The toppled Rosche One Interests and Rosche Aerospace, both headquartered in Corpus Christi, yesterday marked their one-year bankruptcy anniversary. Rosche Corp. president Keith Harvey, based in Dallas, tells GlobeSt.com that Rosche One Interests has found two equity teammates, BVT, a leading Munich syndicate, and an unidentified American investor.

The Rosche plan is to emerge from Chapter 11 by satisfying creditors, secured and unsecured, with $23 million from the new investors and roughly $77 million from the forced sale of high-profile office buildings and retail centers in Texas and Washington state. In the past year, there have been some contracts placed and then withdrawn, so Harvey has come up with a new plan.

The 235,805-sf Quadrant I-5 Complex in Bothell, WA, once occupied by Boeing Co., was being marketed at $17.5 million--it's now going to go up for auction under the watch of Kennedy-Wilson International. A contract fell out on the 158,355-sf Meridian Center, with a $60-million price tag, in the Seattle CBD so Harvey is talking to a possible joint venture partner. He expects to generate another $10 million from the sale of four office buildings, totaling 83,991 sf, in Houston, San Antonio and Carrollton, TX and 213,599 sf in five single-tenant retail properties in the Texas towns of Abilene, Alpine, Hereford, Plainview and San Angelo. Harvey says Rosche and Wells Hill Partners Ltd. of New York City are close to signing a listing agreement on the properties.

Investor Life Insurance Co. of America, a Cedar Rapids, IA-based lender owned by Aegon, is forcing the sale of the assets because Rosche defaulted on a $61-million loan, Harvey admits. The secured lender has been charging 18% interest to push the bottom line to $100 million, Harvey says, but he's negotiated it down to $82 million and a 7.86% interest rate if the reorganization plan is accepted by Judge Richard J. Schmidt and the creditors. Harvey says the reorganization confirmation could come as early as May.

There also is another $40 million to $60 million of unsecured debt, depending on who's doing the counting. Harvey says he will meet Monday with unsecured creditors to see if he can get signatures on the reorganization plan, paired to an all-cash offer for the group.

The creditors' roster includes Canadian Imperial Bank Corp. (CIBC), which says it's owed $30 million for the Shops at Sunset Place in South Miami for Rosche's share in a joint venture with Simon Property Group of Indianapolis; a group of investors that wants repaid $3 million to $5 million for loans to Rosche founder Michael Vogelbacher; Deutsche Bank, $9 million; a trio of bankruptcy law firms, $1 million; and the IRS, $1.8 million. Only CIBC and Deutsche Bank hold carve-out guarantees, says Harvey. As for the German investors--"moms and pops"--their claim is $170 million. The Freiburg, Germany-based syndicate, Rosche Finanz AG, is in the process of liquidation.

"We're going to pay back $100 million," Harvey says. "Anything above that is going to be wiped out." In the coming month, the 3,000 German investors will be asked to kick in a percentage of their invested equity for a stake in the newly re-capitalized, restructured investment group. "I am trying to create a scenario here where they can maintain their interest and share in the upside of this company that they created," Harvey explains.

Harvey says Rosche founders Gabriele Rosche and Vogelbacher are facing trial this month in Germany along with accountant Bernd Burkhardt and board director Dr. Detles Mayer-Olert. Harvey is unsure as to the specifics of the charges against the four, but he is sure that they are no longer affiliated with the Rosche hierarchy nor tied to its new-found equity partner, BVT, which has an office in Atlanta.

In December 2001, Vogelbacher was arrested in Frankfurt in the midst of a campaign to drum up capital for investments in urban retail centers. "When Michael was arrested, he couldn't continue to send money. Therefore, the company just stopped running," Harvey says, noting the trickle-down effect was a default on $300,000 monthly payments for Quad 1-5.

A German investor triggered an investigation into Vogelbacher's capital-raising activities after he allegedly claimed ownership to 810 First St. in Washington, DC, a neighbor to Rosche's CNN Building and FERC Building, neither of which are part of the bankruptcy sale. Harvey says Vogelbacher had $5 million in non-refundable earnest money on the asset, but he didn't own it.

According to Harvey, all of the hard assets have liens against them because Vogelbacher amassed the portfolio with raised equity and borrowed capital. The ownership is spread among a string of five Rosche companies, all Delaware incorporated. Only one is in jeopardy of a bankruptcy filing, says Harvey, who is negotiating with lender CIBC. It's a situation where the property--the Shops at Sunset Place--is turning a profit, but "the owner of 50% of the equity is having problems," he says. Talks Friday could toss Rosche Miami LP into bankruptcy court. Those entities with a stake in the Denver Pavilions and a land bank in Dallas are not flirting with bankruptcy, Harvey emphasizes.

But, Rosche isn't planning to sell all. It will keep deeds to its headquarters, the 124,666-sf New York Life Building in Corpus Christi; 73,832-sf Sun Plaza Building, also in Corpus Christi; 79,615-sf Aerospace Building in Houston; 67,146-sf Siemens Building in North Texas' Las Colinas; and the 199,168-sf FAA Building in the state of Washington.

In addition to Meridien Center and Quad 1-5, the following office properties are up for grabs: the 7,955-sf Attorney General Building and 51,000-sf Castroville Building, both in San Antonio; 9,936-sf ITT Flygt Building in Carrollton, TX; and 15,100-sf Gemini Building in Houston.

Harvey, confident he can woo the votes, says the plan is to emerge from bankruptcy and start a new fund, with sights set on German institutional capital as part of the BVT alliance. In addition to the Simon JV, Rosche's only other US partner is Greenebaum-Rose Associates of Washington, DC.

Why would investors, here or abroad, invest in Rosche? "First, those people (Rosche and Vogelbacher) are not here anymore," says Harvey. "And second, when we come out of bankruptcy, we'll have an established, manageable debt with development potential.