed to roll over investments maturing in the coming months.

"The willingness of existing debenture holders to extend the maturity dates of their investments is further underpinning liquidity by significantly reducing our forward funding requirements," Mr Maier said.

Last week South Canterbury Finance had its long term credit rating downgraded by two notched to B plus by Standard & Poor's.

The company also announced that chairman and controlling shareholder Allan Hubbard would become president for life and step aside as director.

Mr Hubbard is focusing on attracting significant new equity to the company.