Tower Trust reports on receiver strategy

By ANNE GIBSON

Metropolis bondholders owed $34 million for funding Andrew Krukziener's glamorous Auckland tower are getting letters from trustee Tower Trust explaining the appointment of receivers.

As at February 28, investors were owed their original $21 million principal as well as $13,011,472 capitalised and unpaid interest, Tower Trust general manager Glenn Clark said.

Tower Trust appointed Michael Stiassny and Grant Graham, of Ferrier Hodgson, as receivers last week.

"While we are unable to take immediate enforcement action against the development company, it is in the best interests of bondholders that receivers be appointed to Pacific Properties (Metropolis) Limited (PPML) and to Courthouse Capital Limited (CCL)," Clark wrote to bondholders.

"PPML is the company that issued the bonds to you and CCL is the company that holds the second mortgage over the unsold properties at Metropolis," Clark wrote.

"Tower Trust has taken this step with some reluctance as the position is very complex and taking the step will necessarily involve some costs.

"While the terms of the prior ranking loans to the development company were outlined in the prospectus and investment statement, those documents placed some emphasis on the fact that those loans would be repaid from the sale of the Metropolis properties and, when that had been done, that a new mortgage would be provided to bondholders.

"However, both ANZ Bank and latterly Structured Finance have provided substantial levels of funding to the development company to enable it to meet payments due to its unsecured creditors. While such payments may have provided some benefit to bondholders in some instances, in others they have not. Tower Trust is not willing to allow that situation to continue.

"It is now almost two years since Mr Krukziener advised us that he would be sending a proposal to you outlining how the bonds would be repaid but this has not been forthcoming.

"We have concluded that there is no realistic prospect that such a proposal will ever be issued."

Clark wrote that the receivers had already spoken to Krukziener and would complete a report on the situation.

"The Metropolis assets are owned by the development company Courthouse No 1 which is not in receivership," Clark wrote.

"Courthouse No 1 is a company owned by Mr Krukziener and is managed by him or by other companies owned by him or his interests.

"We expect that management of Courthouse No 1 will continue under Mr Krukziener's control but that he will need to liaise closely with the receivers on future sales and any further development of the remaining properties."