Dorchester pulls finance company pin too
Dorchester Pacific has, as expected, withdrawn the prospectus for its finance company and is seeking time to repay debenture holders.
Wednesday, June 25th 2008, 8:44PM
Dorchester Finance chairman Barry Graham says the company "will withdraw and not renew its prospectus and will seek the approval of debenture holders and note holders to a deferred repayment plan, but with continued interest payments."
"As a result of the rapid decline in the property finance market and a continuing fall in reinvestment rates the board has formed the view that there is now a risk of a cash flow shortfall arising in future months."
He says deferred repayment plan should give Dorchester time to realise property loan positions in an orderly way and ensure full repayment to debenture holders and note holders.
"The intention of the deferred repayment plan is to allow us to repay principal owed to investors over a period of approximately two years. Although the details are yet to be formulated and agreed with the trustees, Dorchester Finance intends to continue to make interest payments."
Repayments of debenture and subordinated note maturities will be suspended from tomorrow (Thursday).
Dorchester Finance has $168 million in debenture stock secured against total assets of $212 million, including $18 million in cash. In addition it had $8 million in subordinated notes on issue.
The board has engaged Grant Samuel and Associates as an independent adviser to assist in the preparation of a proposal for investors to consider as soon as practicable.
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