September 1, 2009
Prince Resorts Hawaii said Monday it plans to terminate its management contract and close the Maui Prince Hotel and the Makena North golf course next month.
The resort’s 380 full- and part-time employees were notified Monday that the Makena Resort hotel and golf course would close on Sept. 16, according to a statement from Prince Resorts Hawaii.
Lenders, represented by trustee Wells Fargo, filed a foreclosure lawsuit on Aug. 24 against the hotel’s owners saying they had defaulted on a mortgage of $192.5 million.
Maui developer Everett Dowling and Morgan Stanley had purchased the hotel and the 1,800-acre Makena Resort two years ago for $575 million from the financially troubled Seibu Group of Japan. Dowling did not immediately return a call from PBN seeking comment.
The lenders were “unable to meet the funding terms and conditions” the hotel operator required to keep the 310-room hotel and golf course open, Prince Resorts Hawaii President Donn Takahashi said in a prepared statement.
The hotel operator, Maui Prince Hotel LLC, has been in discussions with the lenders to fund the hotel’s payroll and accounts payable, which previously were the responsibility of the owners, he said.
“Maui Prince Hotel LLC cannot continue to operate the hotel without adequate assurance that funds will be made available to pay for payroll and operating expenses for the hotel and golf course,” Takahashi said. “As of our deadline, Friday, Aug. 28, we did not receive funding from the owner or the lenders to pay for past-due account payables, and as of our deadline today, Aug. 31, we had not received a favorable indication from the owner or the lenders that they are willing to guarantee the required funding going forward.”
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Wells Fargo is taking immediate steps to keep the hotel open, the lender’s attorney said.
“Tomorrow, we will ask the 2nd Circuit Court on Maui to appoint a receiver to take over operation of the resort,” attorney Barry Sullivan said in a statement. “If approved, the receiver and its team will transition to a new management company to be approved to operate the Maui Prince Hotel and Makena Resort. We look forward to a smooth transfer with Prince Hotels.”
Prince Resorts Hawaii told employees that they would received up to 60 days’ severance under state law. The state Department of Labor and Industrial Relations said it was working with Maui Prince management and with the International Longshore and Warehouse Union on assisting the displaced workers.
Many of the employees have been with the hotel for more than five years, and some have been there since it first opened in 1986, Takahashi said.
“This is a heartbreaking scenario,” he said. “The Maui Prince Hotel is a well-run operation with a great heritage, excellent potential, and wonderful employees that has fallen prey to the economic downturn.”
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