The Securities Commission is advising Dorchester Finance debenture holders to be wary of an offer from Australian-based Stock&Share Trading Company Pty.The commission today said it reminded investors to be cautious of any unsolicited offer to purchase
The Securities Commission is advising Dorchester Finance debenture holders to be wary of an offer from Australian-based Stock&Share Trading Company Pty.
The commission today said it reminded investors to be cautious of any unsolicited offer to purchase their investments, especially where the offer was well below face value. It urged investors to seek professional advice before making any decision.
This month, parent company Dorchester Pacific said its directors did not support the Stock&Share offer.
Stock&Share was offering to buy Dorchester Finance secured debentures for an amount equal to 5c in the dollar of their outstanding balance.
Under a capital reconstruction plan approved in June, Dorchester had estimated the return to debenture holders from four separate securities investors would receive at 33c on a net present value basis, plus the potential for increases in the value of shares and options, the company said.
When a finance company was in moratorium it was difficult to accurately assess the value of its debentures. The debentures are not trading on any organised market, so there was no market price against which investors could assess the offer, the commission said.
Debenture-holders should consider, together with other relevant factors, the value that the directors of Dorchester Pacific had attributed to the securities to be issued under the capital reconstruction plan.
Dorchester Finance's debenture stockholders and noteholders approved a deferred repayment plan in late 2008.
Stock&Share previously made similar offers to that for Dorchester Finance for debentures issued by Strategic Finance and St Laurence Finance.
