Massive Kawarau Falls development put into receivership (Update 1)

Kawarau Falls, the hotel and luxury home development near Queenstown, has been put into receivership, receivers Korda Mentha have confirmed. (Updated to include Nigel McKenna's comments) The development by Nigel McKenna's Melview Developments was worth hundreds of millions of dollars and had been backed by Bank of Scotland and Hanover Finance, which is itself in moratorium. The Sunday Star Times reported talk that the New Zealand Superannuation Fund may underwrite the project, surprising and disappointing many in the investment community. Korda Mentha receiver Brendon Gibson told a teleconference that construction on stage 1 of the project would continue for the next two weeks while the situation was asssessed. Bank of Scotland Internation had called in the receivers after development defaulted on payments for the first mortgage, he said. "Bank of Scotland exercised their right to appoint receivers," Gibson said.

Stage 1 of the development was half completed and was due to have a value in excess of NZ$250 million on completion in November of this year, he said. The hotel and apartment development was designed to 178 rooms and apartments and the hotel part was to be managed by Westin. There were 400/500 workers currently on the construction site, which had 5 main blocks. Gibson confirmed that Hanover Finance had the second mortgage on the project. Later, Nigel McKenna issued a statement saying only two companies linked to the Kawarau Falls development had been put into receivership. "No other companies in the Melview Group were involved and in particular Melview's Hotels division, which manages The Westin and The Quadrant in Auckland and the Holiday Inn in Wellington were unaffected," McKenna said. McKenna described Kawarau Falls Station as "an infrastructure project of national importance to our tourism industry which will create the first convention facility for Queenstown capable of seating 1000 people under one roof."