Investors in a failed McEwan Group development are "gutted" that three hectares of prime waterfront land at the spa village of Waiwera, north of Auckland, has been put up for mortgagee sale.
The land was bought by McEwan interests five years ago for $17 million to be redeveloped as a $200m-plus international spa resort and luxury hotel-apartment complex.
A total of $5.8m was raised from 98 investors in a McEwan company, Forum Select Waiwera, earmarked for buying the two beach-front blocks of land.
Plans were put on hold as tough economic times bit. Dan McEwan was declared bankrupt and Forum Select Waiwera was placed in liquidation.
Faced with kissing goodbye to their money, Forum Select investors have banded together to fight for what they believe are their interests in the land.
Their money was loaned by Forum Select to another McEwan company, Waiwera Stage One, to buy the land and develop an ambitious international spa resort.
Murray Hale, a Forum Select investor and preference shareholder, said he believed investors like himself had a general security agreement over the land, which was threatened by the pending liquidation of Forum Select.
Liquidator Meltzer Mason Heath has called a creditors' meeting for this Thursday as part of the process for finally winding the company up.
But Hale said investors are fighting to prevent that happening. "A lot of families have been badly hurt by this affair and I don't want to see the slate, in effect, wiped clean, by a too hasty liquidation," he says.
Hale said the company was put in liquidation by its sole director and shareholder Kelly McEwan, son of Dan McEwan, just days before he was also declared bankrupt. Hale understood the action was taken on a $3000 debt owed to another company owned by McEwan interests.
"We want a liquidator appointed who has the interests of preference shareholders at heart, and we intend to call for that at Thursday's meeting," said Hale.
Hale also said investors did not accept the view of Kelly McEwan, apparently shared by liquidator Meltzer Mason Heath, that there was no chance they would get any money back.
"We have a general security agreement over those two blocks of land, and if Forum Select is wound up that debenture will vanish," said Hale. "We want to know what happened to our money, and whether that will help us rescue something from this sorry mess," he said.
Waiwera Stage One, the company which owns the land, is itself owned 44.5% by McEwan interests, and 44.15% by a company owned by John St Clair Brown - owner of the Waiwera spa pool complex - who sold the two blocks of land adjacent to the spa to McEwan five years ago.
The rest is held by 37 small shareholders who invested $2.4m in the development. They successfully took action to stop that company being dissolved because they believed it would further limit their chances of getting back any of their money. The liquidators say the land is now controlled by the financier holding the mortgage security, BNZ, which holds the only registered mortgage, and is believed to be owed $6.2m. Last week, the land was put up for mortgagee tender sale. The land had a commercial valuation of just over $20m in 2007, and what it is worth now is anyone's guess.
What is less uncertain is the intention of St Clair Brown not to drop his vision of an international-class spa development at Waiwera. St Clair Brown spent a decade exploring that possibility before getting into bed with McEwan in late 2004.
"Now they have collapsed and the future is is difficult to forecast," said St Clair Brown.
"But yes, there are a lot of things happening in the background and yes, there is still potential life for a project, but in a very different form than that envisaged by McEwan. The vision is still there."
Forum Select investors last week contacted the official assignee, who now holds the shares in the company previously owned by the bankrupted Kelly McEwan. They wanted to have the assignee apply to the high court - hopefully before Thursday's liquidator's meeting - to have the company taken out of liquidation and the shares given to preference shareholders instead so they may pursue their interests.
Hale said he had been advised that the official assignee would not take high court action itself, but that has not deterred him from seeking support over the weekend for investors to take their own high court action.
"We are gutted at the news that the mortgagee sale on the land is still going ahead, but that is not the end of the road for us," he said.
At the very least, being able to take Forum Select out of liquidation would allow investors to find out what had happened to their money.
He also said there still could be something left for investors after the mortgagee recovered its money from the land sale, and creditors of Waiwera Stage One had been satisfied.
- Sunday Star Times