1 Dec 2008

Finance company Dorchester has $35m half-year loss

11:42 am on 1 December 2008

Beleaguered finance company Dorchester Pacific made a loss of $35 million in the six months to the end of September.

Dorchester Pacific owes investors $176 million and has $229 million in assets and $6.5 million in shareholder funds.

The company had made a $3 million profit in the same period last year.

Dorchester Pacific attributes the loss to a $21 million write-down in its investment in troubled finance firm St Laurence, which it now values at nil, and an $11.5 million provision on property loans.

Chairman Barry Graham said the company expected to make a loss, because of the deterioration in economic conditions.

"We've been faced with unprecedented loss of investor support for finance companies with most finance companies, except for a few, striking difficulties."

Barry Graham said the loss will not affect its plan to repay investors all their original investment over three years.

He said shareholder funds have been calculated on its pre-repayment plan structure, and will double if investors accept Dorchester's repayment plan, as the company will have a more certain future.

Investors will decide whether to accept the repayment plan, at a meeting in Auckland on 17 December.