Amfac recovery proposal approved
By Andrew Gomes
Advertiser Staff Writer
An Illinois bankruptcy judge yesterday approved a plan to reorganize Amfac Hawaii LLC, after creditors overwhelmingly supported the proposal to discharge nearly all company debt in exchange for equity in the firm.
Amfac Hawaii, which through affiliates owns three golf courses and about 5,000 acres of land in the state, will give most creditors shares in the restructured company in return for discharging roughly $330 million in claims.
A subsidiary of Chicago-based Northbrook Corp., Amfac Hawaii filed for Chapter 11 in February, and will emerge from bankruptcy with only about $11 million in debt.
Northbrook and other companies affiliated with Amfac Hawaii that were owed about $190 million and were first in line to be repaid voted unanimously to accept the plan and will receive about 85 percent of new Amfac Hawaii stock.
Only 1,650 of roughly 15,000 investors holding Amfac Hawaii certificates of land appreciation notes, or COLAs, voted on the plan. Of the votes, 1,587, or 97 percent, supported the reorganization.
The COLA holders, with $142 million in claims, have an option to take stock in the restructured company, or $35 in cash for each $500 COLA. It was not clear yesterday how many want stock.
Other general unsecured creditors who voted chose unanimously to accept the plan. These creditors held about $2 million in claims and have a choice of cash equivalent to 15 percent of their claims, or stock in the reorganized Amfac Hawaii.
The company plans to merge a number of subsidiaries 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.
Proceeds from land sales, including a 40-acre piece of property Amfac Hawaii has on the market now for $38 million, is expected to finance the development plans.
Waikele Golf Course continues operating under an Amfac Hawaii affiliate. The company's two other courses, the North and South links at the Ka'anapali Beach resort, are the subject of a foreclosure lawsuit.
At the end of March, the company had $5.9 million in cash, and reported a $7.6 million net loss for the first three months of the year.
Bankruptcy Judge Bruce Black in his confirmation order said that Amfac Hawaii had demonstrated that it will have sufficient capital and liquidity to operate in initial years after reorganization.
Amfac Hawaii, once known as Amfac Inc. and as American Factors, is the descendant 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.
Amfac Hawaii once commanded such assets as vast sugar plantations, a department store chain and more than 50,000 acres of real estate.
Millions of dollars in losses, primarily from agriculture, combined with unmanageable debt tied to the company's sale to Northbrook affiliate JMB Realty Corp. in 1988 for $900 million, forced Amfac Hawaii into bankruptcy with $150 million in assets and $330 million in debts.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
