42 Below founders buy Dorchester stake

Last updated 08:48 01/09/2009

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The former owners of Vodka company 42 Below see potential in the decimated New Zealand finance company sector and have picked up a 19.47 percent stake in Dorchester Pacific for $400,000.

The Business Bakery, a limited liability partnership founded by Geoff Ross, Grant Baker and Stephen Sinclair, has purchased 7.2 million Dorchester shares at 5.6c each from St Laurence founder Kevin Podmore's Auguste Holdings Ltd.

After selling out of 42 Below the three businessmen set up The Bakery, a venture capital company.

Dorchester's subsidiary Dorchester Finance last year instituted a deferred payment plan after its reinvestment rates fell dramatically. The company's shares traded above $3 in 2004 but the 5.6c price The Bakery paid is an 18 percent discount to the weighted average price in the last 30 days.

Mr Baker believes there will be a requirement for finance companies in the future. "Because a lot of them have fallen over there is going to be a whole lot less competition that there used to be.

"It is going to be more regulated, which means if you are a good business operator, you will get approved, get an appropriate credit rating and be able to do well at it.

"We believe there is quite a strong future in it and Dorchester is quiet a good vehicle for it."

The Bakery would like to purchase more shares and is prepared to put capital into the business.

"We would like to increase our stake but not necessarily by just going and buying shares on market. There would be a number of ways to attack that," he said. "We would like to be involved in recapitalising the business because its major issue is it just does not have enough capital."

Mr Baker said he would look after this investment. He is a previous chief executive of Blue Star Group, which had a finance book.

"We don't put ourselves about as being experts on finance, or electricity, or Vodka, or anything else. We do know how to run a business and we've proved that quite a few times," he said.

Dorchester was in better shape than other finance companies. Although the company was in a moratorium, it looked capable of paying back their investors and had an insurance and investment arm.

"It is not a typical finance company story," Mr Baker said.






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