Metropolis bonds fate still in air

By ANNE GIBSON property editor

Metropolis bondholders, owed $25.5 million, have been delivered good and bad news by Tower Trust in a mailout to the 1700 investors.

The good news is that Auckland developer Andrew Krukziener has sold $6.6 million of apartments in the skyscraper since June. The bad news is that the new prospectus outlining repayment of the bonds cannot be issued because Mr Krukziener has been unable to get a new first mortgage on the property.

Late in 1998 the bondholders invested $21 million principal to help pay for the glamorous central Auckland tower and were promised 14 per cent interest a year.

"Mr Krukziener is confident that he will have secured appropriate first mortgage finance and finalised the prospectus so that a proposal is ready for consideration by mid-October," Tower Trust's general manager Glenn Clark said in his letter.

Mr Krukziener was seeking a first mortgage loan of just under $15 million.

Bondholders were due to get their principal, plus $4.5 million interest, at the end of May. But early that month they were told lack of sales in Metropolis would mean the bonds could not be repaid and the future was uncertain.

Tower Trust was not involved in discussions about the first mortgage funding, Mr Clark said, but Mr Krukziener was "keeping us informed and we can confirm he is working hard to secure a stable financial arrangement."

All the $6.6 million in Metropolis sales would go to ANZ.

The new prospectus is expected to seek renewal of the bonds for up to three years on new terms, which could include a lower rate of return on the investment.