Dorchester investors being offered liquidity

The company's complicated debt-swap offer to debenture holders will take total cash repayments to 50%, give them ownership and control of Dorchester-owned hotels including the proceeds of any sale with operating returns, and offer them a three-year interest bearing note, as well as raise up to $10 million through a share issue, of which $7 million has been underwritten by its two major stakeholders.

Investors will be able to trade all four securities, with the shares, notes and options to be listed on the NZX, and the units placed on the Unlisted trading exchange. Executive director Paul Byrnes told investors at a roadshow in Wellington that the company wanted to offer some liquidity to investors, and said they will look at aggregating the sale of small shareholdings to reduce brokerage fees, though nothing had been confirmed yet.

"All four securities will be listed on some exchange and there will be the opportunity for some liquidity," Byrnes said. "The units can't be listed on the NZX, but the Unlisted market exchange is available, and they will be listed on that."

Dorchester's offer was criticised by the Securities Commission for having a "significant bias" in favour of the recapitalisation plan, and the firm today released new information about the offer at the request of the regulator. The supplementary document gives forecast returns at net present value of 33 cents under the plan and 19 cents for receivership. Net present value shows the value today of money received or payments made, and the forecasts excludes the 50 cents already repaid. The document also aggregated of the major risks facing the business.