Posted on: Friday, January 21, 2005
Aloha Tower complex may be sold for $25M
By Andrew Gomes
Advertiser Staff Writer
The owner of Aloha Tower Marketplace has proposed to sell the retail complex at Honolulu Harbor to its mortgage holder, AHI Aloha LP, for $25 million in a deal that would bring the operation out of a three-year-old bankruptcy and pay unsecured creditors about half what they're owed.
The proposal, filed recently in U.S. Bankruptcy Court, also would pay off delinquent rent and maintenance fees owed to the state totaling $200,000.
State officials have not agreed to the proposal, but have said they are willing to negotiate a few objectionable details in the plan.
The state Aloha Tower Development Corp. plans to discuss the proposed settlement at a meeting scheduled for Jan. 27, in advance of a Jan. 28 bankruptcy court hearing on the sale plan.
Marketplace owner Aloha Tower LP said in its filing that no competing proposal to bring the retail complex out of bankruptcy is conceivable because AHI Aloha, the mortgage holder, has an $83 million claim, much of which would need to be paid ahead of about 60 unsecured creditors.
Unsecured creditors are collectively owed $380,000, according to Aloha Tower LP. Under the sale proposal, unsecured creditors would receive $200,000, or 52.5 percent of their claims.
The largest unsecured creditors are transportation firm Enoa Corp., owed $132,345, Akal Security, owed $122,023 and Hawaii Care & Cleaning, owed $18,899.
A committee of unsecured creditors supports the proposed sale, according to Chuck Choi, an attorney representing the owner in the bankruptcy case.
Because AHI Aloha has an $83 million claim, the company is using that as a credit to acquire the marketplace and isn't actually paying $25 million. AHI Aloha is contributing $700,000 in cash to pay unsecured creditors, the state, taxes and fees. Some of the $700,000 will go to Aloha Tower LP.
AHI Aloha is a partnership formed by Trinity Investment Trust LLC and Apollo Real Estate Advisors LP to purchase the marketplace mortgage but not the operations in 1997.
Trinity, led by local attorney Jon Miho, also is the majority partner in Aloha Tower LP.
Aloha Tower LP bought the marketplace leasehold property and operations in 1998 after the developer of the retail center filed for bankruptcy. The center opened in 1994.
Aloha Tower LP filed for Chapter 11 bankruptcy protection in January 2002 after a dispute over rent the company pays the state to lease the land under the marketplace.
The company blamed the state for marketplace losses, saying state officials rejected several company proposals to cure a parking shortage that has discouraged major tenants from opening stores, and led to reduced rents.
Aloha Tower LP also claimed that the state refused to make good-faith efforts to direct cruise ships to dock at Aloha Tower piers, and converted a ferry terminal to a use that doesn't generate significant customers for the center.
Aloha Tower LP sought more than $10 million in damages against the state in two lawsuits, one of which is on appeal. AHI Aloha as part of the proposed sale would acquire the seller's interest in the lawsuits.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
