Tower Trust general manager Glenn Clark has written to the 1700 investors, who hold $21 million worth of bonds, to give them some good and some bad news.
The good news is that another $6.6 million worth of apartments have been sold recently. The bad news is that all the proceeds of those sales (after commissions) is being used to repay first mortgage holder ANZ Bank.
Clark told bondholders that the rescue process is difficult as Tower, as trustee, can't take any enforcement action against the owner of Metropolis until ANZ is repaid in full.
It is unknown exactly how much ANZ is owed, but the figure is estimated to be around $10 million.
Clark has assured investors that rescue package was coming together.
"Krukziener has presented a proposal to us that is intended to recover as much of your investment as possible.
"Following significant negotiation and progress the key terms of the proposal are worthy of your consideration, but there are two significant items to finalise before the proposal can be documented and presented to you," he says.
The two issues were that the first mortgage needed to be extended, or the developer has find a new lender to replace the ANZ.
Then a new prospectus is required to accommodate the proposal.
Clark says Tower is not involved in the first mortgage refinancing process, however Krukziner is keeping the trustee informed.
"We can confirm that he is working hard to secure a stable financial arrangement that will facilitate property sales in an orderly fashion. Such funding is critical to the proposal and its related prospectus."
Clark says Krukziener is confident that appropriate first mortgage finance will be secured and a prospectus written by mid-October.
Bondholders are likely to get to vote on the proposal in late October.
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