Dorchester Pacific said today it hoped a deferred payment plan for subsidiary Dorchester Finance could be with investors in time for a vote before Christmas.
In June, Dorchester Finance was estimated to owe debenture holders $168m against total assets of $212m, including $18m in cash.
Today Dorchester Pacific said trustee, Perpetual Trust had confirmed the deferred payment play had merit to be put to secured debenture holders to vote on.
Some relatively minor points still had to be worked through.
Dorchester considers a deferred repayment plan will provide a better outcome for investors than a receivership.
It said that if the plan was approved, investors could be repaid all their principal over three years through a managed wind down of the company's loan books.
ST LAURENCE WRITE-DOWN
Dorchester Pacific also today said it had written down its investment in St Laurence to a nil carrying value, due to present circumstances and the uncertainty of future projections for St Laurence.
Dorchester said it had negotiated an option to participate in the recapitalisation plan of St Laurence in lieu of its making an immediate cash or asset contribution.
The effect, pending Dorchester exercising the option, was that Dorchester's shareholding in St Laurence would reduce from 25 per cent to 1 per cent.
If Dorchester exercised the option at any time over the three years its shareholding in St Laurence would revert to 25 per cent.
The exercise price for Dorchester's option was $3.3m payable in cash or by a transfer of assets to St. Laurence.
The write-down of the investment in St Laurence, together with the further provisioning against property loan receivables and trading losses for the six months to the end of September were likely to leave Dorchester Pacific shareholders' funds around $5m, Dorchester said.
Chairman Barry Graham said if investors did not approve the Dorchester Finance plan it was almost certain the going concern assumption for Dorchester Pacific would be brought into question.