DORCHESTER FINANCE INVESTOR UPDATE

Dorchester Finance, a wholly owned subsidiary of Dorchester Pacific, today issued the following update to debenture and note holders.

29 July 2008

Dear Investor,

I am writing to update you on our progress in finalising the deferred repayment plan.

We are hoping to get the final plan to you in mid-August, with the meeting to vote on it in the last week of August or early September. Pending the outcome of the vote, we will continue to pay interest.

We are confident that the plan will represent the best option for debenture holders and note holders. We have been working on it with the benefit of independent expert advice from Grant Samuel and Associates Ltd. In addition, we have engaged property specialists Jones Lang Lasalle to review the company’s property finance assets and timeframes for realisation.

We have also engaged Colin McCloy of PricewaterhouseCoopers to subject the plan to critical scrutiny so as to ensure it will be not only robust but also in the best interests of debenture holders and note holders.

We expect shortly to present the plan to the Trustees, Perpetual Trust Limited and New Zealand Permanent Trustees Limited, for consideration and review.

Assuming the Trustees should approve our putting the plan to investors, we will post it to you. The vote by Debenture and Note Holders will be held 16 days later at a meeting in Auckland.

In advance of the formal vote we intend to hold meetings in major centres at which we will explain and discuss the plan with investors. All investors are encouraged to attend one of these meetings. We will enclose with the plan a schedule of the dates, times and places for these meetings together with the voting papers.

In the meantime, if you have any questions please feel free to call our investment team on 0800 100 601.


Yours sincerely

Paul Byrnes
Executive Director

Ends