Dorchester Pacific's big shareholders agree to underwrite

Dorchester executive director Paul Byrnes. Photo / Greg Bowker

The two major shareholders in financial services company Dorchester Pacific have agreed to subscribe between them to 70 per cent of shares issued in a $10 million capital raising.

Dorchester has been operating under a deferred repayment plan since late 2008. A capital reconstruction plan has been proposed which is conditional on Dorchester raising at least $8m.

The Business Bakery and Hugh Green Investments, which each have a stake of just under 20 per cent in Dorchester, had agreed terms of an underwriting commitment to each subscribe to 35 million shares or $3.5m, Dorchester said today.

There was also an option exercisable at the discretion of each of the two major shareholders to apply for a further 5m shares or $500,000 -- $1m if both parties exercised their option.

Dorchester had applied to the Takeovers Panel for an exemption for The Business Bakery and Hugh Green Investments to hold more than 20 per cent of voting rights following the capital raising.

A summary independent appraisal and independent advisor report on the proposed allotment of voting securities would be made available to shareholders who needed to approve the Dorchester capital reconstruction plan, the capital raising and the underwriting arrangements.

Dorchester also said that at its annual meeting in August chairman and director Barry Graham would be stepping down, to be replaced as chairman by Grant Baker from The Business Bakery. A new independent director would be appointed when a replacement was found.

Executive director Paul Byrnes had been asked to stay on in the permanent role of chief executive and executive director, Dorchester said.

Byrnes said that in respect of his own shareholding of 4.8 per cent, he would be taking up his full subscription entitlement.

- NZPA