Investors in tropical resort keep eye on storm clouds

Photo / Supplied

Investors in the Fiji Beach Resort & Spa managed by Hilton are waiting for developments after last month's warnings of trouble.

The resort continues to operate at Denarau Island with 160 villas.

But the business which is expanding looks to be heading for receivership after a series of issues which its developer has blamed mainly on funding.

On August 24, Neville Mahon, the Greenlane-based developer who is part-way through building a further 90 villas, wrote to investors warning them of problems.

He said he had worked since January to try to negotiate a solution but receivership of one company, Denarau Investments, appeared imminent.

He put up a $105 million proposal to pay Bank of Scotland $36 million over 24 months, Strategic Finance $55 million over four years and get an additional $14 million funding. But that deal has not succeeded.

"The repercussions of a receivership on villa owners are unknown and I truly regret having to do it. I cannot predict what will happen," he said, although he expects no issues with Hilton continuing to operate the part of the resort which is already completed.

"The future for me is completely in the air under a receivership. I have discussed this with the Villa Owners' Representative Group chaired by Rob Campbell and I will undertake to set a meeting up between the villa group and the receiver when he is appointed as soon as possible," Mahon told investors.

Campbell said on Thursday he was waiting for the next step.

"There is no major new development. We are continuing to maintain contact with Denarau Investments and pressing for an early resolution of the impasse over non-payment of villa owner revenue.

"There is also considerable discussion amongst the villa owners about what form any future arrangements - whether under Denarau Investments' ownership or receivership or new ownership - should take.

"The most pleasing thing is that the resort continues to operate very well," he said.

A meeting is planned soon for people from the villa owners' group which has taken legal action against Denarau Investments.

In a separate Fiji property issue, Bayleys is still negotiating to sell the $180 million-plus Momi Bay resort at Momi Bay on the Coral Coast. Only $41 million was offered when the resort was passed in last month.