Developer blames finance industry "mess" for Five Mile woes

Developer Dave Henderson says the receivership of his Five Mile Holdings project in Queenstown is symptomatic of the "mess" the finance industry is in.

Yesterday Hanover Finance said it had instructed security trustee FMH Nominees to appoint a receiver "as a result of un-remedied loan defaults".

Mr Henderson, the subject of a feature film about his four-year successful battle with Inland Revenue over tax payments, said lender Hanover and secondary lenders, NZ Castle of the US and Auckland financier Martin Reesby, had all threatened receivership.

He is also facing a liquidation application against Five Mile Holdings and its parent, Property Ventures. Christchurch crane-hire company Smith Crane and Construction applied in May for the liquidation to recover a "significant six-figure" amount, according to Fairfax Media's Business Day.

Hanover said the defaults arose several months ago and the finance company had been working with the borrower to determine a suitable way forward.

"However, as a result of other third party creditors commencing legal action against Five Mile Holdings, and enforcement action against other Property Ventures Limited companies (the parent of Five Mile Holdings), Hanover Finance believes it is in the best interests of its investors and other stakeholders to exercise its rights as a secured creditor."

Accordingly, a receiver was yesterday appointed to Five Mile Holdings so that the assets could be best managed for all interested parties and the loan repaid in due course.

Today Mr Henderson said he did not know what would happen to the Five Mile project now.

"No one's been in touch with me about it since these events rolled out," he told Radio New Zealand.

"The whole thing is symptomatic of the mess that the finance industry's in and Hanover's actions are symptomatic of the desperation that starts to filter through these companies."

He was in the middle of a plan change process for Five Mile initiated by the Queenstown Lakes District Council, which started on Monday and was scheduled to last for two weeks.

"It's something we've been working on and poured a lot of money into over the last five years."

Asked if pouring money into that had meant his company had been unable to pay contractors for work, he replied, "no, not at all". "All this was budgeted and all this was planned," Mr Henderson said.

The New Zealand Herald reported today that Hanover had taken action over a $70 million loan in default.

Mr Henderson disputed Hanover's claims about payment defaults.

"There's been a whole bunch of arguments in the last eight months, with reassurances from Hanover that they would provide us with additional funds. Whether we defaulted is debatable because of the arrangements between the parties," the Herald reported Mr Henderson saying.

Talking to Radio NZ today, Mr Henderson said that it was not, in fact, Hanover that had put Five Mile into receivership.

Hanover was unable to do that because on June 30 Hanover had sold the loan to a company associated with an Australian finance company called Fortress.

"As recently as three weeks ago Hanover were desperately trying to do a deal with me ... Offering to lend me more money if I signed some agreements and documents with them," Mr Henderson said.

"There's an issue with a number of people there that we've had, as a consequence of what we see as breaches of agreements with Hanover that go back almost a year now, where Hanover had undertaken to make further advances to us for this development. That hasn't happened."

Five Mile is an ambitious project to build a high-density township for 10,000 people in Frankton, near Queenstown Airport. It would cost hundreds of millions to build and was expected to have a value of $2 billion when finished, although those values were given when the property market was buoyant.

The development was in the early stages with a large hole dug where an underground carpark has started to be built.

It is understood the Five Mile project is now in the hands of another big Queenstown developer, Nigel McKenna, who is involved in a billion dollar hotel development project, Kawarau Falls, slated to build up to four hotels.

Mr McKenna's Melview Developments is building the first hotel, The Westin Queenstown, due to be finished next year. Construction of an Intercontinental Hotel and The Quadrant are due to start later this year.

The four-year Kawarau Falls Station project on a 7 hectare waterfront site was due to be finished in 2011.

Under the receivers, the Five Mile project is expected to initially proceed with a supermarket development with related commercial and residential building, but is likely to be hugely scaled back on what Mr Henderson planned.

This article is tagged with the following keywords. Find out more about My Tags

1 Comment & Question

Commenter icon key: Subscriber Verified

Sad about Dave and his ilk finding themselves in the position they are. NZ needs such visionaries and Dave has contributed so much to city's such as Christchurch.

I just hope he can rise from the ashes and continue his stirling work.

Reply
Share

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7866 -0.0100 -1.26%
AUD 0.8969 -0.0111 -1.22%
EUR 0.6221 -0.0044 -0.70%
GBP 0.4902 -0.0041 -0.83%
HKD 6.1001 -0.0780 -1.26%
JPY 84.2850 -0.9540 -1.12%

Commods

Commodity Price Change Time
Gold Index 1241.1 -7.450 2014-10-22T00:
Oil Brent 84.7 -1.510 2014-10-22T00:
Oil Nymex 80.5 -1.970 2014-10-22T00:
Silver Index 17.2 -0.310 2014-10-22T00:

Indices

Symbol Open High Last %
NZX 50 5279.7 5282.7 5279.7 0.06%
NASDAQ 4429.2 4435.9 4419.5 -0.83%
DAX 8934.5 8957.2 8887.0 0.60%
DJI 16615.3 16653.9 16614.8 -0.92%
FTSE 6372.3 6401.5 6372.3 0.43%
HKSE 23300.5 23460.8 23088.6 1.37%
NI225 15038.2 15195.8 14804.3 2.64%