Receivers don't know if Kawarau Falls development can proceed

Receivers appointed to two companies developing the first stage of Queenstown's $1 billion Kawarau Falls Station six-hotel development say it is too early to know whether the project can be completed.

Auckland developer Nigel McKenna, managing director of Melview Group, has been building the luxury tourism estate on Lake Wakatipu.

But yesterday two companies associated with the development, Melview (Kawarau Falls Station) Investments Ltd and Melview (Kawarau Falls Station) Development Ltd, were put into receivership by Australian lender BOS International.

Five hundred people have been working on the waterfront site just outside Queenstown.

Steve McLean of Rilean Construction, which has 50 workers and subcontractors on the site, today told Radio New Zealand he was trying to remain optimistic.

"Obviously it will be devastating for town if this project does not get going," he said.

"We're trying to remain optimistic and certainly the receiver hasn't given us any indication that we should be anything than optimistic and positive."

Asked if the project could be completed, receiver Brendon Gibson of KordaMentha said, "it's too early for us to make any statements around that. Obviously we want to look at it very hard, discuss it with the funders and look at what the options are".

"There's a lot of pieces to the jigsaw and we've obviously got to try to fit all of those together to see what is the ultimate outcome."

There were five blocks in stage one, all of which were subject of presales. That probably helped the receivers who would be talking to the principals who had arranged those presales, Mr Gibson told RNZ.

Yesterday Mr Gibson, who was appointed with Grant Graham as receivers, said their immediate task would be to understand the construction costs and associated revenue streams for the project.

"The current intention is that construction work will continue to be funded in the interim while all the options are assessed."

That assessment was expected to take a couple of weeks.

The New Zealand Herald quoted Mr Gibson saying stage one of the project started in 2007 and could be worth about $250 million. A second mortgage over the project was held by Hanover Finance.

"Stage two and three are owned by companies owned by Mr McKenna, so obviously we will be trying to understand what's going to happen with those stages. But they are subject to separate arrangements ant totally separate financiers."

Mr Gibson told The Dominion Post the main contractor had secured funding with BOS International to continue.

"BOS believed we should assess the position to see if there is an option to finish it."

Mr McKenna last night issued a statement saying none of the other companies in his Melview Group were affected by the receivership.

He emphasised his hotels division, which manages The Westin and The Quadrant in Auckland and the Holiday Inn in Wellington were unaffected.

The first stage was on budget, fully consented and paid up to date, as of yesterday, after 30 months of construction, he said.

Yesterday's announcement highlighted nervousness in Queenstown, where an ambitious $2b, 33ha development of a new township, Five Mile, next to the airport, was put into receivership by Hanover last year and put up for sale with only a few excavations on the site.