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Dorchester Pacific is raising $20 million from interests associated with substantial shareholders, and has sold its holding in a downtown Auckland building.
The sale of floors eight through 17 of the Auckland Club Tower in Shortland St for $30.7 million was expected to return approximately $15m cash to Dorchester and its associated companies, it said today.
It also published its half year results, putting net profit after tax for the six months to the end of September at $3.09m, slightly up from $3.01m in the corresponding period in 2006.
Revenue for the latest period was $39.5m down from $41.39m, while total assets were $424.88m down from $458.73m.
Unrealised gains from the sale of the Shortland St building and healthy returns from Dorchester's investment in property and funds company St Laurence contributed to the result, Dorchester said.
A $2m operating contribution also came from Dorchester Finance, a "solid result" given the $1.66m operating loss on its Senate Finance business.
The ongoing effect of poor loans in the Senate ledger was partly offset by a 38 per cent increase in operating contribution from branch network and property and equipment lending operations, Dorchester said.
Senate's transition from a financier to a brokerage business was now complete.
Of the $20m in new funding, $10m was from a related company of substantial shareholder Hugh Green Investments, and $10m from a related company of substantial shareholder Auguste Finance, Dorchester said.
The advances were repayable on demand on an equal basis to Castle Finance and Auguste Holdings and would be for an initial term of six months, with interest charged at 9 per cent a year. No establishment or other fees would be payable by Dorchester Pacific.
An independent opinion from Grant Samuel & Associates confirmed the transaction was fair and reasonable to shareholders, other than Hugh Green Investments and Auguste Finance, and in the best interests of the company, Dorchester said.
Chief executive Andrew Walker said the $20m facility would enhance Dorchester's ability to take advantage of lending and portfolio expansion opportunities and would also bolster cash reserves.
"We welcome this support from our cornerstone shareholders and are pleased with their demonstration of confidence in the business," Mr Walker said.
The holding in the Auckland Club Tower had been bought by Australian-based Valad Property Group.
This week Valad announced it had bought six established self-storage sites, worth $30m, in the North Island, in a joint venture with New Zealand's Kennards Self Storage, and was on the hunt to buy more.
Valad also recently purchased retail depots and packaging plants from Graeme Hart's Carter Holt Harvey.
Mr Walker said the sale was in line with a strategic decision to divest non-core operations and assets.
Dorchester Pacific shares were up 5c to 89c around 11am, having been as high as $2.39 in February.
- NZPA
