Dorchester's four steps to survival
Dorchester has outlined four steps it needs to take to survive and one of those is a settlement with its debenture holders.
Monday, 7 September 2009
by Paul McBeth
Dorchester Pacific says it needs a combination of boosting its operating performance, realising value in some of its assets, raise new capital or offer a settlement option with investors for a successful outcome for its shareholders, according to executive chairman Paul Byrnes.
In his speech at the company's annual meeting last month, Byrnes outlined the risks still facing investors along with an update on the measures taken by the company as it continues to repay investors under its deferred repayment plan.
"While there are some parts of the Dorchester business that are attractive to other industry players, our lumpy property loan book and debenture liabilities are challenges in any consolidation," Byrnes told shareholders. "While we continue to work hard on maximising operating performance to ensure there is a profit proposition, our strategy and focus has to be on how those two aspects can be managed in any market consolidation opportunity."
Dorchester has paid some $50 million to investors in three of its 12 payments under the plan agreed to by investors, and still owes around $122 million. It will make an $8 million payment this month.
The finance company was forced to hold a vote on whether to put the business into liquidation after activist group the Shareholders' Association gained enough support to call for a special meeting prior to the repayment plan's ratification last December.
Byrnes told investors that the greatest risk facing the business was around "significant property loans," two of which have a first mortgage ahead of Dorchester.
Last week, the Business Bakery acquired 7.1 million Dorchester shares, amounting to around 19.5% of the stock on issue.
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