Somers-Edgar pushes up bond repayment by 1c

By Chris Hutching

Friday 28th June 2002

Bondholders in the Park Tce Property Bonds are receiving an initial payment of 51c in the dollar as the result of a special deal to buy 45 unsold apartments in the troubled 102-unit Christchurch development.

Park Tce Developments defaulted in October 2000 on repayments to bondholders who had invested $7 million because it failed to sell sufficient apartments.

Bondholders ranked behind Bank of New Zealand in the creditor queue but the bank has now been satisfied leaving other proceeds to the bondholders.

The latest payout is the result of an offer by South Island businessman Phil Burmester to buy the balance of the unsold apartments. Although Mr Burmester has a co-investing relationship with Michael Hawkins of Park Tce Developments in an unrelated venture (Awaroa Lodge), he assured a bondholders' meeting that the deal was at "arm's length."

He offered to 657 bondholders the prospect of receiving 67-70c in the dollar on their initial investment (accrued penalty takes the total figure owed to them to $9.8 million).

Tower Trust is trustee of the bond scheme and it wrote to bondholders telling them about the latest payout and reminding them of its earlier indications that it would pay out an initial 50c in the dollar.

"We are now in a position to pay this. You may also recall at the bondholders' meeting Mr Doug Somers- Edgar of Money Managers (the marketer of the bonds) advised those in attendance that he had persuaded the buyer to increase the sale price by $100,000.

"The price increase enables a further one cent per dollar to be paid to you. Accordingly we can make an initial payment to you of 51c in the dollar," Tower said.

The accounts reveal there will be a $140,000 claim for trustee fees, legal and other costs. Tower told bondholders that if they refused the Burmester offer BNZ would probably appoint a receiver for a quick sale or creditor Mainzeal would wind up Park Tce Developments for the same reason. Finally, Park Tce Developments threatened to tender the remaining unsold apartments.

Tower told bondholders to seek independent legal advice if they planned to reject the offer but it appears no one has.

Comments from our readers

No comments yet