Allied investors in the rough

The Jack Nicklaus-designed course has been beset by problems since it opened. Photo / Sarah Ivey

Shareholders in rural services company Allied Farmers stand to lose out over an estimated $24 million mortgage on the Jack Nicklaus-designed Kinloch Golf Club near Lake Taupo.

The Inland Revenue Department is attempting to liquidate the golf course's current owner, a mysterious entity called Coromandel Investment Trustees.

If the taxman succeeds it will be the second time a company associated with the luxury development has gone belly up.

Publicly listed Allied inherited the Kinloch mortgage when it bought the loan book of Hanover and United Finance late last year.

First mortgage-holder Hanover sold the course and surrounding land to Coromandel Investment Trustees for $26 million in a mortgagee sale in June 2008. A rating valuation the previous year put the 260ha property's value at just $5.9 million.

Just after the sale the company which owned the development, Kinloch Golf Resort Limited - whose shareholders included Nicklaus himself - went into liquidation owing around $49 million.

However Hanover continued to loan money over the course, but this time as second-ranking mortgagee. It gave Coromandel Investment Trustees a $40 million loan of which $24 million is understood to have been drawn down. That loan is now Allied's responsibility.

Instant Funding holds a first mortgage of $20 million over the property.

If Coromandel Investment Trustees goes into liquidation Allied will be third in line for its money behind the IRD and Instant Funding.

Managing director Rob Alloway acknowledged the Kinloch loan was a "difficult" asset.

"While it's beautifully designed, [it] has a chequered history. We've been communicating with the borrower and we're aware of the actions and proceedings and we're monitoring it reasonably closely."

Dennis Parsons, liquidator of the original owner Kinloch Golf Resort, said Coromandel's situation had little relevance for Kinloch creditors.

"If there's no possible money in the golf course for us then we have no interest in it."

Security holders had exercised their rights over the remaining assets of Kinloch Golf Resort with nothing left over for those still out of pocket.

That includes Hanover, owed at least $4 million, and failed finance company Bridgecorp which is owed $19 million.

Coromandel is the corporate trustee for the Coromandel Farm Trust. No-one associated with it will identify those behind the trust, other than to say they are New Zealanders.

It has been widely speculated that the 2008 Hanover sale was an "inside job".

Kinloch Golf Club

* Opened in 2007, the only Jack Nicklaus signature course in the country.

* Nicklaus oversaw construction and played the completed course.

* A round costs $175 in summer and $160 in winter.