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.