BUSINESS SERVE BRANCH, WELLINGTON South Canterbury Finance ‘SOUTH CANTERBURY FINANCE LIMITED PROSPECTUS NUMBER 60 20 October 2009 Issue of $500,000,000 of registered fst ranking dabenture stock and $50,000,000 of ‘unsecured depositsTABLE OF CONTENTS CONTENTS 1. Directorate and Avice 2 Chaimanie Statement 3. Chief Executive's Report 4. Business Overview 5, Management Discussion and Analysis he Yearto 20 une 2008, 6 Main Tem ofthe fer 7. Aédions Stattry ifomatn 8. NewZealand Deposit Guarantee Scheme 9. South Canterbury Financ Lid and Charging Susi Companies — Summary Francia! Ieermation 10. Main Provsons of the Trust 0860 11, Trustees Statement 12, South Canterbury Fiance and Charging Subsidiaries Financ Inormaton 13. Aucter's Report 1A Bie History of the Company 4 5 a 6SECOND SCHEDULE INDEX (fe reuted by Replton 66 of Series Ragas 1983) 1. Main Terms of fer Mare and Adress of Orteror Details of Inccrporaton a suer cuerantors 5. Dioctrate and Advise Resticions on Directors! Powers Aetsites of Boring Grove ‘Summary of Facil Statements ‘Acsision of Buses & Subslary Matera Centacs 10. Pending Proceedings 11 tne Expenses eexnoeg 12 Ranking of Seouties 13, @. Provisions of Twel Dee and thor Reetctons on Borrowing Truss Statement 44 Other Terms of Offer and Secures 18:92, Facil Statements (and Associated Notes to Acoours) 38, Paves ef Inspection of Documents 34, Other Material Mators 35. recor’ statement 38. Autor ceport ‘This Prospectus hss been registered afer 1 Occber 2008 but before the close of 30 June 2010. In accordance with eguaion 82 ofthe Sacre Regulations 2009, Sth Carerbuy Finance Lined he "Company, er South Cantertury France") has elec that the Seures Resuations 1083 aply o ts offer of Stock and Deposts unde tus Prospectus. This Protpectus len respect of South Canrbury mosesorus ss22 Not Apleate 2 ar 2eassar Ey “an 23,254.42 25.28 nm Finance and ts Charging Sbslares (he "Charging Group’, ofthe “Barong Grae".DIRECTORATE AND ADVISERS piRecrors ALLAN JAMES HUBBARD ‘EDWARD ORAL SULLIVAN B.Com, FCA (Chalrman) KSt, ULB. Fine Taran haters Accountant Borister and Sofictor “The Directors may be cortactd through the Registered Oice ol the Company. ‘SENIOR MANAGEMENT LACHIE MeLEOD KEVIN Loa Bagval, 89. Comm Timon Timers General Manager Funding (Chit Executive Offoor GRAEME BROWN, PETER BOSWORTH BES. CA MBA, BCom (ACR) Timaru Chvisicrureh (Chit Finan Oftoer Group Credit Maragor WARRICK BAXTER Direetor= FACE Finance Christen Taio Raga Of ‘Weodnorth Myers se Company Charts Accoueats $32 George Sow, “00-104 Sopa Sees. Tray P.O. bor, Te “Tetphona (03) 668 8°17 or 0000808 117 Ssoltors ‘eacny West Tina Secures Registra Raye Sivan MeGlasha, Timaru ‘The Rogesrer Bal Gut, Wangton {Sou antrbry Finance Lis 39.Goorge Sst, Tn Trusts for Stockhdere and Depostons Trustees Exess Ud Ue 10 Curomreuse Quay FOR FURTHER DETAILS ON ANY INFORMATION CONTAINED IN THIS PROSPECTUS, PLEASE ‘CONTACT: Me Kevin loag Genera Manager — Funding South Carteoury Finance Ltd ‘Telephone: 0800 808 117 Fecal: 08684 9550CHAIRMAN'S STATEMENT [A numberof developments ha 2000 andIn the petod sce then occured in respect ofthe Company ove the 12 maths o 30 tne In October 2008, South Canterbury Finance emalgamstad with is wholl-onned subsisiry tance ‘companies. As ares, South Canterbury Fnancs's ram i now recognised thoughout Now Zealand {and he change In operting suture under the amgamation (ram @ramber india compoies ' single company with regional branch ofc) has alreay rete in sdminststve Benes an cost Saving for he Group. In November 2008, South Cantsroury Finance enced into @ Ose of Guarantee withthe Cow under the New Zealand deposit gurantee scheme (th “Depost Guarantee Scheme In broad ta ths ‘means thal sutoct the fers of he guaranse) debentures and deposte et South Gartersury Fnarce ‘el have the benef of tne qusranee fom the Crow up unl the expy ofthe Depost Guarantee ‘Scheme at 12./1am on 12 October 2010. The Croom has fecal announced an extension too tr of the Deposit Guarantoe Scheme to $1 December 2011 but on matanal ferent terns to trose of he ‘rent Deposit Guaranie Scheme, We curonty send sppying to take savantage of ths exersicn, However, atti stage, the Company does not have a Crown gueranoe bayend the exp of he Dopost {Guarantee Seneme at 1201 amon 12 October 2010 andere lan assurance that wil heve a Grom, ‘guarantee ater that tne Iman endeavour fo reduce the impact ofthe economic downtum on the Compary, Soutbuy Group Linited (Sout Canteroury Finaneas sue ordinary sharetolde)itoduces » father 820 min in ash as paid up capital In March 2009 anda fuer $40 millon of ew caoial in June 2009 under The ‘cxustion by the Company of 38.6% of Day Heldngs Limited fom Southbury Group Limited for 2 purchaee prise of $75.73 millon. The $40 milan of now shares Isaued to Soubury Group Led Pursuant otis rancaen wera cated ae tly ald prt coeideraton for to acaultion of he Deity Helcings Linited interest. Tho Company paic te balance of tho purchase price, boing $25.73 mion to Soutbury Greup Limited a cash This tanescion was aoproved by an nseverdent expert {proved bythe Gran who cones thal he taneacton was ona eng ems ane hat ne val alder he nteretin Day Holinge Llnted repenentes far va for South Canterbury France. In August 2009, Standard & Poor's lowered South Canterbury Finance's investment grade rating of B68 /Stabie fo BB+/Negatva. On 21 September 2009 Standard and Paors Ratings Services places BB" tong torm rating en ‘Soun Carserouy Firanoe on Cradivatch Nagatne, The tmeleatons of he ovngraded rating aro explains in more deta in tha Cnet Exoetve's repr end on pages 2010 2 ot this Prospects. South Canterbury Finance recognises that the Independent ratings an parton ator forinvestors and the Company remains commited 'o marvin the rang over te. NNotsithstanding the Dest eos of the Company and its management team, the South Canterbury Finance Charging Grup announced an aud group alter at lone of $578 lion forthe 2 monte ‘30 June 2008 In oer recent evrts, the Company announced the rerements of Ne RA. White and Mr S.J Natrass as Seuth Carterouy Fiance dredors on 27 August 2008, The Companys carreny In advanced Siecuesons rogarcing the appolntmert of sdestoal indopendent ects othe Board ane intone Tove to beard comsed ofa msiory of independent crecters, I's alse my neon to step Sow a2 Calan of he Board wii the next 12 months, a favour ef aapcining a now independent chan ‘These changes to the Board ofthe Compeny wil inkodice a wide range of new connrcil sls and ‘experise to the Company, and stengtien the independence of the ow’ and the Company's goverance Wie the Board and management of South Canterbury Finance recognise thatthe curenteconame evronment erates a numberof challenges, i also presents the Compan wilh ome good and ext pporuni aswel,‘The Company is inthe process of pursuing @ number of intatves to atenthen is capital base and improve the aly of Is overall asset base. Inti reapect, Took forward to shorty announcing 3 resting and recaptssation lan fox te Company ance we aren poston todo. ‘On behalf ofthe Boar | extend ou appreciation ac tanks for the support received from indvial and Insttonal investors snd Io our loyal sta and management team fr thor ors, We lock forward to your eorinaed support during te coming ves, ALL Hubbard Chairman of Dractors ‘further infamasionsbou this scheme set out on pages 20 to 32 fils Prospect and ie als aval, treet charge anda esonbe tines on heat somata 6 on bal of Taso (ow ieasun, vt)CHIEF EXECUTIVE'S REPORT uke many partpants inthe ance industry, the Companys peferanes has been adversely affected by the econamie dowtum and, In parca, the inpact ofthe dountur on is borrowers and tlt business activites. The Impact ofthe scorome downtum hae reauited Inthe Charging Group talon {$1213 milion of loses and non-cash provdons fr nanpefoeing inesimenta and eaubtl propery loans inthe nani yoaro 20 June 2009. Of ese losses and provilon, $728 rion was unosiocd ‘Asa result of the provision, the Company has anneunced ensued iter fax loos of S378 ron for ho Charging Group fr the finan yeor 030 ne 2008, “To mitigate the impact ofthe Charging Greups provisions for non-performing loans, th Company's saree, Soutbury Group Limite, Injected $60 milion f nae acy daring the yor onded 30 June 2000, 28 nied in he Chima’ report. |n action, in October 2008, Mr A. 2d Mrs MJ. Hubbard entered into a secuny sharing arrangement effectively purchasing a nuriber of oan recelvabie ater ul r peal for paroxmately $60 rion ‘tam South Canerbury Finance, The majo ofthese imparedicans were property loans, ‘As a further step to reduce the impact of ner-peronming loan, MAJ, and Mie ML Hubbard have feriered into a Deed f Undenwrte and Guarani withthe Company under wie thy have epred to Lnderrte iosees which the Company may Ici espoct of carta specie’ lone cp los maximum ‘ggregale amount of $25 min by procaing the payment of thal sur, or the Wander ef asetsof nat ‘Yale, the Company. Tho obigaton of i Aad Mrs Md. tbors uns the Does of Undorite land Guaranie are aio Itec tothe vate o he assets of North Wind Hotere (2008) milo, The ‘fect of the deed was o reduce provisrzng within te Charing Gra by $25 mon, In July 2008, Standard & Poo's paced South Canterbuy Finance's BBS- long tem ting on CrodiWsich Negatve. On 13 August 2009 Standerd & Poors annaurced tht the Compan’ cet rating had been downgraded io BB* Negative. ‘Shorty afer the douarade, tho Company. coated alin secures under ks then registered prospacus. On 21 September 2008, Standart ard Poors Raiings Senices placed its ‘BS long form ratrg. on South Cantarbuly Finance on CrediVetch Negative, A Gredvatch Negatve isong 2y Standard & Poor's implies @ onesnvo theod of downgrade ofthe eet ang within th newt trae months. nthe Company's vets the Crodiatch Nagaive asigrment relates mainly to tho fact thal the Company sid et have a aren Tele ‘prospec and, asa rosul, coud rot ake debentre vestments and deposits. Wee the Company i (nee again abe to iake debenture vestrents and depois flowng regiaraton of hs Prospact, Ihumber ot ether esuee. need to ba adaresces for th Company to be remove fom Crsiisich Negative. Further intarmaten on the Standard & Poors rg sel cul on popes 28 te 27 of tie Prospectus. [Asa rst of the above rating downgrade in August, ivedtors in noes ised bythe Company (under ‘he debenture tus dood) pursuant to Unies States private placement in 2008, how Te yh ‘ererisabie by nlce tothe Compary 50 days ater the coungrade, to reqio the Campy repay ‘heir nots, nfl together wth rest and ether amount caleiates in aserdance wth he tome the notes In adlon, the Compary gave nates to thoee ntshoiders that fs row In freach of coral finanéal covenants st out in the pvatepacemert Cooumentaion. As 8 result reteholders caus, by imajiy vate, have required the Company to repay thir netos, In fl, together th interest and ter amounts calculate n acerdance uth the terme of ths notes, ‘The Company has entered nto binding commitment ltr wih the nolohoers under the Uied Sates feivaleplsounest under whi the Company wll make ccclrate repayment ofthe princi sum of Ust00 ron to netoholdare (together wah tert on thet sum) by way of stamens. ih fet [stamert beng due on 31 March 2040, The frst inalment of USSes rilen wil be payable tas week ending 28 October 2008. In elon, the agreement in prndle provides forthe Compary to Bay UUSs5 millon on 31 Octcber 2008, USSTZS milton on November 20 2009 and St Deconbor 2008, USS7.S lion on 31 fanuary 2010 and 28 Febuary 2070 wh tne remaining USSTO miko fo Be bald oh ‘aturity being 31 Maren 2040,