Dorchester recapitalisation runs behind schedule

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Dorchester Pacific Finance is running six to eight weeks behind schedule on its recapitalisation plan, though it has recently settled its last substantial prior ranking debt.

Wednesday, April 7th 2010, 12:02AM 2 Comments

The finance company, which is looking to exit its moratorium, repaid debenture holders a further 7.5 cents in the dollar, taking their total repayments to 50%. That could be the final payment if the company's proposed recapitalisation plan goes ahead, which is currently undergoing scrutiny from the trustee.

Executive Director Paul Byrnes said the company had been working hard to improve its business and cashflow and has whittled down some $22 million worth of prior ranked debt in the past year.

"We have recently reached a settlement on one big individual exposure - a 675 hectare property in Turangi," he told depositrates.co.nz. The property went for more than its $3 million value, and was the last major asset with prior ranked debt.

Byrnes said he expects the proposal will get over the line, and once it gets approval, the next stage is a $10 million capital raising.

"It will be a rights issue to existing shareholders, which we have an indication of support from our two major shareholders - the Business Bakery with 20% and Hugh Green with 20%," Byrnes said.

The offer would see total cash repayments to debenture holders of 50 cents in the dollar, and give them ownership and control of Dorchester-owned hotels including the proceeds of any sale with operating returns, and a three-year interest bearing note to debenture holders

Byrnes sees Dorchester as playing a boutique role in the finance sector once it exits its moratorium, and said the company will definitely be looking at merger and acquisition opportunities when they arise.

The company considered a change of name as it prepares to resume normal trading, but Byrnes said they decided against it as they should be proud they managed to survive both the global financial crisis and a moratorium.

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