US firm continues Kingston Flyer bid

BY BEN HEATHER

A United States firm is still in sideline negotiations to buy the Kingston Flyer despite other potential buyers being told all offers had been rejected.

Receivers of Kingston Acquisitions Ltd (KAL) have been trying to sell the dormant heritage train near Queenstown, along with tracks, stations and surrounding land since the firm was placed into receivership last month.

Last week, sales agent Bayleys told parties participating in the international tender seven offers had been lodged, but none was acceptable to the receiver.

However, US-based Railmark chief executive Allen Brown said his firm had bypassed the tender process and was negotiating directly with the receiver. "The tender process does not affect the Railmark bid. We have made our offer directly to the receiver."

The offer, details of which Brown would not discuss, was still being assessed by the receiver and Railmark expected a response next week, he said.

Kingston Flyer Charitable Trust made a $2 million tender bid for the train and was told in a letter from Bayleys it, along with all other bidders, was unsuccessful.

Trust spokesman Karl Barkley said he did not know offers were being made outside the tender process and was led to believe all offers, including Railmark's, had been rejected. "There's so many other dodgy things going on that I'm not surprised," he said.

Bayleys Queenstown agent Barry Robertson, who was managing the tender, said he was not aware of any bids for the train outside the tender process.

Receiver Lindsay McClean, of Malloch McClean Queenstown, said Railmark was told to lodge a tender, after making him a direct offer during the tender period, but it never followed through. "We can't force them to put in a tender," he said. "They did take the risk that a tender might be accepted."

Railmark's offer had not been considered until after the tender process proved unsuccessful and in its present form would not be accepted, he said.

He rejected the suggestion that Railmark's offer had affected the outcome of the tender process.

"It wasn't dodgy."

Further talks might take place with other parties, such as the trust, whose initial tenders were rejected but McClean would not comment on how many, if any, other parties would be approached.

Railmark's sideline bid was revealed days after a legal dispute arose between the receiver and Kingston Flyer Steamtrain Ltd (KFSL), which ran the train before, under a lease agreement, with KAL before closing down earlier this year.

Receivers issued KFSL with a trespass notice last week barring it from Kingston Flyer's yard and station, and preventing it from removing any property.

McClean said he has legal advice that KFSL lease with KAL was never valid and all train-related property was owned by KAL. But KFSL director Phil Kerr said much of the property was owned by KFSL, and he would be contesting ownership with the receiver.

The dispute is the latest hurdle for the Kingston Flyer, which has been stuck in a financial quagmire since now-bankrupt developer Dan McEwan took over with plans to develop the holiday village around the train.

Several unsuccessful attempts were made last year to sell the train, as McEwan's plans stagnated and debt to financier Prudential Mortgage Nominees mounted. Prudential Mortgage placed KAL into receivership last month and is owed $4.7m.

- © Fairfax NZ News