16 Jun 2010

Dorchester sets out to convince investors

11:27 am on 16 June 2010

Dorchester Finance will hold a series of meetings to convince investors to support its second financial restructuring plan in less than two years.

The finance firm has repaid half the $164 million owed to investors since it revised its repayment plan in December 2008.

It now wants them to accept a new repayment plan under which they would own four hotels and a mixture of interest-bearing notes and shares.

They'll also be asked to support plans to raise $8 million to bolster the company's financial position.

The plan requires the support of Dorchester's trustee, Perpetual, which has already rejected restructuring proposals from Strategic Finance and St Laurence Finance & Investment, placing both of them in receivership instead.

Perpetual's head of corporate trust, Matthew Lancaster, says an independent report it commissioned suggests the plan will strengthen Dorchester's balance sheet and support growth.

Concerns raised about proposal

PriceWaterhouseCoopers and the Securities Commission have raised concerns about the merits of the proposal, arguing receivership might return more to investors than estimated by Dorchester.

The commission is also concerned there may be potential operating losses on the properties in the latter years of the plan's timeline.

Dorchester's directors have dismissed these criticisms.

The investor meetings get under way next week, starting in Auckland on Monday.