Heron puts back meeting with banks: Reconstruction plan delayed as net worth falls further into deficit
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.GERALD Ronson's troubled Heron group has postponed this week's meeting with 80 bank lenders until 29 October, amid signs that the group's negative net worth is now pounds 400m.
Accountants KPMG Peat Marwick estimated that Heron was worth minus pounds 209m in March. Since then, the value of its international property portfolio has fallen further and the pound's decline since leaving the ERM has increased the value of its debt.
With details of the reconstruction plan - codenamed Project Fred - yet to be revealed, Heron would not comment on the likely deficit. But a source close to the group said: 'The new numbers have to take account of currency movements and the general property situation has got worse in the past few months.'
Heron is likely to unveil a debt-for-equity swap under which banks and bondholders would exchange part of their Heron debt for shares. The rest would be replaced by new paper with maturity extending over many years. Heron would then begin a property disposal programme.
Bondholders are hoping the new paper would also be tradable to give them the option of an earlier exit. Heron's Swiss franc bonds are currently trading at only 18p in the pound in Zurich.
One Swiss bondholder has started court proceedings to enforce default on the group. But the bonds were issued by Heron International, a Dutch Antilles company, which is not subject to Swiss law.
The creditors with the best level of security are banks, which have lent to Heron Corporation, the UK property-to- garages business, and to Mr Ronson's European property arm.
After paying these creditors, any remaining funds flow first to bank lenders to the troubled US property division, and last and very much least, to bondholders.
The reconstruction process is likely to take until Christmas. The banks will take some weeks to consider Heron's proposals. Only if they agree will bondholders be approached for their support. And any final package is likely to need court approval.
One source close to the bondholders said: 'At any point in this long process a single creditor could take action forcing Heron into administration or other insolvency procedures.'
Meanwhile, Alan Goldman, Heron's deputy chief executive, is understood to be likely to remain in his job, though the company will probably appoint several experienced non-executive directors.
(Photograph omitted)
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments