DORCHESTER ANNOUNCES FINALISATION OF CAPITAL RECONSTRUCTION PLAN

Dorchester has finalised its Capital Reconstruction Plan. Since 10 March Dorchester has been working closely with the Trustees and their independent advisors. The Plan and an Independent Report from PWC are now with the Trustees Perpetual Trust and the Public Trust.

Dorchester is awaiting final confirmation from Perpetual Trust so that the Plan can be put to Debenture holders.

Dorchester believes that the relevant documents should be able to be mailed out to investors around the 26th of May and that an Investor Meeting should be able to take place on 17th June 2010. Whether that timetable can be met depends on how long it takes to get final confirmation from Perpetual Trust. A number of Investor Roadshows will be held around the country before the formal Meeting.

If the Plan is approved Dorchester Finance will be out of Moratorium by 1 July 2010.

The structure of the Plan is in line with earlier announcements, although one important requirement, repayment of 50 cents in the dollar to Debentureholders, has already been achieved.

In essence, four securities will be issued to Debentureholders in exchange for their outstanding Debenture Stock.

(i) Units in a Property Trust which will hold $33 million of hotel properties

(ii) Interest Bearing Secured Notes ($20 million in total)

(iii) 36.5 million shares in Dorchester Pacific, the same number as currently on issue, and so representing 50% ownership prior to any further capital raising

(iv) Options to purchase Dorchester Pacific Shares in 3 years at a set price

The Plan is conditional on Dorchester Pacific raising a minimum of $8 million new capital from a proposed rights issue of $10 million (100 million shares at 10 cents per share). It is also conditional on shareholder approval and subordinated noteholder approval.

Full details of the Plan will be released when all documentation is finalised.

Executive Director Paul Byrnes commented: “The delay in getting the proposal to this stage has been frustrating for everyone and we apologise to investors for the uncertainty that this may have created. But, if the Plan is approved and the capital raising successfully completed the Board believes that there is every possibility that Debenture Stockholders could ultimately receive 100 cents or more in the dollar of their original Debenture Stock.”

ENDS