Dorchester looks to do deal with debenture holders
Listed financial services company Dorchester is looking to do a deal with the debenture holders in its finance company to get going again.
Tuesday, October 6th 2009, 5:26AM
by Paul McBeth
The company, which has paid 35% of the amount owing under the deferred repayment plan for its finance unit, would like to find a settlement with investors which it could then take to shareholders as a means to pay off its outstanding debt.
"It would be good to reach some kind of agreement with debenture holders at some stage," executive director Paul Byrne says. "If we could agree, we could go to the shareholders to raise money, and in that way, get out of moratorium."
In August, Byrne told shareholders at its annual meeting that settling with debenture holders was one of four practical steps the company could take to come through the moratorium process successfully. A combination of improving its operations, selling assets and raising new capital could help the company survive, he said.
Still, Byrne is confident Dorchester Pacific is one of the few companies that entered moratorium that will be able to come out the other side in one piece.
Fundamental to its success was "getting investors' agreement to waive interest" over the three-year period, he said.
Byrne echoed Securities Commission chairman Jane Diplock's concerns about the viability of many companies operating under moratorium arrangements, and was skeptical about the future of those that hadn't convinced investors to waive the interest and had signed up to repayment plans over longer periods of time.
Last month, the company made its fourth payment, taking the total to about $58 million, and he confirmed they have enough money to make the fifth payment later this year.
"We've got the money in the bank to make the payment at the end of the year," he said. "The challenge for us depends on the need to realise some of the bigger of the bigger property positions."
Dorchester owes around 7,200 debenture and note holders a total of $168 million.
Paul is a staff writer for Good Returns based in Wellington.
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