Dorchester to buy EC Credit for $18.5m in cash, stock and earn-outs
BUSINESSDESK: Dorchester Pacific, which avoided failure in 2010 by convincing investors to accept a debt-for-equity swap, has agreed to buy debt collection company EC Credit Control from its owner-manager for $18.5 million in cash, stock and earn-outs.
The deal will be paid with 60% cash and 40% Dorchester shares, with about $8 million of the total determined by earn-outs over two years, the Auckland-based company says.
The acquisition would contribute to profit in the second half and ensure Dorchester posts a profit of at least $1 million in the 12 months ended March 31, 2013, chief executive Paul Byrnes says.
With trading continuing to improve at Dorchester Finance and its insurance business, profit in the next full financial year may be $4 million to $5 million, he says.
Napier-based EC Credit is owned and managed by Matthew Harrison, was started in 1989 and has grown into the nation's largest privately owned debt recovery business, with growing operations in Australia. It employs about 100 staff and specialises in the corporate and SMR markets.
The sale is subject to approval by shareholders at a special meeting set for late October.
Shares of Dorchester rose 12.5% to 18 cents and have surged 88% this year.