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Dorchester awaits Perpetual Trust response to capital plan

Fuseworks Media
Fuseworks Media

Wellington, May 14 NZPA - Dorchester Pacific Ltd has said its finance company subsidiary Dorchester Finance could be out of moratorium by July 1 if a capital reconstruction plan is approved by investors.

Dorchester has been working closely with trustees Perpetual Trust, the Public Trust, and their independent advisers since March 10.

The plan, and an independent report from PricewaterhouseCoopers, are now with the trustees.

Dorchester said it was awaiting final confirmation from Perpetual Trust so that the plan can be put to debenture holders.

A meeting of investors could take place on June 17 if documents were mailed to investors around May 26. The debenture holders approved a moratorium for the company in December 2008.

"Whether that timetable can be met depends on how long it takes to get final confirmation from Perpetual Trust," executive director Paul Byrnes said.

Perpetual Trust, which is trustee for the debenture holders in Dorchester Finance, said it a final decision would be made within two to three weeks.

"The plan was first announced to the market before Christmas. We have received the final report from the independent expert, PricewaterhouseCoopers, which we have commissioned for the debenture holders," said Matthew Lancaster of Perpetual Trust.

"We are also under taking the final review of the meeting documents to ensure that they contain sufficient information to enable debenture holders to make an informed decision," Mr Lancaster said.

The plan is conditional on parent Dorchester Pacific Ltd raising a minimum of $8 million new capital from a proposed rights issue of $10m. It is also conditional on shareholder approval and subordinated noteholder approval.

Under the plan it is likely Dorchester Finance debenture holders will be offered four different securities in exchange for their outstanding debenture stock, of which 50 cents of the principal amount has already been re-paid.

The four securities consist of units in a property trust, interest bearing secured notes, shares in Dorchester Pacific, and options to purchase Dorchester Pacific shares in three years at a set price.

"These types of reconstructions are complex and take a lot of time to fully assess to determine that they are in the interests of debenture holders, and also to ensure that the process complies with applicable securities legislation. We are almost there," said Mr Lancaster.

Mr Brynes said the delay in getting the proposal to this stage has been frustrating for everyone.

"We apologise to investors for the uncertainty that this may have created. But, if the plan is approved and the capital raising successfully completed the board believes that there is every possibility that debenture stockholders could ultimately receive 100 cents or more in the dollar of their original debenture stock."

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