Dorchester raises 2015 profit expectations on better trading
By Suze Metherell
Sept. 9 (BusinessDesk) - Dorchester Pacific, the finance company which plans this month to make a takeover bid for vehicle auction company Turners Group, raised its forecast for annual profit on better-than-expected trading across its insurance and credit businesses.
The Auckland-based company expects pre-tax profit of $11.5 million in the year ending March 31, ahead of its earlier forecast of $10 million to $11 million, it said in a statement. It kept its forecast for 2016 pre-tax profit unchanged at $15 million. The earnings include returns on its current 19.85 percent stake in Turners and income from Oxford Finance, bought in April for $12.3 million.
Dorchester, which counts motor vehicle lending and insurance as a large part of its business, expects to offer a $3 a share for Turners on Sept. 18, valuing the auction company at $82 million. The offer is conditional on achieving at least half the shares and already has the support of Turners chairman Michael Dossor, taking the combined holding to 40.65 percent.
Today, 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 at 25 cents apiece. Should it only acquire an additional 50 percent of the company, taking its stake to 70 percent, some 30 percent of the purchase would be funded via bonds and 70 percent by a share issue with no new bank debt, it said.
The company has agreed a bank debt facility of as much as $39.55 million to fund the acquisition, it said.
Dorchester shares were unchanged at 24.5 cents and have gained 11 percent since the start of the year. Turners shares rose 0.6 percent to $3.21 and have gained 31 percent so far this year.