Dorchester makes further NZ$7 mln provision for property loans

Finance company Dorchester Pacific, which is currently in moratorium, announced a further NZ$7 million worth of property loan provisions on Tuesday that it said were not anticipated at the time its moratorium was approved. It also announced a further NZ$1.2 million of consumer loan provisions. "While the additional property loan provisions we are now taking were not anticipated at the time of the approval of the Deferred Repayment Plan last year they reflect a more negative view taken by independent valuers of the current market," Dorchester's Executive Director Paul Byrnes said. "However, one of the primary objectives of the Deferred Repayment Plan is not to conduct fire sales, but rather to carry out an orderly realisation during the three year term of the Plan. This approach is likely to produce a significantly better result," Byrnes said. "An additional provision of NZ$1.2m will be made in respect of motor vehicle and consumer receivables," Byrnes said of the consumer loan provisions. "The provision is in the nature of "an economic overlay" to reflect the potential impact of the uncertain economic environment, both locally and globally, on future collections." Byrnes said Dorchester had also written down NZ$0.5 million of the carrying value of assets following its decision to exit the Energy Direct Metering business. On the progress of the moratorium, Byrnes said: "We have made good progress on our three hotel property exposures and there is also some interest on a couple of the other property loans at above carrying value. Collections from our motor vehicles and consumer loan books is tracking as forecast and our cash position is currently just on NZ$20m." "As soon as our annual accounts are completed and audited we will be writing to investors to keep them fully informed and confirm we are on track to make the 30 June 2009 and 30th September 2009 repayments under the Deferred Repayment Plan".