Waikato Regional Airport, which operates Hamilton airport, bought the Hamilton Airport Hotel and Conference Centre out of messy receivership for $3 million as it seeks to cut its reliance on regulated transport revenue.
The airport operator, owned by five local councils, announced the purchase on January 31, saying it was in line with the company's goal of expanding non-aeronautical revenue and included a leaseback arrangement with the current operator Hamilton Airport Hotel to run the facility until at least January next year.
"Ownership of the hotel provides an opportunity to further develop and enhance the range of services offered within the airport precinct," chair John Spencer said in a statement.
"With a number of new businesses in the area and record numbers attending events such as Equidays and Fieldays at nearby Mystery Creek Events Centre, demand for accommodation near the airport has grown."
The airport's wholly owned subsidiary Titanium Park Ltd developed a 10-year property strategy last year which seeks to generate $1m of pre-tax earnings from a property portfolio, which saw it buy 98-hectare farm next to the hub.
As at June 30, 2017, Waikato Regional Airport's development property was valued at $8.5m and investment property at $15.3m.
The hotel lease and chattels were owned by Bolton Properties, but transferred to a related entity Hamilton Airport Hotel Ltd in December last year "when it became clear that the IRD proposed to wind up Bolton Properties," receivers Thomas Rodewald and Kim Thompson of Rodewald Consulting said in their first report. The tax department looks set to be left out of pocket with the sale proceeds largely exhausted by existing creditors.
The airport operator had signed a conditional deal to buy the buildings from Bolton and the business and chattels from Hamilton Airport Hotel ahead of the Inland Revenue Department's application to liquidate the business, prompting former director and creditor Kevin Parker to appoint receivers "to take control of the sales process," Rodewald and Thompson's report said.
At the time of receivership, ASB Bank topped the list of secured creditors owed $2.4 million, followed by the van der Hulst family trust owed about $807,000 in a second mortgage, and Kevin Parker owed $150,000 on a general security agreement.
IRD filed a preferential claim of about $208,000 and an unsecured claim of $74,000.
Shareholder advances totalled $206,000 as at March 31, 2017, the report said.
Negotiations broke down between the airport operator and the Bolton receiver, with Waikato Regional Airport threatening to file court proceedings if a sale was not completed, the report shows.
"Following extensive discussions, taking into account the potential legal costs and also taking into account the building report indicated substantial repair costs existed, the receivers offered to complete the sale contract," Rodewald and Thompson said.
"The receivers accepted that Hamilton Airport Hotel Ltd had a valid lease, but did not accept that the chattels had been effectively transferred to Hamilton Airport Hotel Ltd. Settlement was reached."
The property was sold for $2.85m and the assets for $140,000. Of that, $2.4m was paid to ASB, $140,000 to Kevin Parker and $470,000 to the van der Hulst family trust.