Dorchester Finance is working on a deferred repayment plan which should see a full repayment to debenture holders and note holders.
The stricken finance company said in a statement, through its parent Dorchester Pacific, that it would withdraw and not renew its prospectus and seek approval of debenture and note holders to a deferred repayment plan, but with continued interest payments.
Dorchester Finance chairman Barry Graham said as a result of the rapid decline in the property finance market and a continuing fall in reinvestment rates, the board had decided there was now a risk of a cash-flow shortfall arising in future months.
"The intention of the deferred repayment plan is to allow us to repay principal owed to investors over a period of approximately two years.
"A deferred repayment plan should give us time to realise property loan positions in an orderly way and ensure full repayment to debenture holders and note holders," he said.
It was reported yesterday that New Zealand bowls clubs and thousands of members, including in Dunedin, had been left in financial limbo when Dorchester, a bowls sponsor, got into trouble.
A Dorchester spokesman said the finance company still planned to pay interest on the investments of bowling clubs.
Principal payments would be suspended under the plan being put to debenture and note holders.
At June 24, Dorchester Finance had $168 million in debenture stock secured against total assets of $212 million, including $18 million in cash.
In addition, it had $8 million in subordinated notes on issue.
Mr Graham said the board intended working closely with both trustees - Perpetual Trust Ltd and New Zealand Permanent Trustees Ltd - and had engaged Grant Samuel and Associates as an independent adviser to assist in the preparation of a proposal for investors to consider as soon as practicable.
Although the details were yet to be formulated and agreed with the trustees, Dorchester Finance intended to continue to make interest payments, he said.
Repayments of debenture and subordinated note maturities were suspended from June 26.
"Clearly, taking proactive measures in the current economic environment is the best way to ensure full return of investors' funds and to preserve value for stakeholders," Mr Graham said.
A reference yesterday that it was understood Bowls New Zealand would get between 1%-2% of its investment back was incorrect.
Dorchester said the reference was likely to be regarding the 0.5% per annum brokerage commission that bowling clubs received when investors nominated their local club.
This money was paid to their local club, not Bowls NZ.
There was no outstanding brokerage commissions owed to clubs.
Bowls NZ said the statement was not made by the group and was incorrect.
It expected Dorchester to use its best efforts to recover the invested funds.
Bowls NZ also said it did not or had not provided financial advice or recommendations to its members, clubs or centres in regards to where they should invest their money.
It had not received about $10 million from Dorchester during the past 18 years.
Dorchester had invested about $8 million to $9 million in all levels of the sport, with most put into club and centre level, Bowls NZ said.
