Estate now seeks resort foreclosure
By HARRY EAGAR, Staff Writer
In April 2009, the owners of The Ritz-Carlton, Kapalua defaulted on the loans they had taken out to rebuild the hotel in 2007.
The amount owed, principal and interest, approached $300 million, but the lender, Lehman Brothers Holdings Inc., in bankrupty itself, did not press the issue for another 16 months. This week, the Lehman estate in bankruptcy filed for foreclosure against Gencom Group and Whitehall Street Global Real Estate, claiming it is owed $255 million.
The move was reported by The Wall Street Journal.
How the principal was reduced over the past year is unknown. Many resorts in Hawaii are in default, but most do it in privacy. The Ritz-Carlton’s trouble became known because Maui Land & Pineapple Co. was a 16 percent partner, and as a regulated public company, had to disclose the default in its reports, which it did in May 2009.
Also lagging the market Thursday are real estate development shares, down on the day by about 1% as a group, led down by Maui Land & Pineapple , trading lower by about 6.9% and Ifm Investments Limited , trading lower by about 4.3%.
Maui Land & Pineapple Co. has filed registration documents to proceed with a previously announced plan to convert some of its debt into equity.
On Thursday, the company said it intends to pursue a rights offering for up to $40 million of its common stock. That means it will offer existing stockholders the right to purchase additional shares in the company, raising money that will be used to pay back lenders.
ML&P said shareholders have already subscribed to $27.5 million of the offering.
If the rights offering is sold out, ML&P will repurchase all of its outstanding senior secured convertible notes – a kind of debt that allows lenders to take what they’re owed in the form of stock, if they’re not paid off in cash.
Haliimaile Pineapple Co. employees work to process fresh pineapples Thursday at the company’s renovated Haliimaile plant. The company closed a former Maui Pineapple Co. processing plant in Kahului and moved to Haliimaile to centralize plantings and packing there, said Vice President Rudy Balala. He said the weather has been “nice but kind of dry,” but replanting is on schedule. Haliimaile Pineapple took over about 1,000 acres when Maui Pineapple shut down at the end of the year. The new company handles about 75 tons of fruit per day, but most of it stays in Hawaii, with about 20 percent sold to customers on the Mainland, Balala said.
Votes authorize smaller board, more sales of common stock
By HARRY EAGAR, Staff Writer
After hearing about management’s plans to "survive to thrive" following a disastrous 2009, Maui Land & Pineapple Co.’s shareholders voted Thursday to accept two proposals designed to carry the company through its debt crisis.
The main vote, carried by 83 percent of the company’s shares and by 99 percent of the shares represented in person at Kapalua by owners or proxy holders, was to authorize 20 million shares of common stock.
This will be a rights offering, rather than an approach to the public market. Each shareholder would have a chance to buy new shares in the proportion that he or she owns of old shares.
Since there are 23 million shares outstanding, the offering is for almost, but not quite, one new share per old share.
And since Steve Case owns more shares than anybody, the offering’s success will depend upon his willingness to put new money into the company.
President Ryan Churchill said after the meeting that he couldn’t comment about whether Case had indicated he would be willing to put more tens of millions into the company.
Company seeking approval to nearly double common stocks
By GREG WILES, The Honolulu Advertiser
Maui Land & Pineapple Co. is seeking shareholder approval to almost double the amount of its authorized common stock as it contemplates financing alternatives to pay down debt and raise money.
The company is proposing increasing the authorized shares to 43 million from the current 23 million, according to proxy material filed with the U.S. Securities and Exchange Commission.
The proposed increase comes after the company reported losses totaling $202.7 million during the past two years and the exit from the pineapple business on which it was built.
Maui Land had previously noted that it might have to sell shares as it looked to generate additional cash, use stock in compensation plans and make acquisitions.
"Our cash outlook for the next 12 months and ability to continue to meet our financial covenants under our credit facilities is highly dependent on generating additional capital, including the sale of equity," said the filing.
The filing said the company has no definite plans for the shares should they be authorized, but that it may need to sell shares in excess of its current authorized number.
This would be needed to facilitate meeting obligations as well as its ability to redeem $40 million of convertible notes that become redeemable in July 2011.
Maui Land’s annual shareholders meeting is scheduled for 8:30 a.m. May 13 at the Kapalua Village Center in West Maui.
Case also will lead a $20 million round of new equity financing for the luxury destination club.
Case, who has served on Exclusive Resorts’ board since investing in the company in 2003, acquired majority ownership in 2004.
Exclusive Resorts has more than 3,000 members and a real estate portfolio valued at more than $1 billion. The Denver-based club was founded in 2002.
Case also owns Grove Farm, one of Kauai’s largest private landowners, and is chairman and CEO of Revolution, a market investment firm.