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Dorchester still hunting acquisitions after Turners purchase; refines guidance

Tuesday 2nd December 2014

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Dorchester Pacific says it's still in the hunt for acquisitions after completing the $82 million cash, scrip and bonds funded purchase of Turners Auctions and refining its guidance for earnings.

Dorchester has invited Turners chairman Michael Dossor to join its board and his investment arm, Bartel Holdings, has ended up with 7 per cent of the finance company. Bartel owned about 20 percent of Turners and accepted a mix of shares and bonds for its stake. All up, 247 Turners shareholders took up shares in Dorchester Pacific and 213 accepted Dorchester bonds.

Buying the car auction house adds to Dorchester's loan book, of which 70 percent is made of car loans, while the focus of its insurance business is also car related. The company said pretax earnings in the year ending March 31, 2016, the first full year with Turners on board, would be about $23 million, after previously giving guidance of $20 million to $25 million.

Dorchester funded the acquisition with the issue of $32.5 million of new shares, $23.2 million of bonds and $10 million of bank borrowing, less than the $18 million of bank debt it had previously flagged. It already owned about 20 percent of Turners, which it valued at $16.3 million.

"The higher take up of shares and bonds has resulted in lower bank borrowings and a relatively conservative equity ratio, even before factoring in the likelihood of some bonds converting to equity in 2016," said chief executive Paul Byrnes.

The acquired business would now be delisted from the NZX, for annual savings of about $500,000 and the board was "considering the merits of a group name change.”

Chairman Grant Baker said the final mix of funding " has resulted in a balance sheet with headroom for further merger and acquisition activity."

"We are therefore continuing to remain active in the evaluation of opportunities that could add further growth either specifically for the Turners business or for the Dorchester group,” he said.


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