KEY POINTS:
The Shareholders Association's bid to have cash-strapped Dorchester Pacific liquidated stands little chance of success, the finance company's chairman Barry Graham said yesterday.
The association's Bruce Sheppard has been locking horns with Dorchester for months principally over what he says was its "stupidity" in ramping up its property lending activity shortly before an anticipated meltdown in that market, and its $25 million purchase of shares in director Kevin Podmore's St Laurence last year.
Dorchester last month announced plans to ask its investors to approve a "deferred repayment plan" or moratorium saying the rapid decline in the property finance market and a continuing fall in reinvestment rates meant it was likely to default on payments to investors in coming months.
Sheppard wrote to Dorchester last week saying the association saw the decision to call for a moratorium as an act of insolvency and investors should consider whether or not liquidation was a better option for the company.
He has asked that resolutions to trigger the removal of Graham, Podmore and executive director Paul Byrnes from Dorchester's board and the company's liquidation be put to shareholders at the company's annual general meeting on August 21.
Sheppard says a liquidator may be able to reverse the St Laurence purchase and other transactions thereby recovering $45 million in funds which could be used to repay investors.
However Graham, who was dismayed Sheppard went to the media with the letter before it was received by Dorchester, denies his company is insolvent now or when it announced its intention to seek the deferred payment plan.
Furthermore, he said the suggestion that the transaction referred to by Sheppard may be voidable "reflects a misunderstanding of some elementary legal and accounting principles".
The association has said that should its resolutions not be put to the meeting it will seek support from shareholders for an extraordinary general meeting. However, Graham said an EGM would require 75 per cent shareholder approval, which again was unlikely to be forthcoming.
Sheppard yesterday denied he was singling Dorchester out for special treatment.
"We are targeting finance companies for the next few months. Dorchester needn't feel victimised."
Dorchester shares closed unchanged at 23c last night.
