Dorchester raises $4.1m in placement supported by major shareholders

The shares rose 3.5% to 30 cents on the NZX today.

Dorchester Pacific has raised $4.1 million in a placement to institutions, with two major shareholders taking up an offer to sell down their holdings in a secondary pool.

At total of 35 million shares were sold at 25 cents apiece to institutional investors, the financial services company says in a statement. That was made up of 16.3 million of new shares issued by Dorchester, 12.5 million sold by Business Bakery and 6.2 million by Matthew Harrison, the head of EC Credit Control that the company acquired last year.

The shares rose 3.5 percent to 30 cents on the NZX today.

The placement follows on from Dorchester investors electing to exercise 133.7 million out of a total 150 million options to buy shares at 12.5 cents each, raising $16.75 million. The uptake was bigger than expected.

Business Bakery's holding will rise to 114.6 million shares, or 24.5 percent of the expanded capital, after the exercise of its options, which must happen by July 31, from 47.1 million, or 22.6 percent currently.

Mr Harrison's holding will rise to 40 million shares, or 8.5 percent of the expanded capital subject to earn-outs, from 14 million, or 6.7 percent now.

The conversion of the options and share placement are expected to boost Dorchester's shareholder funds to $61 million by July from $29 million as at March 31, giving it headroom to look for acquisitions.

The options were part of a 2010 recapitalisation plan led by the Bakery Business, where some 7200 investors owed about $84 million agreed to convert their debenture stock for four different types of security to keep the firm afloat.