Statements Detail Circumstances Of $18M Loan

July 19, 2015

There is “substantial doubt” about the Corporation of Hamilton’s [CoH] “ability to continue as a going concern” if forced to repay the $18 million debt out of current income, and the debt is presently accruing interest at the rate of $3,452 per day.

This was stated in the CoH’s most recent financial statements, which provided an overview of their financial position, as well as details of the circumstances surrounding the $18 million loan to Par-la-Ville Hotel and Residences Ltd, which the CoH signed on as a guarantor for.

Par-La-Ville-car-park-pano-generic 33838

Background

Last year, US-based Mexico Infrastructure Finance [MIF] extended an $18 million loan to Par-la-Ville Hotel and Residences Ltd [PLV], with the CoH signing on as the guarantor.

PLV is the company that has an agreement to develop a hotel on the Par-La-Ville car park, and the $18 million was a bridging loan which was supposed to be used to secure financing for the hotel development.

The loan was supposed to be be repaid in December 2014, however it was not paid back resulting in MIF initiating legal action against both the CoH and PLV principal Michael MacLean in early 2015.

Following the non-payment of the $18 million loan, KPMG were appointed as Joint Receivers over the Par-La-Ville car park on March 31, 2015.

In practice this means that the CoH still operates the Par-la-Ville car park, but income collected will be turned over to the Joint Receivers to pay down the debt owed by PLV to MIF.

Financial Statements

The financials said, “Mexico Infrastructure Finance LLC [MIF] obtained a summary judgement in the amount of US$18 million against the Corporation on May 27, 2015, under the Guarantee given by the Corporation for the loan to Par-la-Ville Hotel and Residences, Ltd [PHRL].

“MIF is now seeking enforcement of the $18 million judgment debt against the Corporation and PHRL that raises substantial doubt about the Corporation’s ability to continue as a going concern, if forced to repay this debt out of current income.

“The Corporation will therefore need to raise funds and is considering several options including the sale of assets and debt financing or a combination of both.

“Any debt financing would have to take the Municipalities Act 1923 into consideration as the Act specifies that the Corporation’s debt limit cannot exceed twenty million dollars.

“The outcome of these options cannot be predicted at this time. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.”

The financials also state, “MIF and PHRL negotiated a Credit Agreement in which MIF agreed to loan PHRL $18 million as Bridge Financing for the construction of the Project.  In order to advance the agreement the Corporation agreed to guarantee the loan by providing a mortgage over the property.

“The Credit Agreement was signed on July 9, 2014. That same day the Corporation passed a resolution to guarantee the loan and pledge the car park property as collateral.

“Under the terms and conditions of the Escrow Agreement the loan proceeds were to remain in escrow until such time as PHRL had secured a Permanent Loan comprising a loan of $225 million and an equity investment of $100 million or for such substantially similar financing structure from a Permanent Lender.

“The Corporation authorized the release of the funds from the escrow account in October 2014,” the statements added.

“Due to the default on repayment of the loan on December 30, 2014, MIF initiated legal proceedings against the Corporation and PHRL. On March 31, 2015, the Par-La-Ville Car Park was taken over by the appointed Joint Receivers.

“On May 27, 2015 the Supreme Court awarded summary judgement to MIF over claims against PHRL and the Corporation.

“The $18 million judgement against the Corporation accrues interest from the date of judgement at the rate of 7% per annum or $3,452 per day until the obligation is satisfied. MIF is not limited to proceeding against the Par-La-Ville Car Park to obtain satisfaction of its judgement against the Corporation.

“In accordance with the terms of the Credit Agreement, the Borrower, PHRL, was due to pay the Corporation $900,000 upon the closing of the Permanent Loan. In July 2015, the Corporation issued a statutory demand for payment of the monies due within three weeks.

“Non-payment will result in the Corporation petitioning the Supreme Court to wind up the company in accordance with Section 161[e] of the Companies Act.”

The Corporation of Hamilton’s financial statements follow below [PDF here]:

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Comments (12)

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  1. White black boy says:

    Is this another large sum of monies that go unaccounted for under the cloak of unethical but not illegal while the average person foots the bill ?

    • And de Dr. was investigated for Cedar Beams and we haven’t had an investigation since these Dreamers have been in power after all these allegations.
      WTF

  2. Kangoocar says:

    Comments are welcome from the usual plp talking heads on this??? You all should be very proud of yourselves for giving away a very large piece of real estate to FOREIGNERS!!! In my opinion all those responsible for this embarrassment to Bermuda should be made to personally pay the $18 million plus interest themselves in order for us to keep this valuable peice of BDA real estate!!! And for the slow, I will explain who that is?? The plp and their personally placed former COH team!!!!! I am sure the usual xenophobes such as Ian, Betty, Rhonda and coffee will be silent on this matter????

    • Impressive says:

      Are you labelling all PLP supporters as being xenophobic?? That’s a broad paint brush, mind you don’t get paint on the windows while your cutting them.

  3. Exqlg says:

    Ummm we know who got the 18 mil… can’t we go after him…all his gobbling off on the radio and court papers… follow the money…

  4. Kevin says:

    not sure why McLean is not responsible to repay the 18 million

  5. swing voter says:

    so the CoH are bleeding 3500 per day in interest alone? Mac u messed up bie. Go ahead and sue the government but you should have honored that Mexican deal. Credibility now questionable….no different than the bies you allege tried to strong arm you.

  6. You incurred that debt…you are responsible….there is …”no we”.

  7. nomoremoney says:

    Graeme Outerbridge and Donal Smith and the others really knew what they ere doing.

  8. Baygrapes says:

    WHERE IS THE MONEY?

  9. Hope says:

    And still no news on where the $18m went?! I wouldn’t be surprised if someone decided to now use it to buy property from CoH, so that they can repay the same loan…

  10. If C.o.H. feels it has gotten to the point of needing to sell property to exist, then don’t hesitate for the simple reason this fiasco is costing the general public on a whole the debt of $18 million presently while accruing interest at the rate of $3,452 per day.
    So we must stop the bleeding a.s.a.p. then continue on with the Court proceedings…