KEY POINTS:
Dorchester Pacific has secured a timely $35 million cash buffer against further downturn in the debenture market which will result from Capital + Merchant Finance's collapse this week.
Dorchester, which yesterday reported a half-year net profit of $3.09 million, also said it had gained $15 million on the sale of floors eight to 17 of the Auckland Club Tower in Shortland St.
It had also secured an additional $20 million in funding comprising $10 million each from interests associated with substantial shareholders Hugh Green and St Laurence's Kevin Podmore.
"Right about now, the single most important thing for a finance company is liquidity and cash," chief executive Andrew Walker said yesterday.
Like most other finance companies, Dorchester's debenture reinvestment rate has been hit hard by the 13 recent failures in the sector.
Walker said Dorchester's rate had "oscillated" between about 25 per cent and 49 per cent in recent months.
"It's not as high as we'd like it to be. We have seen it start to climb back up, but on the back of Capital + Merchant, what always happens is you get a short-term knee-jerk reaction and I anticipate it will be down again next week."
However the transaction and funding deals announced yesterday would see Dorchester well equipped to ride out the latest squeeze.
"It's not too bad. It looks at this stage we'll finish the year with somewhere between $40 and $50 million in the bank."
Revenue for the half year was $39.5 million, down from $41.39 million a year ago. Dorchester shares closed steady at 84c yesterday.
