2 investors in the property trust Dorchester Pacific Ltd (now Turners Ltd) created 5 years ago as part of its exit from a moratorium have forced a meeting to get themselves elected as trust managers.
But, yesterday morning, a trading halt was placed on the trust’s units on the Unlisted trading platform, “pending the announcement of the sale of one of the properties”.
LET Securities Ltd (Deepak Gupta & John Southworth) forced the Friday 29 May meeting to terminate Dorchester Hotel Property Trust Management Ltd’s position as manager of the Dorchester Property Trust, and for their company to take over the job.
Dorchester countered by offering to accelerate sale of the trust’s remaining properties with an exit target of 31 July 2016, so the trust could be wound up by 30 November 2016.
A quorum for the meeting is 10% of unitholders and vote to change management requires 75% support (provided at least 25% of all units are voted in favour). The Dorchester Management proposal requires only 50% support as an ordinary resolution.
Mr Southworth said less than 21.5% of assets had been sold in the trust’s 5 years, and it had paid no dividends, so 4 months ago he decided to push for the trust to be wound up because of the lack of action.
“We also asked for LET, as a significant unitholder with the requisite skills & experience, to be appointed as new manager in order to progress the trust to a successful & timely wind up.”
Finance company Dorchester Pacific Ltd, renamed Turners Ltd in February after taking over the Turners Auctions business, entered a moratorium in December 2008 and exited it in August 2010 after stockholders agreed to a capital reconstruction
This involved exchanging their stock for:
- $20 million of interest-bearing secured notes, to be listed on the NZDX market
- $36.6 million of new shares of the same class already quoted on NZDX
- units in a property trust which would hold $33 million of hotel property assets, and
- $56.6 million of options to subscribe for Dorchester Pacific shares at 12.5c/share on 15 June 2013, to be quoted on NZDX.
Properties held by the trust were the Goldridge Resort and some other apartments in Queenstown, units in Parkview on Hagley in Christchurch and the Emerald in Gisborne. $7 million of property has been sold, of which $6 million has been returned to investors.
Mr Southworth said: “Over the last few years many other investment vehicles which have been in much more serious strife than the trust have disposed of all their assets and paid back capital & income to investors…. Also during the last 5 years the property market in regions relevant to the trust’s properties has experienced a broad uplift in values…. 5 years to sell 4 properties has simply been too long and, as a substantial unitholder, we are not prepared to wait any longer for all unitholders to get their money back.”
Mr Southworth said it was ironic that, “subsequent to our questioning of the incumbent manager’s performance and our request to hold an extraordinary general meeting, a conditional sale of the Goldridge Resort in Queenstown is announced, a marketing campaign for the Parkview on Hagley units in Christchurch is announced, and ongoing discussions at ‘around book value’ on some of the apartments in Gisborne are announced, together with 2 small sales. An agreement for a conditional sale of Goldridge was agreed in November last year prior to LET’s engagement with the manager, but the agreement was not announced until March this year.”
He said LET owned 6% of the trust’s units, and the holders of another 9% had granted it voting rights.
Mr Southworth was investment manager from 2005-09 of New Plymouth District Council’s Taranaki Investment Management Ltd, established Discovery Asset Management Ltd in 2009, spent 2 years working on Rodney District Council’s asset disposal programme as chairman of Rodney Properties Ltd, which resulted in 20 properties being sold in 2009-10, and has a background in capital, property & financial markets spanning 24 years. Mr Gupta managed a substantial fund that has been terminated & wound up.
23 May 2014: Dorchester transformation complete as it lifts profit to $8.2 million
25 August 2010: Dorchester Pacific exits moratorium with $10.3 million of new capital
6 March 2009: Dorchester buys Goldridge Hotel to overcome mortgage predicament
18 December 2008: Dorchester investors vote heavily in favour of deferred repayment plan
Attribution: Meeting documents.