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Shareholders to vote on note conversion

Dorchester Pacific shareholders will be asked to allow an early conversion of notes to give its two main shareholders, Business Bakery and Hugh Green Investments, control of the firm at the annual meeting next month.

Sunday, August 11th 2013, 12:00AM

They will also be asked to approve a 20% increase in the directors’ fee pool and give the chief executive a loan to buy shares.

Dorchester will ask shareholders to approve the early conversion of 110 million optional convertible notes, which were set to mature in 2015.

That would mean means Dorchester would have $11 million of debt on its books swapped into equity, and would let it take on more bank debt to fund future acquisitions.

The notes were issued at 10 cents each and are worth between $27.6 million and $28.4 million.  Dorchester will pay $1.76 million for the early conversion, which will in turn dilute to below 50% the holdings of non-associated shareholders.

Dorchester wants to increase the directors’ fee pool to $375,000, from $300,000. Shareholders will also vote on a two-year, $250,000 loan to the chief executive to fund the $312,500 conversions of options into 2.5 million shares.

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