Heron looks for buyers after restructuring fails

HERON, the struggling property company run by Gerald Ronson, has admitted that its nine-month, pounds 1.3bn restructuring has failed, and is talking with potential buyers and its bankers about a further massive debt-for-equity swap.

Speculation mounted yesterday that Mr Ronson might attempt a management buyout, but Heron denied this.

A spokesman for the company did say, however, that it was unclear what Mr Ronson's future role may be if a purchaser comes forward for the group.

Heron's banks, led by Barclays, said they had heard nothing about a buyout.

Mr Ronson may be offered a sizeable chunk of equity if a buyer can be found, since he and his management team stood to receive 25 per cent of the company's shares if it had completed its debt repayment programme.

Property markets, particularly in Spain, have failed to recover as rapidly as envisaged in last year's reconstruction.

The banks have no incentive to appoint receivers, since they believe a receiver would do no better than Mr Ronson in selling Heron's properties.

Heron's advisers, led by UBS, are working hard to sound out buyers ahead of next week's bondholders meeting, which was postponed from a fortnight ago after the meeting failed to reach a quorum. The quorum next week will be nominal. Nevertheless, any plans that include Mr Ronson stand to get a rough ride from bondholders, who feel they have been shut out of the property sell- off by the banks.

The company is in default with bond interest payments, and the bondholders meet again next week to vote on whether to postpone such payments.

Gary Klesch, the trader in troubled company debt who has campaigned for Heron to be put into receivership, thinks a complete pounds 1.3bn debt-for-equity swap now looks inevitable.

But whatever happens, Mr Klesch wants the company to stop sales until the property market recovers.