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The Honolulu Advertiser
Posted on: Friday, June 8, 2001

Sale of Hawaiian Waikiki hotel OK'd

By Andrew Gomes
Advertiser Staff Writer

A state judge yesterday approved the sale of the Hawaiian Waikiki Beach Hotel to the New York company that holds the mortgage on the property, and appointed a mediator to help settle employee severance and vacation pay claims totaling more than $2 million.

Jim Muligan of Waikiki walks past the Hawaiian Waikiki Beach Hotel. A New York company is scheduled to take over the 715-room hotel on July 1, and plans to invest $30 million in renovations. The hotelâs workers will have to reapply for their positions.

Advertiser library photo • Aug. 19, 2000

Leucadia National Corp., through subsidiary Hawaii Ventures LLC, is scheduled to take over the 715-room hotel July 1. It plans to invest $30 million in renovations. Aston Hotels & Resorts will manage the hotel.

Leucadia, a financial services holding company, acquired the mortgage on the Hawaiian Waikiki last June from Mitsui Trust & Banking Co. Ltd., and in August filed a foreclosure suit against hotel owner Otaka Inc., which had defaulted on an $85 million loan.

Leucadia bid $80 million for the hotel (using credit toward the mortgage it holds on the property) at a foreclosure auction last month. Yesterday, no other bidders took the opportunity to top Leucadia's bid.

In addition to the hotel, the sale includes several million dollars in cash held by a receiver. If necessary, that money will be used to pay claims made against the hotel by an insurance company and the union representing about 220 of the hotel's 274 employees.

The International Longshore and Warehouse Union Local 142 has asked the court to order that employees be paid an estimated $2.3 million in accrued vacation pay and severance.

Judge Karen Blondin took the motion under advisement Tuesday, and yesterday appointed Honolulu attorney Jerry Hiatt as a mediator to help settle the claims.

Receiver Patricia Kim Park, who has been operating the hotel, said enough money exists in the receiver's estate to satisfy all claims if necessary.

Still, future work remains uncertain for hotel employees, who were notified in April that their jobs would be terminated June 30 because of the foreclosure. Unionized employees have been working under an Otaka contract that has been on extension since expiring Jan. 31.

Aston plans to invite all Hawaiian Waikiki workers to reapply for their positions, but that doesn't sit well with many workers who say they shouldn't have to reapply for jobs they've held for years.

Councilman Duke Bai-num, who represents the Waikiki area, introduced a resolution last month urging Leucadia to pay Hawaiian Waikiki employees for their earned vacation and severance, and to rehire them at current wage and benefit levels. The resolution reported out of a policy committee on Wednesday and will go before the full council June 20.

Andrew Gomes can be reached by phone at 525-8065, or by e-mail at agomes@honoluluadvertiser.com.