St Laurence may own 31% of Dorchester

Jenny Ruth

Thursday 29th March 2007

Bridgecorp's cash crisis doesn't appear to be over yet: it has just rolled over its loan from St Laurence for another three months.

The loan was initially granted in late September for three months and then extended for a further three months in late December. It is secured over Bridgecorp's 18.1% stake in listed company Dorchester Pacific, which requires it to notify the New Zealand Exchange every time the loan terms are altered.

While Bridgecorp hadn't filed a notice of the latest extension by late Thursday, St Laurence has acquired a 13% stake in Dorchester Pacific in its own right. Before taking the stake, St Laurence was granted a waiver from the exchange allowing it to exclude its security over the Bridgecorp loan from being regarded as an interest St Laurence has in Dorchester Pacific.

With Dorchester Pacific's shares closing at $2.18 yesterday, Bridgecorp's stake's market value is $12.5 million, below Bridgecorp's book value of $13.8 million at December 31. The stake's value in Bridgecorp's books was written down from nearly $17 million at June 30 last year. The loan from St Laurence is believed to be $8 million with an effective interest rate of up to 18%.

Asked about Bridgecorp's ability to repay the loan, St Laurence managing director Kevin Podmore said late Thursday that "I understand our lending guys are talking about that."

He was in Sydney and said he wasn't up with the details but that "I'm sure there's an exit strategy. We would expect that they will come up with a strategy to repay us. We're comfortable with the security we have for that loan. One of the things we want to do is give them time to repay."

He said the loan terms are confidential.

Asked what would happen should St Laurence have to exercise its security, Podmore said that "potentially there would be an issue but, as of today, we don't have control of those shares."

Under the takeover code, the maximum shareholding allowed in a listed company is 19.9% and anyone wishing to go over that level is required to launch either a partial or full takeover offer that would take their stake over the 50% mark.

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