Investors owed more than $400 million by two ailing finance companies received bad news yesterday as it emerged St Laurence, 25 per cent owned by Dorchester Pacific, had lost almost $30 million in just three months.
Dorchester, which is listed on the NZX, was forced to reveal theloss as part of its continuous disclosure obligations.
St Laurence's pre-tax loss of $29.8 million is 2 1/2 times the size of its March year net profit of $12 million reported just four months ago.
Both companies froze repayments to investors two months ago, citing a lack of debenture funding and the impact of a property market meltdown, and are preparing restructuring plans that will hopefully see investors repaid on a delayed basis. St Laurence has 9000 debenture holders owed around $240 million while Dorchester owes $168 million.
This week Dorchester's trustee, Louise Edwards, expressed frustration at the fact Dorchester had not come up with its repayment plan on time.
In its sharemarket announcement yesterday, Dorchester said it would be required to equity account St Laurence's loss resulting in a reduction in the carrying value of its St Laurencestake.
"Dorchester will not, however, be in a position to quantify the extent to which that value has been impaired until after St Laurence's proposed scheme has been finalised and voted on by its investors."
Dorchester paid $29.6 million for its St Laurence stake in March last year in a complex transaction partly funded by issuing 4.77 million new shares that gave St Laurence 13 per cent of the expanded Dorchester.
Meanwhile, Fitch Ratings yesterday affirmed and simultaneously withdrew its "D" rating on Mark Hotchin and Eric Watson's Hanover Finance.
The D rating indicated Hanover had defaulted on its financial obligations, while the withdrawal recognised the company was no longer seeking to raise money from the public
"As a result, Fitch will no longer provide analytical coverage."
