Metropolis investors made to wait

By GEOFF SENESCALL

Property developer Andrew Krukziener has refinanced his debt in the high-profile Metropolis building, providing comfort to nervous junk-bond owners holding $21 million of its debt.

While the final payment date on the bonds is not until next May, an $18.3 million financing package with ANZ Bank means that the holders move to being secured creditors.

When the bonds were issued as part of the mezzanine financing for the project in 1998, at the time with the lure of a 14 per cent yield, they were unsecured.

Uncertainty over the bonds has been fuelled by slower than expected sales of units in the Auckland building. Adding to the suspicions was the failure of the developer to repay the bonds as expected on June 30, although there was always provision in the issuing prospectus for the bonds to carry on until next May 30.

Mr Krukziener said yesterday that everything was in order and working to plan. "I think I will end up repaying them [the bondholders] this side of Christmas," he said.

"The ANZ would not have lent me $18 million a month ago if it was concerned about anything ... If they thought for one second that the bondholders wouldn't be able to be paid immediately they wouldn't have wanted to put themselves in the position of having to take action to prejudice the bondholders."

The ANZ cash replaced the remaining debt held by Deutsche Bank (formerly Bankers Trust), which lent $35 million as a second mortgage to the development. The first mortgage of $105 million was held by a syndicate of banks, including HSBC. It was repaid last December.

Since refinancing, Mr Krukziener said there had been $9 million of sales. Twelve of the 345 apartments and five of the 21 penthouses had still to be sold.

Mr Krukziener wanted to recover $13 million from further sales. That would more than cover the debt with the ANZ. He said he would look to refinance the bonds, because bank finance was cheaper. "I really want to retain the balance of the building because it is income-producing."

Bryn Jamieson, finance director of the bonds issuer, UDC Securities, said he was comfortable with the process.