Dorchester gets past 90% ownership for Turners, triggering mop op
Dorchester Pacific [NZX: DPC], the finance company, has reached the 90 percent threshold in its takeover of Turners Group, allowing it to mop up remaining shares in the car auction firm.
Dorchester offered Turners' shareholders either $3 a share in cash, two-year notes that pay interest of 9 percent and convert to Dorchester shares, ordinary shares of Dorchester, or any combination of the three.
The finance company wants the car auction house to complement its loan book, of which 70 percent is made of car loans, while the focus of its insurance business is also car related. Dorchester already held 19.85 percent of Turners when it entered into a lock up agreement with the target company's chairman, Michael Dossor, who owns 20.8 percent through Bartel Holdings, for a combined 40.65 percent stake.
In September, Dorchester said that a full takeover of Turners would be funded by $18 million of bank debt, $18 million of bonds, and $30 million from the issue of new shares.
The Turners board endorsed the $82 million bid by Dorchester, saying the $3 a share offer was within the valuation range of between $2.97 and $3.27 put forward by Grant Samuel in its report. The report said the 9.1 percent premium to Turners' pre-offer trading price was lower than the average incentive offered in successful takeovers of Australian and New Zealand listed firms. But it said no other offer had been made, the finance company already held about 41 percent of the firm's shares, and if the offer isn't successful, the Turners shares will likely trade below the $3 price.
The independent adviser's report said Turners investors who opted for Dorchester shares at 25 cents apiece could receive more or less than the $3 per share offer, while those taking the bonds would receive an attractive interest rate for two years, after which time the notes could be converted to Dorchester shares or redeemed for cash.
In August, Turners lifted first-half profit 5.9 percent to $2.27 million on a 19 percent increase in revenue to $49.6 million.
Shares of Dorchester were unchanged at 26 cents and have gained some 18 percent this year, while Turners stock was unchanged at $3.05 and has gained 30 percent since the beginning of the year.