THE IRISH owners of the high-profile Sawgrass hotel and golf resort in Florida have filed for Chapter 11 protection with a US court after failing to agree a restructuring deal with Goldman Sachs on a $193 million loan.
The Chapter 11 filing has been lodged by RQB Resort LP and RQB Development LP, US-registered companies that control a hotel, spa, golf villas and other properties at the 65-acre resort.
The investment in Sawgrass is led by Irish financier Niall McFadden.
In their court filing, the two RQB companies state that the economic downturn resulted in revenue declining by 25 per cent last year to $42.6 million.
Its net operating income fell by more than 30 per cent to $7.45 million.
This resulted in its owners being unable to service their debt with Goldman Sachs Commercial Mortgage Capital.
No payments have been made to Goldman Sachs since August 2009.
The RQB companies state that they entered into discussions with Goldman Sachs almost a year ago about restructuring the loan. They told Goldman Sachs that “trends in business bookings” would result in liquidity issues emerging in July or August 2009.
The two sides looked at extending the payout term by three to four years and reducing the interest rate to allow the loan be serviced by the resort’s operating cash flow.
The RQB entities claim that last October Goldman Sachs informed them that it wanted to foreclose on the resort.
The Irish-backed companies sought an extension and engaged Jones Lang LaSalle in New York in December 2009 to secure $40 million to pay to Goldman Sachs as part of a debt restructuring.
This process came to nothing.
The resort comprises a 448-bed hotel operated by Marriott; The Spa at Sawgrass, which has 19 treatment rooms; 83 two-bed golf villas; and the Cabana beach club, which faces onto the Atlantic and has 780 members.
The resort is also an “exclusive partner” to the PGA Tour’s Tournament Players Club at Sawgrass, which has two golf courses.
RQB bought the resort in 2006 for $220.55 million and spent $30 million upgrading the facilities.
In their petition, the RQB entities said they expect the resort industry to recover in 2011 and believe it could emerge from Chapter 11 in time for a “stabilisation of the economy” next year.
Chapter 11 is commonly referred to as reorganisation bankruptcy, and offers a corporation protection from creditors.
