Fiji project in doubt as deposits paid back

The Pacific Point development in Fiji was marketed as 'a perfect point in the Pacific' but work on the site has stalled and investors who bought sections have had their deposits repaid. Photo / Supplied

Investors who bought sections in a Fijian property project where Allied Farmers has an outstanding $20 million-plus loan have been repaid their deposits, putting the future of the project in doubt.

The project was one of many that Allied took a stake in when it paid nearly $400 million for the assets of Hanover Group last December.

News of the Fijian troubles coincided with an arm of Allied getting a credit downgrade.

Allied Nationwide Finance (ANF) yesterday said Standard & Poor's had lowered its rating to B from BB-.

S&P credit analyst Peter Sikora said the ratings actions reflected a material deterioration in ANF's liquidity position beyond what S&P previously expected and factored into the BB- rating.

"In our view, this deterioration has increased ANF's exposure to a cash shortfall from now until October 2010 should reinvestment rates weaken from current already modest levels or should cash inflows from loan repayments be delayed beyond our current expectations," Sikora said.

John Mallon, Allied Nationwide Finance chief executive, said he was disappointed but the business was focused on taking the necessary steps to improve its credit rating.

Hanover Group funded the Pacific Point project near Suva where developers Kevin Storey and Brent Gibson hoped to create a tropical paradise. Pre-deposits were taken and sections were in the process of being created.

But Storey has written to Allied managing director Rob Alloway saying uncertainty over funding meant the money must be repaid.

Three weeks ago, Pacific Point investors said they got bank cheques, repaying 75 per cent of their deposits which had been held in a lawyers' trust account but with no interest paid on the money.

The company which took deposits had no alternative but to repay investors, Storey said, blaming Allied's inaction for the move.

Alloway said a few weeks ago that no firm decisions had been taken on the project's future.

John Loughlin, Allied chairman, and Alloway said they had a number of demands for payment against developers for loans on properties here and in Fiji.

Investors in Pacific Point said initial earthworks had been rendered virtually worthless by the progress of time and storms and the site was in bad shape. Work stopped in the middle of last year.

About 70 per cent of the earthworks were completed and a 24,000sq m reclamation was formed for 116 sections on Island Quay, subject to Fiji Government approval.

When Allied took over the loan book of Hanover Finance and sister company United Finance in December, it told investors it was worth $396.2 million.

But on May 28, Allied said the loans were now worth just $124 million.

Since Allied bought the Hanover/United loan book the company's share price has plunged, from 19c before the deal was approved to a close of just 4.6c yesterday.

PACIFIC POINT
* $160 million Fijian residential project.
* 20-minute drive south of Suva.
* 1000sq m sections with gated security.
* Priced from $199,000-$299,000 each.
* Shops and supermarket were planned.
* 80-room hotel with conference facilities.
* Sold as "a perfect point in the Pacific".
* Project stalled due to funding issues.
* Now, investors have been repaid.