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Dorchester Pacific stock tumbles on delayed payment plan

Thursday 26th June 2008

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Shares of Dorchester Pacific tumbled 52% after the company sought to delay payments to debenture holders, becoming the latest finance firm to be caught in the credit squeeze.

The stock fell to 10 cents from 21 cents yesterday, when the plans were announced. The move follows a similar announcement from 25%-owned St Lawrence this week.

Dorchester chairman Barry Graham yesterday said the company will withdraw its prospectus and seek approval to defer payments on debentures.

"As a result of the rapid decline in the property finance market and a continuing fall in reinvestment rates the board has formed the view that there is now a risk of a cash flow shortfall arising in future months," told the Sharechat website yesterday.

The company, which owes debenture holders NZ$168 million secured against total assets of $212 million, has hired Grant Samuel and Associates as an independent adviser.

By Jonathan Underhill

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