Dorchester investors vote overwhelmingly for deferred repayment plan

Investors in troubled finance company Dorchester Pacific have voted overwhelmingly for a deferred repayment plan over receivership or liquidation. At the meeting and vote held at Ellerslie raceway, 97% of Debenture holders voted in favour of the plan, as well as 99% of Noteholders. "While the result is pleasing we appreciate that it is no cause for celebration," Dorchester Executive Director Paul Byrnes said. "However, approval of the plan represents the first survival step for Dorchester. We now have to focus on minimizing overheads, improving operating efficiency and continuing to simplify the structure of the organization. A financially viable business, albeit on a reduced scale, will be necessary firstly to achieve the repayments to investors over the next 3 years and secondly to attract support from shareholders in raising new equity and restructuring the balance sheet in the next year or so," Byrnes said. In a series of roadshows in the weeks before the vote, Dorchestor Pacific told investors that if they voted for the plan, they would get back 100% of their initial investment over three years, but with no interest. Secured debenture holders will be repaid over 12 repayments between now and 30 September 2011, with an initial 20% payment before Christmas. Unsecured noteholders will be repaid an initial 10% before Christmas, with the final 90% paid on 30 September 2011. Under the plan, Dorchester will continue some lending, but no new lending on property will be undertaken over the 3 years. Consumer lending will be restricted under lending covenants in the plan and will also be subject to a new lending and credit policy recently developed and supplied to the Trustees, NZ Permanent. Dorchester froze around 7,800 deposits worth NZ$176 million in June 2008. Debenture holders had invested around NZ$168 million and noteholders had invested NZ$8 million. The company recently reported a net loss of NZ$35 million for the six months ended September, due largely to completely writing off its stake in St Laurence and writedowns on its property loan book.