Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Dorchester holders asked to approve early note conversion

Dorchester shareholders asked to sign off on early conversion of notes, director fee hike

By Paul McBeth

Aug 8 (BusinessDesk) - Shareholders of Dorchester Pacific will be asked at this month’s annual meeting to allow an early conversion of notes giving the Business Bakery and Hugh Green Investments control of the financial services firm, sign off on a 20 percent hike in the pool for directors’ fees, and grant the chief executive a loan to buy shares.

The Auckland-based firm, which avoided failure in 2010 by convincing investors to accept a debt-for-equity swap, will ask shareholders at its Aug. 23 meeting to okay an early conversion of 110 million optional convertible notes, most of which are held by its two biggest investors, the Business Bakery and Hugh Green Investments, and were set to mature in 2015. That deal means Dorchester would have $11 million of debt on its books swapped into equity, and would let it take on more bank debt to fund future acquisitions.

If it gets approved, Hugh Green’s stake would rise to about 27.1 percent from its current 24.3 percent and the Business Bakery’s investment would increase to 24.4 percent from 20.8 percent, giving the two shareholders control of half the company’s voting rights. Chief executive Paul Byrnes would increase his stake to 7.1 percent from 3.6 percent.

As a result of the conversion, non-associated shareholders will have their stake in Dorchester diluted to 41.4 percent from 51.3 percent.

The notes, paying annual interest rates of about 10 percent, were issued at 10 cents apiece and are worth between $27.6 million and $28.4 million, according to independent adviser Simmons Corporate Finance. Dorchester will pay $1.76 million for the early conversion.

Simmons deemed the positive aspects of an early conversion outweighed the negatives, as it would remove the noteholders’ right to stop dividends, something Dorchester is keen on implementing, and wouldn’t give the major shareholders any more influence than they already have.

The financial service firm rejigged its capital structure in June, raising $20.5 million through the exercising of options and a placement to institutional investors.

The company got a new lease of life in 2010 when the Business Bakery got involved with a recapitalisation plan in 2010 which saw some 7200 investors owed about $84 million convert their debenture stock for four different types of security to keep the firm afloat.

Dorchester shareholders will also be asked to approve a $75,000 increase in the pool for directors’ fees to $375,000, its first increase since 2010. The pool will be divided among directors as they deem appropriate, but is expected to raise the base fee level by $6,000 to $50,000 and the chairman’s fee by $10,000 to $80,000.

The firm’s board is chaired by Grant Baker, of the Business Bakery, who is joined by CEO Byrnes, Matthew Harrison, John Gosney, Kevin Brewer and Greg Peebles.

Investors will also vote on whether to approve a two-year $250,000 loan at 5 percent to Byrnes to help fund the $312,500 conversion of options into 2.5 million shares.

Simmons said the loan was reasonable to shareholders, and if not agreed to may result in Byrnes renegotiating his remuneration, which hasn’t changed since 2010.

Dorchester’s shares were unchanged at 23 cents today, and have shed 30percent this year. That values the company at $82.6 million.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Statistics: Annual Inflation Hits A Three-decade High At 5.9 Percent
The consumers price index increased 5.9 percent from the December 2020 quarter to the December 2021 quarter, the biggest movement since a 7.6 percent annual increase in the year to the June 1990 quarter, Stats NZ said today... More>>

Digitl: Bumper year ahead for NZ IT sector

Gartner says New Zealand spending on technology products and services will grow 7.4 percent this year. The company’s latest forecast says the market will total NZ$15.3 billion in 2022... More>>

Fonterra: Lifts Forecast Farmgate Milk Price Range

Fonterra Co-operative Group today lifted its 2021/22 forecast Farmgate Milk Price range to NZD $8.90 - $9.50 per kgMS, up from NZD $8.40 - $9.00 per kgMS. This increases the midpoint of the range, which farmers are paid off... More>>

Skoltech: Study Probes Earth’s Turbulent Past To Explain Where Oceans Came From

The origin of water on our planet is a hot question: Water has immense implications for plate tectonics, climate, the origin of life on Earth, and potential habitability of other Earth-like planets. In a recent study in Physical Review Letters, a Skoltech professor and his Chinese colleagues suggest... More>>

Statistics: Household Net Worth Grows In The September 2021 Quarter But At A Slower Pace Compared To March 2021

Household net worth grew by $60.7 billion in the September 2021 quarter compared with the June 2021 quarter, Stats NZ said today. This represents an increase of 2.5 percent, a similar result to the June 2021 quarter, which was up $60.6 billion or 2.6 percent... More>>

TradeMe: Job Market Ends 2021 On A High With Record Number Of Vacancies
The New Zealand job market finished 2021 on a high note, with the ball still firmly in the job hunters’ court, according to the analysis of 69,600 vacancies listed on Trade Me Jobs for the quarter ending 31 December (Q4)... More>>