Dorchester Pacific - one of the few finance companies to survive the meltdown in its sector - said it had secured new funding lines that would allow it buy back $15 million in outstanding notes.
Dorchester, in a statement to the NZX, said it proposed to buy back outstanding notes at $0.92 per note before they fall due on June 30, 2013.
The proposal and repayment are subject to the terms of the funding line becoming unconditional.
Chief executive Paul Byrnes said the funding had come from a standard, high street bank.
Uncertainty over the fate of the 2013 bonds and confusion over fair value adjustments had weighed down the share price, he said.
"This is quite important for us to tidy up the balance sheet and get rid of the fair value adjustment, which is such a confusing accounting convention," he said.
In May, Dorchester reported a net loss of $1.6m for the year to March. About $1.37m of the loss was the interest expense relating to the reversal of the fair value adjustment arising from the capital reconstruction plan approved by investors in June 2010.
A special meeting of noteholders has been called to consider the buyback.
The payment price of $0.92 represents a premium of 15 per cent to 22 per cent over the market value of the over the past year.
Dorchester chairman, Grant Baker, said the outstanding notes and the perceived uncertainty around their repayment had been affecting Dorchester's share price.
"It has also been, and would otherwise remain, an obstacle to any merger and acquisition that would help the Dorchester Group achieve scale and profitability," he said in a statement.
Resolving the notes issue would be a "game-changer" for Dorchester, Baker, who co-founded of vodka company 42 Below, said.
Shares in Dorchester last traded at 10c each.
