Baker to chair Dorchester with Business Bakery, Hugh Green underwriting capital raising

Grant Baker, one of the founder's of vodka maker 42 Below, will take over as Dorchester Pacific chairman from Barry Graham as the company seeks Takeovers Panel approval for its two major shareholders to hold more than 20% of the company each after underwriting a NZ$10 million capital raising.

Dorchester, owner of Dorchester Finance and Dorchester Life, said Baker whose Business Bakery owns nearly 20% of Dorchester, will replace Graham at August's annual meeting. The Business Bakery and Dorchester's other major shareholder, Hugh Green Investments, will each subscribe for 35 million shares, worth NZ$3.5 million, with an option to each apply for a further 5 million shares worth NZ$500,000, in the company's proposed NZ$10 million capital raising.

The Business Bakery is an investment company set up by Baker and his fellow 42 Below founders Geoff Ross and Stephen Sinclair.

Dorchester Finance froze around 7,800 deposits worth NZ$176 million in June 2008. Investors have so far been paid back half their money.

Campbell MacPherson has been hired to prepare an independent appraisal and report for Dorchester shareholders on the merits of the proposed allotment of voting securities to the Business Bakery and Hugh Green Investments. Shareholders approval is needed for Dorchester's capital reconstruction plan, capital raising and the underwriting deals.

Read Dorchester's full statement below:

In anticipation of the proposed Investor and Shareholder Meetings to approve the Capital Reconstruction Plan and Capital Raising, Dorchester has announced that: - At the AGM in August, Barry Graham will be stepping down as Chairman and as a director;

- Grant Baker from The Business Bakery will replace Mr Graham as Chairman;

- The Board will appoint a new independent director as soon as a replacement is found;

- Paul Byrnes will take up a permanent role as CEO and executive director;

- The proposed $10m Capital Raising will be substantially underwritten by the major shareholders, The Business Bakery LP and Hugh Green Investments Ltd.

Board Changes

Dorchester Pacific signals a new look Board and leadership for the Company’s re-launch following investors’ consideration of the Company’s Capital Reconstruction Plan and the $10 million Capital Raising.

Long serving Chairman Barry Graham has announced he will step down as Chairman and as a director at the Company’s Annual Meeting in August.

Barry Graham commented: “I am pleased with progress made throughout this difficult period in the Company’s history. We have returned 50% in cash to Debentureholders with every possibility of a full recovery of their investment. The underlying businesses and brands have been maintained for building on in the future. The time is right for new leadership to drive the growth in a restructured Dorchester”.

The Board has also announced that Grant Baker will take up the role of Chairman effective from the Annual Meeting. Grant Baker was appointed a director of Dorchester along with Stephen Sinclair following The Business Bakery’s purchase of 19.47% of the shares in Dorchester Pacific in August last year.

Grant Baker commented: “The Business Bakery is very excited about the opportunities that exist in the finance industry and about Dorchester’s prospects of taking advantage of them. Everyone has their sleeves rolled up and is keen to get stuck into the growing the business and making money. That’s going to be to everyone’s advantage”.

The Board advises it will commence a search for a new independent director immediately following the outcome of the investor vote on the Capital Reconstruction Plan.

CEO and Executive Director

The Board announced that it has asked Executive Director Paul Byrnes to stay on in the permanent role as CEO and Executive Director. Grant Baker commented: “As architect of the Capital Reconstruction Plan, Paul has both an intimate knowledge of the business and a good understanding of the industry. He has also demonstrated in the past an ability to build business value in an industry that has undergone significant changes”.

Capital Raising Underwrite by Major Shareholders

The Company also announced that the $10 million Capital Raising will be substantially underwritten by the two major shareholders. The Capital Reconstruction Plan is conditional on Dorchester raising a minimum of $8 million. The Business Bakery LP and Hugh Green Investments Limited, each currently holding just under 20% of the shares in the Company, have agreed terms of an Underwriting Commitment to each subscribe to 35 million shares or $3.5 million ($7.0 million in total) with an option exercisable at the discretion of each of them to apply for a further 5 million shares or $500,000 ($1.0 million if both parties exercised their option).

The Company has applied to the Takeovers Panel for an exemption for The Business Bakery and Hugh Green Investments to hold in excess of 20% of the voting rights following the Capital Raising. Campbell MacPherson have been engaged to prepare a summary independent appraisal and independent advisor report on the merits of the proposed allotment of voting securities to The Business Bakery and Hugh Green Investments.

The report will be made available to shareholders who will need to approve the Dorchester Capital Reconstruction Plan, the Capital Raising and the underwriting arrangements. The Underwriting Commitments are also subject to investor’s approval of the Capital Reconstruction Plan.

Executive Director Paul Byrnes commented: “Investors and shareholders should be delighted with this support and show of faith from our major shareholders. It is significant that both The Business Bakery and Hugh Green Investments have had Board representation over the last 9 months or so as our Plan has evolved. That support and ongoing input will no doubt prove a valuable resource for the business over the next few years.

Paul Byrnes added: “In respect of my own shareholding of 4.8%, I have indicated to the Board that I will be taking up my full subscription entitlement”.