Potential buyers sniffing around a Queenstown hotel will have their eyes wide open.
The ownership and operating companies of Arthurs Point’s Coronet Peak Hotel separately went bust owing $9.4 million between them, with the two firms at loggerheads beforehand.
A large chunk of what’s owing is a $4.8m mortgage funded by 232 investor-clients of Timaru’s RSM Lawyers – the firm’s nominee company is flogging the hotel off.
Being Timaru, two of the people involved with the Coronet hotel have links to the spectacularly defunct South Canterbury Finance.
And to cap it all off, the mortgagee sale is being run by a realtor determined to disclose all the hotel’s warts.
The bare facts are that Coronet Peak Hotel has a capital valuation of $6.8m, with a 5600sq m building housing 78 rooms, a commercial bowling alley, restaurant, bar, pool and 2105 sq m of spare land leased out for LPG storage.
But the blurb from agent Buzz Scown of Bayleys Queenstown couldn’t be plainer.
Decor and fittings are tired and refurbishment will be required to raise room rates, Scown warns.
“Tourism has been doing it tough the past few years so operational budgets within the property have been funnelled into underpinning frontline services rather than structural maintenance,” he explains.
Investment, imagination and marketing expertise will be needed to make the hotel viable, Scown reiterates.
The operation was run by Coronet Peak Hotel Ltd from late-2006 to July 2011 under a lease from another company,
Coronet Alpine Ltd, which owned the freehold.
According to Coronet Peak Hotel’s liquidator, this company was claiming damages from Coronet Alpine “as a result of lack of maintenance”.
The dispute was subsequently settled.
However, Coronet Peak Hotel was voluntarily liquidated last December, with 15 local firms among creditors owed $1.4m.
The liquidator blamed the company’s failure on a leaky roof giving the hotel a bad name, plus unsustainable rent of $600,000 yearly – while “the earthquake in February 2011 was the death of the business”.
Freehold owner Coronet Alpine didn’t live much longer either.
Mortgagees RSM Lawyers Nominee Company seized the hotel in mid-February this year and Coronet Alpine was wound up in April by Inland Revenue, who were owed $3.1m.
RSM Lawyers emphatically told the Timaru Herald their 232 investors will get their money back from the mortgagee sale.
According to the Herald, RSM partner Edward Oral Sullivan, a former director of South Canterbury Finance, has stood down from RSM while he and four others answer pending Serious Fraud Office charges.
A company personally owned by Sullivan also has a second mortgage over Coronet Peak Hotel, although Sullivan assured the Herald no further RSM client funds are involved.
The hotel has another historic link to South Canterbury Finance.
Shareholder/directors of the hotel’s defunct ownership company Coronet Alpine were Barry and Judy Ford, formerly of Timaru.
Barry Ford once co-owned another faded Wakatipu hotel, Frankton’s Remarkables Resort – backed by multi-million dollar mortgages from South Canterbury Finance.
Ford and his then-partner’s scheme to timeshare Remarkables Resort hit rocks in 1991 after Mountain Scene
coverage triggered a Securities Commission investigation.