Greycoat strives for Postel rescue: Property company must convince shareholders of merits of pounds 120m package

THE fate of Greycoat, the troubled property company, hung in the balance yesterday as it made a last-ditch effort to convince discontented share and bond holders that a proposed rescue by Postel, the pension fund, was the only way of avoiding collapse.

Richard Guignard, at Greycoat, said: 'There is no other option on the table at the moment. If it is voted down it is extremely likely that Greycoat would cease trading.'

The complicated pounds 120m rescue package for Greycoat, which owns some of London's most prestigious office buildings, goes to a vote next Friday and needs 75 per cent acceptance from all classes of investor to go ahead. A feature of the deal is a rights issue, underwritten by Postel.

Postel, the BT and post office pension fund, has said that unless it gains that level of support it will walk away from Greycoat, which developed Embankment Place above Charing Cross station and owns Britannic House, BP's City headquarters. That could lead to the company being put into administration.

With a week to go, the future of the proposal looked in doubt. Some holders of Greycoat paper remained opposed to the proposed deal, which could see Postel take as much as 88 per cent of the company.

A circular posted yesterday reiterated Greycoat's assertion that a forced sale of properties would realise much less than the market expected. Preference shareholders had criticised Greycoat's refusal to spell out valuations for each property.

Greycoat declined to provide more details on individual property values, suggesting that doing so would lower their values even further in a forced sale. The company also claimed that special circumstances, including outstanding disputes with British Rail over leases, meant that Greycoat's portfolio had had only limited benefit from the recent improvement in property values.

The information provided was rejected by one preference shareholder. Nicholas Berry, the property investor who recently sold his stake in Manchester Ship Canal to Peel Holdings, said the deal was unfair to preference shareholders. He had already voted against it with his 2 per cent preference shareholding.

Preference shareholders are being asked to accept a 60 per cent reduction in the value of their shares and to waive their entitlement to dividend arrears.

The complexity of the rescue plan mirrors the traditionally arcane nature of Greycoat's funding arrangements, which depended during the property boom on ever rising rents to fund complicated stepped-interest payments.