Shareholders throw out Greycoat rescue: Rejection of Postel's pounds 120m package throws future of troubled property developer into confusion

THE FUTURE of Greycoat, the troubled property developer, was thrown into confusion yesterday after two classes of disgruntled shareholder threw out a proposed rescue by Postel, the BT and Post Office pension fund.

After a stormy series of meetings, holders of the preference shares voted by 57.4 per cent to 42.6 per cent to reject the Postel offer, which many felt treated them less fairly than other classes of investor.

They were supported by Greycoat's zero coupon bondholders, who mustered only 60.6 per cent support, below the 75 per cent required from all classes of shareholder to approve the deal.

The specific resolutions spelling out the details of the pounds 120m deal were rendered meaningless by the emphatic rejection by the zero and preference holders. However, they were also defeated, narrowly failing to achieve 75 per cent support.

If approved, the scheme, masterminded by Postel's chief executive, Alastair Ross Goobey, would have left the fund with between 27 and 87 per cent of Greycoat's equity.

Postel wanted to rescue Greycoat because, although it is struggling in a quagmire of debt, it owns a high-quality portfolio of office buildings with secure tenants.

In a letter sent to the company on Thursday as a last-ditch effort to garner support, Mr Ross Goobey restated Postel's intention to walk away from the deal if it was voted down by any class of shareholder.

The cause was given late and, in the event, futile support by Goldman Sachs, holder of 8 per cent of the preference shares, which made a public statement on Thursday of its intention to support the deal.

Geoffrey Wilson, chairman, said Greycoat was now considering its position. Before the vote he warned shareholders that rejection was likely to mean that the company would be forced to cease trading. He said Greycoat had not received any alternative proposals.

Greycoat is in breach of a number of its borrowing covenants, but it is thought that other rescue proposals may be presented in an effort to avoid forced liquidation.

The outcome of the votes confirmed the mood of earlier questions in which a succession of preference holders took Mr Wilson to task for his handling of the rescue package.

John Katz, who has campaigned for a number of shareholders, said the company had failed to provide adequate information to investors despite the fact that they were being asked to accept a sharp diminution in the value of their shares.

Since the publication of the proposed scheme on 2 September, Mr Katz has demanded more helpful information on the value of Greycoat's properties, which he claimed had risen in value by much more than the company suggested.

Its portfolio includes Embankment Place, an office building above London's Charing Cross station, and Britannic House, BP's City of London headquarters.

Mr Wilson refused to divulge individual values, claiming that they represented commercially sensitive information. He said potential offerors had been furnished with the figures.

Mr Katz was supported by other preference shareholders, including Nicholas Berry, the property entrepreneur, who raised a ripple of laughter with the assertion that if preference holders were to be treated in this way they should be renamed 'deference shareholders'.

A representative of Banque Paribas accused the management of answering legitimate questions with threats and said the board was 'trying to rape the various constituencies of shareholders'.

Michael Bell, of Gruss Partners, the US securities house that holds 14 per cent of the preference shares, focused on the remuneration of Greycoat's adviser, NM Rothschild, the terms of which he suggested compromised the value of its advice to shareholders.

Mr Wilson said the costs of the proposals would now reach pounds 2.8m. He admitted that, of the pounds 1.5m still to be paid, 70 per cent was in the form of a success-related fee.