South Canterbury reported a net loss of $69 million in the 12 months ended June 30, from a profit of NZ$68.9 million a year earlier. Pyne Gould's annual loss was $54.4 million, from a year-earlier profit of $44.8 million.

Pyne Gould took an impairment charge on MARAC's property development loans of $59.5 million and a loss of $13.8 million on its 21% holding in PGG Wrightson. South Canterbury's provision for non-performing assets amounted to about $71 million. Its loss caused a technical breach of interest cover covenants.

"The loss is disappointing, especially given the group's long and proud history," PGC chairman Sam Maling said. The company "needs to learn from its mistakes. Like many others, MARAC got caught up in the demand for property development finance and the high returns that were offered."

South Canterbury and PGC's MARAC unit this month lost their investment grade credit ratings, being cut to BB+ from BBB- amid what S&P called "a weak industry environment, where the prospects are for further growth in non-performing assets."

South Canterbury today said shareholder Allan Hubbard agreed to underwrite certain non-performing loans at book value, amounting to $25 million. The company has hired Forsyth Barr and Harmos Horton Lusk to advise on a capital restructuring, with a further announcement to be made in the next three weeks.