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The Honolulu Advertiser
Posted on: Sunday, July 21, 2002

Amfac coming back

By Andrew Gomes
Advertiser Staff Writer

Amfac Hawaii LLC last week took another step closer to emerging from bankruptcy as creditors voted on a proposal to eliminate nearly all debt and allow the business — once one of the state's largest — to continue operating with its few remaining assets.

• Twin-tower office buildings near Aloha Tower, formerly known as Amfac Center, were sold off for $95 million last year.
• Liberty House was lost in bankruptcy and is now operated as Macy's.
• Lihu'e Plantation's sugar-cane land, about 6,500 acres, is now leased by the state to 13 Kaua'i farmers and ranchers.
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Voting results aren't expected to be made public until Thursday in a Chicago Bankruptcy Court report, but Amfac Hawaii president Gary Nickele said he hopes the plan will be approved by creditors and confirmed by the court at a hearing later this month.

Amfac Hawaii, a subsidiary of Chicago-based Northbrook Corp. that owns three golf courses and about 5,000 acres of land in Hawai'i, filed for Chapter 11 in February.

The company offered creditors ownership of the firm in return for discharging roughly $330 million in claims.

The largest group of creditors, Amfac Hawaii's parent and affiliated companies, is owed about $190 million and is first in line to be repaid. Under the proposal, they would receive stock in the restructured business.

A subordinate group of creditors, about 15,000 investors mostly from the Mainland who hold $142 million in Amfac Hawaii certificates of land appreciation notes, or COLAs, could opt for stock in the restructured company, or cash equivalent to 7 percent of their claims. Under the cash option, investors would receive $35 for each $500 COLA.

Other general unsecured creditors with estimated claims of about $2 million have a choice of cash equivalent to 15 percent of their claims, or stock in a restructured Amfac Hawaii.

If all creditors want stock, Amfac affiliates would own about 85 percent of the company, with unsecured creditors owning roughly 15 percent.

If unsecured creditors want cash, Amfac Hawaii would pay them with money from cash reserves, proceeds from operations or by selling assets.

At the end of March, the company had $5.9 million in cash on hand, and reported a $7.6 million net loss for the first three months of the year. The company also is trying to sell a 40-acre development site at Ka'anapali Beach for $38 million.

If the plan is confirmed, Amfac Hawaii would emerge with about $11 million of debt, and concentrate on developing about 1,000 acres of the 5,100 acres it owns primarily in the Ka'anapali/Honokowai resort area of Maui.

Amfac Hawaii, once known as Amfac Inc. and American Factors, is the descendent of H. Hackfeld & Co., a firm founded in 1849 that became one of the "Big Five" businesses that dominated commerce in Hawai'i for nearly a century.

Chicago-based JMB Realty Corp. bought Amfac, including 55,000 acres of Hawai'i real estate and department store chain Liberty House, for $900 million in 1988.

The company lost Liberty House last year in the retailer's bankruptcy reorganization, and its agricultural operations have lost $120 million since 1989. Amfac Hawaii golf courses also have been in trouble in recent years, while property development and sales have been slow.

To adjust, Amfac Hawaii got out of sugar two years ago, has wound down coffee operations, sold thousands of acres of land, and negotiated with lenders to buy back a $24 million loan on its Waikele Golf Course for $13 million.

But those and other changes didn't do enough to improve Amfac Hawaii's bottom line, as it lost $40 million last year after losing $105 million over the previous three years.

The company's unmanageable debt finally forced it to file for bankruptcy protection in February, listing $150 million in assets and $330 million in debts.

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