Tuesday, April 27, 1999

Amfac to pay
$40 mil to
buy 1988 notes

Star-Bulletin staff


Amfac/JMB Hawaii Amfac/JMB Hawaii LLC will pay out $40 million on June 1 to buy back some of the notes that were issued in 1988 to finance the purchase of Amfac Inc. by JMB Realty Corp.

Amfac/JMB, a Hawaii land owner, property developer and agriculture business, recently made an offer to buy in the Class B certificates of land appreciation held by investors for $410 each and 50 percent the notes were turned in, said Gary Grottke, company president.

The certificates, known as COLAs, are an unusual financing vehicle, not secured by land or other assets but paying interest, ranging from a minimum of 4 percent up to a high of 23 percent, depending on how well the company does in increasing the value of its properties.

The cash-out price in the latest buy-back offer was equal to about 82 percent of the face value of the Class B COLAs.

Grottke said the buy-back will use up a lot of Amfac/JMB's cash but will position the company to move forward with its plans for Hawaii. The company will no longer be paying out the interest on the Class B COLAs.

"This is a big hurdle. We'll still have to be aggressive in maintaining cost controls and we'll still be looking to sell surplus land, but we won't have this significant financial burden hanging over our heads," Grottke said.

All the remaining COLAs mature at the end of 2008, when the company must buy them back. Amfac/JMB Hawaii is now owned by Northbrook Corp., an affiliate of JMB Realty.

Chicago-based Northbrook also owns the Liberty House chain, which also was part of the original Amfac Inc.

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