The company developing the $300 million Fiji Beach Resort and Spa managed by Hilton has revealed that it is on the verge of going into receivership.
Neville Mahon, the Auckland based developer of the huge luxury property, has written to villa owners saying receivership of Denarau investments is now imminent.
Bank of Scotland and Auckland finance company, strategic had funded the project.
Mahon said he has been unable to pay dozens of investors who bought villas at his Hilton Denarau Island project, planned to be eventually expanded and called Fiji Hilton.
Investors are owed $1.2 million for last quarter 2008 payments and have been complaining for months but Mahon told them he had funding problems.
Speaking from Auckland today, Mahon said Bank of Scotland had provided a $45 million loan facility and taken over the first mortgage from Strategic Finance.
He said he wanted to pay strategic $55 million over four years but needed an extra $14 million to keep going.
However, he said there are virtually no investors or financiers willing to offer the money.
Mahon and business partner, Gregory Shanahan has been developing the property throughout this decade and the Hilton has been running it for some years.
By 2007, the hotel had 240 rooms and 150 villas operating and Mahon had expansion plans to make the resort Fiji's best.
Mahon said lower room occupancies and room rates, the need to honour guaranteed payments to owners and the expenses of running the resort, meant income sank.
Strategic Finance Chief Executive Kerry Finnigan said his firm had loaned $75 million to Mahon for Fiji's Hilton and the funder was just protecting its interests.
He said the long and short of it is that it was a project that has had a cost blowout.
