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Lender keeps Makena open


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POSTED: Wednesday, September 02, 2009

Wells Fargo Bank, the trustee of the mortgage lender for Makena Resort, said it will keep the distressed property running and wants a team in place soon to help turn the operation around.

The clock began ticking for Makena Resort when it went into foreclosure late last month and set into play the possible closure of its Maui Prince Hotel and Makena Golf Course, which would result in 380 job losses.

Circuit Judge Shackley Raffeto agreed yesterday to hold an emergency hearing to consider Wells Fargo's request to appoint a receivership team. The hearing on Maui is scheduled for 10:30 a.m. Tuesday.

Wells Fargo is recommending that the court appoint local attorneys Miles Furutani, George Van Buren, Steven Mau, Anna Elento-Sneed and hotel industry executive Peter Herndon as receivers, said Barry Sullivan, attorney for the lender. The company also has set up a lender-funded escrow account in Hawaii and advanced $247,000 to pay expenses, Sullivan said. It also is talking with two local hotel companies to operate the resort, he said.

“;We anticipate that a substantial number of employees will keep their jobs,”; Sullivan said yesterday at a news conference. “;People should be able to book rooms. It should be a smooth transition.”;

;[Preview]  Hundreds Of Jobs At Maui Prince Hotel In Jeopardy
 

Wells Fargo Bank says it has every intention that the Makena Resort will stay open for business.

Watch ]

 

The events so far for the property have been anything but smooth.

First, resort owners Everett Dowling Co. and the Morgan Stanley real estate fund could not make their mortgage payment in July. The owners had used a combination of private funds and mortgage-backed securities to buy the 1,800-acre Makena Resort for $575 million in 2007 from Seibu Group of Japan, the parent company of Prince Resorts Hawaii.

They had planned to expand the resort by adding a residential development.

“;They went from a loan with an optimistic projection to a situation where people are walking away from a lot of money,”; Sullivan said, adding that the hotel was losing about $1 million a month.

Resort closure appeared imminent Monday when hotel operator Maui Prince Hotel LLC said it would cease managing the resort on Sept. 16 because lenders had not met obligations.

“;Through no fault of Maui Prince Hotel LLC, the owner and lenders of Makena Resort entered into a legal dispute, which resulted in a foreclosure filing by the lenders and left Maui Prince Hotel LLC with very serious funding issues that are clearly the responsibility of the owner and lenders,”; said Prince Resorts Hawaii President Donn Takahashi.

Prince Resorts Hawaii successfully operated the Maui Prince Hotel for 22 years, Takahashi said. “;It was profitable until we hit the downturn about October or November of last year,”; he said, adding that the losses were not as wide as Sullivan claimed.

Hotel workers union ILWU Local 142 said it was “;cautiously optimistic”; that the lender's actions would keep the resort open.

“;We have hope because they want to keep the property open,”; said Willie Kennison, ILWU's Maui division director. “;We were hoping that Maui Prince would continue to operate the hotel. But in the event that they do not run the hotel, we'll work with whoever comes in.”;

A new operator could accept the current union contract or propose reductions in benefits or staffing, Kennison said.