THE receiver of Power Corporation has gone to the US to meet the bankers and other parties connected with the group's US properties. Following the sale of the Irish properties, in a management buy out, the main focus of Mr Tom Grace, of accountants Price Waterhouse, is now on the US properties which accounted for 85 per cent of Power's portfolio.
Mr Grace will be meeting Lazard Freres, the US banking group which is involved in the San Francisco Shopping Centre, and Yasuda Trust and Banking Company, the Japanese lender to the other US properties. Power's US operating subsidiaries are not in receivership so Mr Grace has a limited role.
However, as receiver he can sell some of the properties. Industry sources say he is in the US to familiarise himself with the properties, the lenders and other interested parties. He was in San Francisco over the weekend and will be going on to New York either today, or tomorrow.
Following the familiarisation trip he will prepare a report which will make recommendations to the syndicate of banks, headed by Irish Intercontinental Bank, which is owed around £100 million (other banks secured on the US properties are owed a further £90 million. Lazard Freres and Yasuda are understood to be quite happy to remain as lenders as the US operating companies have been fully servicing their loans and those loans are well secured.
The US properties consist of the San Francisco Shopping Centre; The Rhinelander Mansion Madison Avenue, New York; 3 45/347 Rodeo Drive, Los Angeles; an interest in the Ambassador Hotel site in Los Angeles; and an interest in 256 Worth Avenue, Palm Beach, Florida.
The largest property is the San Francisco Shopping Centre, which is understood to be generating a gross revenue of $15 million (£9.3 million) with net income of probably a little more than half of this.
Power has its stake in this property through a joint venture company, according to Power's last annual report in 1994. This says it has an option to acquire its partner's 50 per cent stake, exercisable between December 1995 and December 1997 at an additional cost of $8 million to $19 million, depending on the date the option is exercised. The option could cost it $100 million.
Power has not prepared accounts for more than two years. It last published results were for the six months to the end of September 1994. These revealed a pre tax loss of £5.6 million and net tangible assets of £9.2 million.
The company will now have to produce a statement of affairs. These will reflect a downward revision in the value of some of these assets and the deficit could amount to between £70 million and £80 million.
Mr Tony Leonard, former chairman and managing director, headed the management buyout of the Irish properties. These consist of the Powerscourt Townhouse Centre in Dublin and the Savoy and Queens Old Castle Centres in Cork. The buy out was backed by a British venture capital group which has a majority shareholding.
