Lehman hasn't paid loan funds, MLP says


POSTED: Saturday, October 04, 2008

Maui Land & Pineapple Co. said yesterday that lender Lehman Brothers Holdings Inc. has failed to provide its portion of funding for construction of the Ritz-Carlton Residences at Kapalua Bay.

Kahului-based MLP has a 51 percent ownership interest in Kapalua Bay Holdings LLC, which in July 2006 entered into a construction loan agreement with Lehman Brothers for the lesser of $370 million or 61.6 percent of the total projected cost of the project.

MLP said the members of Kapalua Bay Holdings have agreed to advance funds, which along with other lender funding will be sufficient to pay Nordic/PCL Construction Inc.

Lehman's commitment under the agreement is 78 percent of the total, MLP said in a regulatory filing. To date, $201 million has been funded under the agreement, and the project is about 80 percent complete with a scheduled opening this spring.

As of Tuesday, contracted sales for the project totaled $310 million, or about 40 percent of the units.

Lehman filed for bankruptcy Sept. 15 in New York. On Sept. 22, Lehman and other lenders were obligated to fund Kapalua Bay $35.6 million under the loan agreement. The other lenders, representing 22 percent of the loan commitments, funded their portion, MLP said, but as of Thursday, Lehman had not.

Alternative funding sources could include refinancing the Lehman loan with new lenders or seeking additional capital from Kapalua Bay Holdings members, which also include Marriott International Inc., with a 34 percent interest, and Exclusive Resorts LLC, at 15 percent.