First Metropolis repayment plan turned down

Bondholders owed more than $21 million by the developers of the Metropolis skyscraper in Auckland are no closer to knowing when and how much of money they will be paid.

Monday, June 11th 2001, 1:02AM

Bondholders owed more than $21 million by the developers of the Metropolis skyscraper in Auckland are no closer to knowing when and how much of money they will be paid.

Pacific Properties (Metropolis) defaulted on repaying the capital and interest owed to 1700 investors three weeks ago.

The initial repayment proposal put to the trustee, Tower Trust, was turned down as it was considered unacceptable.

Tower Trust general manager Glenn Clark says that under the proposal the issuer sought to extend the time for repayment of the bonds to May 2004.

He says the offer "did not contain any explanatory material and was not in an appropriate form for us to send to (investors) for consideration."

"We considered bondholders were unlikely to support a proposal along the lines indicated because it restricted the return that they might receive on the bonds if, in the meantime, property prices improved."

Clark says a revised proposal, which includes some explanatory material, has been received and is being reviewed.

"The issuer will not be sending this proposal to the bondholders until a new prospectus, which will be required, has been prepared and registered," he says.

Clark says although the bonds are in default, enforcement is difficult because of the complex ownership structure.

He says the enforcement process has not been started because the trustee has received a proposal and the issuer intends to send it to bondholders as soon as the necessary prospectus has been registered.

Tower is currently trying to verify the likely realisable value of the assets of the issuer and guarantor and how much money is owed, under a mortgage, by Courthouse No 1 Limited to the ANZ Bank.

Clark says once that investigation has been completed he will be able to tell bondholders whether they are likely to have their capital and any outstanding interest paid.

Since defaulting on May 20 interest has been accruing at 19% annually.

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