Christchurch-based developer Buzz March, who was planning to take over the troubled project, walked away from it yesterday frustrated that he couldn't secure an adequate second mortgage over the property.
The story of the Ballantyne Golf and Retirement Resort date back to 1998 when Pacific Properties Ltd raised $8 million from the public through a bond issue. The proceeds of this issue, which was sold mainly through Money Managers, were to be used to develop an 18-hole golf course and 150 unit residential development near Katikati, west of Tauranga.
The plan was that the money would be used to develop the project and bondholders would be repaid by the developer, John Bourke, selling sufficient properties.
However, in the middle of last year it became apparent the project was behind schedule and there were insufficient sales to pay-out bondholders.
While they received initial interest payments, the final interest payment and the return of capital hasn't been made.
Following a lengthy process a rescue package was put to bondholders earlier this year which involved a new developer, Christchurch-based Buzz March, taking over the project. His funding was to be derived from a $13.2 million contributory mortgage on the property arranged by Wellington-based financiers Lombard Financial Services Ltd.
The plan was that once bondholders voted for the package, an initial payment of $250,000 would be made from the new developers. Ninety days later a second payment of $7.5 million would be made and there was a possibility that a third and final payment of $250,000 would be made a year later to close the matter.
Under this deal bondholders would receive, belatedly, all their interest payments, plus their capital (assuming all three payments were made).
While bondholders voted in favour of the package in April the initial $250,000 payment has not been made.
Lombard executive director Michael Reeves says the money is sitting in a trust account, however it hasn't been handed over because there have been problems organising a second mortgage over the property.
He says Buzz March has become so frustrated with the inability to get sufficient security he has walked away from the project.
"It's at an end for the time being," Reeves says.
Reeves says although the contributory mortgage has raised only about $3.5 million to date, that wasn't holding up the project.
Tower Trust has still not been officially informed of the situation.
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