'Bit of fun' becomes financial nightmare for Metropolis bondholders

By ANNE GIBSON

Gary Coulthard bought into the Metropolis bond issue "for a bit of fun," investing $5000 with the promised 14 per cent return.

"It's just a game, really. We put the money in for the interest and were going to reinvest it elsewhere when it was paid out," he said yesterday. Now, the game has become a bit more serious - Mr Coulthard is one of many Pacific Properties (Metropolis) bondholders wondering what will happen to the money.

Several upset and angry Metropolis investors contacted the Herald yesterday , saying they wanted answers from developer Andrew Krukziener and Doug Somers-Edgar of Money Managers.

Mr Coulthard, an area manager from the Hibiscus Coast, became concerned after receiving a letter sent to bondholders by Doug Somers-Edgar of Money Managers, which marketed the bond issue. Three-quarters of the Metropolis investors were Money Managers' clients.

The letter said the investors' $21 million capital was at risk because the income from Metropolis was not enough to cover the interest on the first mortgage.

"Our capital will gradually erode if sales don't take place soon," Mr Somers-Edgar said in his letter.

He revealed that 44 properties worth $45 million were unsold in the 38-level Metropolis tower, said to be New Zealand's tallest and largest apartment block.

Parties associated with the bond issue - which defaulted on $25.5 million in capital repayment and interest on May 20 - are now hatching a rescue plan, with Mr Krukziener saying this would be revealed soon.

A bondholders' meeting would be held in two or three weeks. In the meantime, investors like Mr Coulthard are upset about the uncertainty and delay in repayment.

Most of the concerned investors who contacted the Herald yesterday did not want their names used, saying they were embarrassed.

One investor wanted Mr Krukziener to front up: "I find it curious that your paper in the past has given much coverage to the developer of this block, yet after his failure to meet his bond repayments all reports cite third parties, nothing from the man himself."

Mr Somers-Edgar said he had invested $1 million "of my own hard-earned cash" in Metropolis bonds.

* If you are a bondholder in Pacific Properties (Metropolis), please e-mail anne_gibson@herald.co.nz, or telephone 373-6400 extension 8657. Note: the phone number published yesterday was incorrect.