View from City Road: Heron casts around for a new saviour

As many Heron bondholders have long predicted, the pounds 1.3bn restructuring of the Heron property group - precarious from the moment it was signed nine months ago - has finally fallen victim to the Spanish property slump. So what next for this debt-laden travesty of a company?

Reports of a management buyout led by Heron's founder, Gerald Ronson, were roundly denied by both bankers and the company yesterday, which is probably just as well for it would have caused outrage had they turned out to be true. It is Mr Ronson who must take the blame for Heron's present difficulties. Bondholders and banks, left with a pounds 1.3bn debt mountain, not to mention a pounds 50m advisory bill on the reconstruction, could fairly have felt they had been taken for a ride in the event of a successful buyout by Mr Ronson.

To have allowed Mr Ronson to buy back the company at a knockdown price stripped of its debt would have been too much. Bankers are now talking in terms of converting their loans into equity and finding a third-party buyer for the company (no, not Mr Ronson). Even the most critical bondholders accept this as the most workable way out of the present mess.