Securities Commission warns Dorchester investors over Aussie offer

Securities Commission warns Dorchester investors over Aussie offer

The Securities Commission has again warned investors in a finance company to be wary of a low ball offer from Australian company Stock & Share Trading Company.

This time the offer is for Dorchester Finance debentures, with Stock & Share Trading offering just 5 cents in the dollar. The company has previously made similar opportunistic offers to Strategic Finance and St Laurence investors.

According to the New Zealand Companies Office, Stock & Share Trading Company's address for communication in New Zealand is a PO Box address on Auckland's Victoria Street West. The firm's sole shareholder is listed as Adelaide resident John William Armour.

Dorchester recently became the first finance company to re-emerge from a moratorium after investors voted to support a capital reconstruction plan.

Read the Securities Commission statement below:

Debenture-holders in Dorchester Finance Limited should be wary of an offer by Stock & Share Trading Company Pty Limited to buy their debentures for 5c in the dollar.

Stock & Share Trading Company, which is based in Australia, had previously made similar offers for debentures issued by Strategic Finance Limited and St Laurence Finance Limited.

The Securities Commission reminds investors to be cautious of any unsolicited offer to purchase their investments, especially where the offer is well below face value and urges investors to seek professional advice before making any decision to accept the offer. When a finance company is in moratorium it is very difficult to accurately assess the value of the company's debentures.

The debentures are not trading on any organised market, so there is no market price against which investors can assess the offer. Investors in Dorchester Finance Limited have voted to approve the capital reconstruction plan.

In making their decision whether or not to accept the offer to purchase their debentures, debenture-holders should consider, together with other relevant factors, the value that the directors of Dorchester Pacific Limited, the parent company of Dorchester Finance Limited, have attributed to the securities to be issued under that plan. Under securities legislation it is not illegal to offer to buy securities below their face value. Any offer to buy securities from investors must not be misleading or deceptive.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

1 Comments

There is an interesting exchange here involving Mr Armour - http://www.stuff.co.nz/business/personal-finance/3822903/Low-ball-debent...