Dorchester Pacific offers to buy back NZDX-listed notes 23 Jul 2012
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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, according to the NZX.
“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,” chief executive Paul Byrnes said. 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 percent premium over their market price in the past year.
The proposal requires a meeting of noteholders scheduled for Aug. 14. If approved, the notes would be bought back by Sept. 12.
Chairman Grant Baker said 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,” he said.
Dorchester shares last traded at 0.5 cents, valuing the company at $18 million. They traded as high as 15 cents in March last year.
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