Deadline looms for Metropolis bonds

Friday 18th May 2001

METROPOLIS: Deadline time

By Campbell McIlroy

With the Sunday deadline for the repayment of Andrew Krukziener's Metropolis junk bonds looming bondholders are still in the dark over what will become of their money.

Trustee Glenn Clark of Tower Trust said he had hoped to have received a proposal in time to get it out to bondholders before the Sunday deadline.

Mr Clark said he expected to be spending a lot of time in Auckland with Mr Krukziener over the next two weeks once the bonds were in a default situation.

Meanwhile Money Managers was yesterday preparing a letter for its clients, who hold over two-thirds of the bonds. Managing director Doug Somers-Edgar said it would outline the basic position of the bondholders, which rank behind the ANZ Bank - still owed $14 million.

There has been talk in property circles of a refinancing from the BNZ and Strategic Capital but Mr Somers-Edgar said there would be no other parties involved.

Mr Krukziener poured cold water on the suggestion but would not comment on what bondholders could expect.

"I would suggest you wait until next week before writing anything," he said.

But Mr Krukziener said Mr Somers-Edgar's comments last week (NBR May 11) were very relevant.

Mr Somers-Edgar said there would be no partial payment for bondholders because the ANZ still had first mortgage.

The 17% penalty interest rate is also highly unlikely.

Mr Somers-Edgar said the final interest rate hadn't been finalised yet but it was likely to be low single figures.

Mr Somers-Edgar said the reason it had taken so long to come up with a solution was because there was no possibility of refinancing the bonds.

The Metropolis Bond is the fourth bond issue Money Managers has been involved in which has defaulted.

The Ballantyne and Park Terrace bonds, and a contributory mortgage for the Hornsby Hotel in Christchurch have also defaulted.

But Mr Somers-Edgar defended his company's reputation, saying it had only had four defaults out of 58 bond and contributory mortgage issues in the past three years.

* There is confusion over whether Mr Krukziener bought a Xena sword for $5500 at a Variety Club charity function last week. Last week Variety Club told NBR Mr Krukziener's name was on the receipt for the sword. But this week both Mr Krukziener and the Variety Club denied he had been a bidder. The Variety Club said two other parties sitting at the same table as Mr Krukziener were the successful bidders.

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