Punters question notes deal by DF Mainland

By Deborah Hill Cone

Friday 18th October 2002

Owners of DF Mainland convertible notes were told yesterday the no-money-changed-hands takeover of the second-tier broking house by Dorchester Group would have no "direct impact" on their investment.

Last year DF Mainland raised $2.5 million, partly to finance the purchase of Ord Minnett Financial, and the notes are due to convert next year to ordinary shares.

At that time DF Mainland said it already had $2 million in paid up capital.

A breezy letter from Alan Warner, chief executive of DF Mainland Group, said: "The merging that has been announced has no direct impact on the DF Mainland Convertible notes. The terms of their issue and conversion remain unchanged," Mr Warner wrote.

That's hardly likely to comfort investors given DF Mainland listed on the unlisted securities market in July with 3.5 million shares trading at 10c and yesterday they were listed at 0.1c.

Mr Warner said the shares were tightly held and that was why there was not a lot of movement.

DF Mainland's investment banking operation, behind deals such as the creation of troubled credit firm RMG, was not sold to Dorchester.

Ironically, another of DF Mainland's deals was the rebirth of Venture Pacific as Dorchester Pacific, the company that is now buying them out.

The remains of DF Mainland are stuck with liabilities that may arise from outstanding litigation including a case involving disgruntled client Audi Investments and several cases taken by out-of-pocket Wilson Neil investors who bought into a DF Mainland plan to save the company.

DF Mainland was yesterday deciding whether to appeal a judgment taken by client Gary Gwynne.

Companies Office records show DF Mainland Securities is owned by DF Mainland Group, which has 19 shareholders including DF Mainland principals Rick Flower, Stuart Cairns and Richard Braddock and Tranz Rail chief financial officer Wayne Collins, who used to work as a broker at DF Mainland.

Meanwhile, DF Mainland head of equities John Southworth, who gave evidence in the Audi Investments case, has pointed out he joined the company in only March this year so was not involved in services provided in any of the cases before the courts. The broker named in the Audi case, Greg Arnott, has left DF Mainland.

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