Pressure mounts on property boss

Nigel McKenna. Photo / Supplied

Auckland developer Nigel McKenna is facing problems with a number of his companies where receivers and liquidators are busy at work.

The property boss, who built large apartment towers and hotels around New Zealand, worked on the Metropolis and developed the Beaumont Quarter, much of the Viaduct Basin, Westin, Quadrant, Lighter Quay and Wellington's Holiday Inn.

But his companies are now facing demands from banks, financiers and creditors who want millions of dollars back.

His Queenstown hotel development problems surfaced last year. But issues have now spread to other parts of the Melview empire after impatient financiers moved against his businesses.

KordaMentha, PKF Corporate Recovery & Insolvency, Grant Thornton New Zealand, McGrath Nicol Partners, Chris Horton Associates and Indepth Forensic all have accounting and insolvency crews working inside to find as much cash as possible.

On November 24, Structured Finance NZ appointed Anthony McCullagh and Steve Lawrence of PKF to McKenna's company which built Wellington's $100 million Holiday Inn.

Their first report issued on March 10 showed McKenna's company had a deficit of $8,570,674 but that it could owe creditors almost double that.

An initial taste of the workings at Melview Featherston Street Ltd (in receivership and liquidation) painted a grim picture, particularly for investors including a Fletcher Building business and the failed Structured Finance NZ.

Structured Finance is owed $7,665,788 and, according to the company's records, $15,641,797 was due to unsecured creditors, McCullagh and Lawrence wrote.

The Fletcher Construction Group has served a creditor's application on the company. Fletcher wants final payment on the job for putting up the Holiday Inn.

Structured is one of a raft of finance companies owing about $6 billion. It froze funds in May last year, owing $33 million to 172 investors.

It has paid back nothing. Its first payment of 10c in the dollar is due by September 30 and all funds must be paid back by next October or in 2012, depending on if the money is available.

The Auckland property lender was the last company to go into a moratorium and has yet to begin paying money back to its investors. A further 5c in the dollar is due in March next year.

Another 45c is forecast to be repaid by October 2011 but directors have the option of extending that to October 2012 if they wish to without having to go back to investors to get permission.

Melview Featherston Street Ltd owns 15 Holiday Inn hotel rooms, subject to Fletcher claims, McCullagh and Lawrence wrote.

The company was formed on May 30, 2000, to develop the 17-level 280-room hotel on Featherston St. It opened in 2007 and the company sold all except 15 rooms.

Those were subject to an unconditional sale contract, the receivers said.

Another blow to McKenna's extensive property empire is the fall of his company Peninsula Road Ltd (in receivership and liquidation) which owns part of his ambitious Kawarau Falls hotel project near Queenstown.

Tim Downes of Grant Thornton NZ said that on March 2, he was appointed a receiver by Fortress.

Downes said Peninsula owned a third of the Kawarau Falls project but he refused to say how much Fortress was owed. That won't be known until his first receivership report, due on May 13.

The six-monthly report is due by November 9. Peninsula is wholly owned by Melview Developments Ltd.

Fortress, as first security holder, called in the receivers after Peninsula defaulted on a big loan.

Hanover also funded the Queenstown project and its security has now been taken over by Allied Farmers.

Fears are held for Allied's role in Queenstown after Peninsula's fall.

A liquidator from Chris Horton Associates was also appointed to Peninsula last Thursday.

Melview (Kawarau Falls Station) Investments Ltd and Melview (Kawarau Falls Station) Developments Ltd went into receivership in May last year, a bank appointing receivers from KordaMentha, who said in their latest update issued this year that total amounts owed to Bank of Scotland International were $180 million.

Unsecured creditors would get nothing, the receivers said.

Indepth Forensic of Hamilton were appointed liquidators of McKenna's Melview Halsey Ltd on March 19 but have yet to produce a report.

McKenna's spokesman, David Peach, said this month the developer was not allowed to comment on projects since the receivers had moved in and taken control.

McKenna himself could not be reached for comment.


Work so far

Nigel McKenna's projects:

* Galleria Customhouse shops, Auckland with Andrew Krukziener.

* Metropolis 40-level apartment tower, also with Krukziener.

* Sebel and Quays hotel/apartments, Viaduct waterfront, $100 million.

* UniLodge student towers near Auckland University, $45 million.

* Beaumont Quarter apartments opposite Victoria Park, Auckland, $100 million.

* Lighter Quay's Westin Hotel, lock and apartments, Auckland, $300 million.

* Quadrant hotel/apartments next to Hyatt at Waterloo Quadrant, Auckland, $100 million.

* Holiday Inn, Wellington, $100 million.

Yet to start or be finished

* Kawarau Falls resort, 6.4ha hotel project, Queenstown, $1 billion.

* Flat Bush, new Manukau town for 40,000 people, $1 billion.

* McArthur Ridge health resort, Central Otago, $500 million.

* Atlantic City high-rise apartments, US$350 million.