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The Honolulu Advertiser
Posted on: Friday, December 20, 2002

Hawaiian Palisade purchase announced

By Andrew Gomes
Advertiser Staff Writer

A New York-based owner of a Mainland remodeling magazine said yesterday it plans to buy a Hawai'i home-building factory and nine partially completed houses for $1 million in a deal expected to close Jan. 15.

The firm, a publicly traded penny stock that has been merged at least three times previously, changed its name earlier this month from JSDC Inc. to Housing Solutions Hawaii Inc.

Housing Solutions said in a statement yesterday it had signed a letter of intent for the purchase, but did not name the company it seeks to buy. The target appears to be Hawaiian Palisade Homes, which creditors forced into bankruptcy in June after regulatory, labor and financing difficulties left the business unable to pay its bills or deliver homes to about 120 customers.

Housing Solutions also described its purchase as the only wood-frame home manufacturing plant in Hawai'i, consistent with Hawaiian Palisade.

A Housing Solutions official did not return calls yesterday, and a public relations agent representing the company said she could not answer questions.

Wayne Miyao, a senior vice president with City Bank, Hawaiian Palisade's largest secured creditor, said a potential buyer was negotiating to acquire Hawaiian Palisade assets, though he could not provide more information because of confidentiality agreements.

City Bank, which loaned Hawaiian Palisade $1.5 million and has a mortgage on the company's Kapolei factory, gained control of the facility in October and is free to negotiate its sale.

Mary Lou Woo, a trustee appointed by U.S. Bankruptcy Court in Honolulu to oversee Hawaiian Palisade's assets, could not be reached yesterday. Hawaiian Palisade's bankruptcy attorney also could not be reached.

It was unclear how a sale to Housing Solutions would affect nearly $5 million in debts owed to Hawaiian Palisade creditors, such as materials suppliers and would-be home buyers, including 18 who lost deposits of $30,000 to $110,000.

It also is unclear whether the low-cost factory-built home industry can be developed successfully here. Mortgage lenders have been wary of making loans for homes that have no proven resale value. Hawaiian Palisade's demise, which is being investigated by the FBI and a grand jury, has hurt the industry.

The purchase attempt by Housing Solutions is the second public announcement of intent to buy the defunct builder. An earlier deal fell through with a California roofing contractor that proposed paying $1.5 million for the company.

Housing Solutions has a history as a shell company, owning the remodeling magazine, a gold mining venture in Latin America that was delisted from the stock market, and a full-service advertising agency that was liquidated in bankruptcy.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.