Allied Farmers' risk at $1b site

About 50 workers have stopped working on stage 1 of Kawarau Falls Station because of a dispute between contractors. Photo / Otago Daily Times

Allied Farmers fears for its exposure to Queenstown's $1 billion Kawarau Falls Station development have been realised with stages two and three placed in receivership.

Nigel McKenna's Peninsula Road, which owns the land earmarked for the development, was put in receivership on Tuesday.

His spokesman, David Peach, said McKenna was not allowed to comment since the receivers had moved in and taken control.

"The receivership is a bitter disappointment but given the absence of development funding in the country any more it was probably an inevitability," said Peach.

He said the future of the development was uncertain and "up to the receivers".

Stages 2 and 3 were to include an Intercontinental hotel with a 1000-capacity conference centre.

Allied Farmers, which bought Hanover Finance earlier this week, wrote down Hanover's finance loans assets by $99m.

Timothy Downes and Richard Grant, of Grant Thornton New Zealand, were appointed receivers by Fortress Credit.

Downes said Fortress Credit Corp had provided Peninsula Road with the mortgage to buy the land earmarked for stage 2 and 3.

Fortress, as first security holder, called in the receivers after Peninsula Road defaulted on the loan.

He said it was too early to comment on the future of the development.

Two McKenna companies, Melview (Kawarau Falls Station) Investments and Melview (Kawarau Falls Station) Development, which were set up to develop stage 1, went into receivership in May.

Receivers Korda Mentha allowed building work to continue even though the two companies owed $180 million to Bank of Scotland International.

The receiver's second report said the bank continued to fund the project with a further $62.8 million after the receivership was announced.

More than $64 million was spent on construction, $1.6 million on receivers' fees and $795,645 on legal fees between May and December last year.

Stage 1, including two hotels and apartment buildings, is scheduled to be completed next month.

Kawarau Falls was planned as a 6.4ha resort village of four hotels, 1100 units and 13 major buildings, boulevards, restaurants and parks. It was due to be completed next year.

Meanwhile, about 50 workers are still not working on stage 1 following a dispute between contractors.

CBD construction director Grant Blackmore said his company stopped work on Monday. "We are currently in dispute with Hawkins [Construction], so until that matter is resolved, we are not working on site."

He said the company declined to comment further under "legal advice".

Hawkins Construction chief executive Chris Hunter said the dispute was a commercial matter which needed to be worked through by the parties.

Last night Allied said it had had appointed a receiver to a company associated with the failed Five Mile Holdings development near Queenstown in a bid to chase a loan accruing $23,000 of unpaid interest each day.

The company said after the market closed that it has placed Property Ventures Ltd into the hands of receiver, Grant Thornton in an attempt to recover a $41.5 million.

- OTAGO DAILY TIMES