Ballantyne rescue bid turned down

The receivers of the Ballantyne Retirement Village have turned down a rescue offer from a consortium headed by Money Managers boss Doug Somers-Edgar and Richmond Paynter, and sold the development to another party of $4 million plus gst.

Tower Trust put the Ballantyne group of companies, which were developing a golf course and residential development near Katikati in the Bay of Plenty, into receivership in June because they had defaulted on payments to investors.

Currently the 600 bondholders in this development are owed their capital of $8 million plus interest. They got their last interest payment in September 1999 and are still awaiting the return of their capital and the final interest payments.

Tower Trust general manager Glenn Clark says the Somers-Edgar/Paynter proposal was turned down for a number of reasons.

He says the receivers and Tower were unable to conclude an agreement based on the terms originally proposed in November.

Under this proposal the consortium planned to fund the development and marketing of the Ballantyne resort with a $1 million unsecured interest free loan and a $1.5 million mortgage arranged through a bank or other financial institution.

Clark says the consortium put forward a modified proposal that significantly changed the basis of availability of the $1 million interest free loan.

"As a result, all of the development risk would fall on you and none on the consortium as originally proposed," Clark says in a letter to bondholders.

He also says that Tower was unable to get full details of how the consortium intended to manage, complete, market and sell the development.

"We therefore conducted our own analysis of the position and concluded that if we proceeded with the modified proposal bondholders would be left exposed to an unacceptable level of risk."

Clark says the cash sale, to an undisclosed buyer, "has the benefit of avoiding the complex and risky issues associated with the consortium partially completing and selling the development in circumstances where it would have none of its own cash at risk."