Dorchester Pacific offers to buy back NZDX-listed notes
BUSINESSDESK: Dorchester Pacific, which avoided failure in 2010 by convincing investors to accept a debt-for-equity swap, is offering to buy back its June 2013 notes early for 92 cents in the dollar after gaining a new funding line for the purpose.
The offer price is higher than the notes last trade at 79.35 cents per $1 face amount. The company has $14.96 million of the notes outstanding, NZX says.
“The June 2013 notes repayment obligation has been a significant obstacle in our way to securing bank funding to grow the lending book of Dorchester Finance,” its chief executive, Paul Byrnes, says.
"Directors have been exploring options to deal with the notes and “have since been successful in securing a new funding line to enable early repayment.”
Dorchester released an assessment of the proposal from Simmons Corporate Finance that says the offer is fair as it is at the top of Simmons’ valuation range of 88 cents to 92 cents a note and represents as much as a 22% premium over their market price in the past year.
The proposal requires a meeting of noteholders scheduled for August 14. If approved, the notes would be bought back by September 12.
Dorchester chairman Grant Baker says uncertainty over the notes has been “an obstacle to any merger and acquisition that would help the Dorchester Group achieve scale and profitability”.
“Resolving the notes issue now is a game-changer for Dorchester.”
Dorchester shares last traded at 10 cents, valuing the company at $18 million. They traded as high as 15 cents in March last year.