KEY POINTS:
Investors in Dorchester Finance will receive the first of their principal in time for Christmas after voting in favour of a rescue package at a meeting in Ellerslie yesterday.
The plan, which will repay the finance company's 7200 investors the $168 million they are owed in 12 repayments over three years, was approved by 99 per cent of note holders and 97 per cent of debenture holders.
Debenture stockholders will receive an initial payment of 20 per cent and noteholders will receive an initial payment of 10 per cent before Christmas.
Had the package been rejected, Dorchester Finance would have been put into receivership.
But from the discussion among the few hundred investors gathered at the Ellerslie Event Centre yesterday - most of whom had reached retirement - it was clear they did not want to see the returns they were owed floating in limbo any longer.
Dorchester's executive director Paul Brynes assured investors the plan was the best the company could manage. He was pleased with the outcome of the meeting but appreciated it was no cause for celebration.
It would be wrong to attribute all of Dorchester's issues to the economy - mistakes had been made, he said.
But approval for the plan represented the first survival step for Dorchester and it would now focus on minimising overheads, improving efficiency and simplifying the structure of the organisation, Brynes said.
The plan's provision for a capital raising of $3.5 million over three years was not aired at the meeting.
Chairman Barry Graham said it was a small part of the total package and in order to do it Dorchester Finance would have to make itself more attractive to potential investors.
Two statements, voiced at the meeting on behalf of proxy voters, attacked the rescue package.
A Gore couple said the Dorchester directors should be prepared to give back all their fees and said the company should be shut down as it had proven it could not trade profitably.
Former chief executive of Dorchester Finance Brent King spoke on behalf of un-named proxy voters who felt the company should not have spent investors' money on a public relations ploy to sway proxy voters away from opting for receivership.
He said it was Dorchester Finance's practice to appoint a receiver when the people who owed it money were unable to pay.
"For it now to say [receivership] is a terrible, evil thing is bizarre and we should reject it at all costs."
King claimed the information in the plan sent out to investors was insufficient to make a $168 million decision.
He said that if Dorchester Pacific paid off its debts owed to its subsidiary Dorchester Finance, the investors could have been paid another 12c in the dollar before Christmas.
HOW IT WORKS
* $168 million paid to 7200 Dorchester investors over three years.
* First instalment of 20c in the dollar to be paid before Christmas.
* Followed by 10 quarterly payments of between 5 per cent and 7.5 per cent and a final payment of 17.5 per cent on September 30, 2011.
* Unsecured noteholders owed $8 million paid in two instalments - 10 per cent before Christmas and 90 per cent on September 30, 2011.
* Accrued or future interest will not be paid back to investors.
* Debenture stockholders can opt into a profit-share plan that pays an amount of interest after 2011.
