Investors face lean pickings

By ANNE GIBSON

Metropolis bondholders could lose as much as half of their money, according to the latest calculations from the trustee for the bond issue.

A letter to bondholders from Glenn Clark, general manager of Tower Trust, which is acting as trustee, also raises the possibility of receivers being appointed to the bond issuer, Courthouse Capital.

The investors could expect to get back from 50c to 80c for every dollar invested, but Clark told the Business Herald yesterday that they would not get the money until next year.

He said he was releasing the information because Metropolis developer Andrew Krukziener had not fulfilled promises to find an alternative deal to repay the money.

The ANZ Bank was still owed $5.7 million and "no action can be taken to enforce the redemption of the bonds before the bank debt is repaid", Clark said in his letter.

Bondholders will not see a cent until the bank receives its money.

In the late 1990s, Metropolis attracted 1755 investors into a scheme to help finance the 38-level Metropolis tower in central Auckland, promising to pay 14 per cent interest annually on the $21 million invested. The money and interest would be returned in May last year, investors were promised.

But lack of sales resulted in Krukziener being unable to return the principal or pay interest.

Many of the bondholders were clients of Doug Somers-Edgar's Money Managers network of financial advisers.

Clark's letter to bondholders reminded them about the complicated structure of the deal - and that Krukziener never guaranteed repayment of the bonds.

A valuation of the unsold properties showed that 33 per cent were unfinished penthouses and 29 per cent were untenanted shops, Clark said. "But Mr Krukziener has achieved good sale prices for the properties he has sold and this is commendable against the background of negative sentiment and publicity that Metropolis has attracted."

Krukziener might want to delay even repaying 50c to enable him to keep the money invested by bondholders to pay for finishing parts of the building and then make further sales, Clark said.

"If or when this happens, we would expect a detailed feasibility study to accompany any such request."

Tower could not guarantee any repayment, and had prepared its estimations based on information from valuations, without details from Krukziener's company.

Staff at Krukziener Properties said Krukziener was on holiday this week and could not be contacted to respond to Clark's letter.