Financial problems drive sale Caravanserai ResortPOSTED: 08/12/13 12:34 PM
Company unable to repay at least $16 million to banks
St. Maarten / By Hilbert Haar – The Caravanserai Beach resort in Maho is in serious financial trouble and no longer able to pay its debts. Last week an ad appeared in local newspapers announcing “requests for offers to purchase.” On Friday, two candidates had expressed interest in the resort, but so far no final decisions have been taken yet.
Haresh Manek’s Kildare Properties reportedly has at least a $16 million debt that the company is unable to repay. The banks initially wanted to auction the resort, but a decision was taken to look for potential buyers first.
For sale is the right to long lease on eight different parcels of land, totaling 64,235 square meters of land. Located on this land are, apart from the resort itself, Bliss, Yolo, the Chinese supermarket and restaurant Dragon Gate, the Thai Smile restaurant, Le C-Lounge restaurant and the Sunset Beach Bar.
The Dunes Casino, located at the Caravanserai property belongs to Atlantis world Group boss Francesco Corallo and it is not included in the sale.
Observers note however that the casino license is linked to the hotel rooms at Caravanserai and that a split of the project could spell trouble for Corallo, who is currently detained in Italy where he reported himself last week for interrogation by a prosecutor in Rome.
St. Maarten’s casino policy allows for hotels with at least 200 rooms to have a casino. The dunes-permit has long been a point of discussion, because the caravanserai Resort mainly caters to timeshare owners and it is questionable whether the condos these people are using qualify as hotel rooms.
The resort advertises on its web site with a penthouse, one and two-bedroom condos, studios, deluxe hotel room and standard hotel rooms. At the resort’s entrance, a notice offers studios for sale starting at $185,000, 1-bedroom condos starting at $345,000 and 2-bedroom condos starting at $545,000.
According to our information Kildare Properties has sold parts of its land already but it pretended incorrectly to buyers that these properties were not mortgaged.
In August of 2010, Caravanserai signed a contract for the expansion of the resort with the local construction company Liccom. The first part of the resort has 130 rooms and the expansion would add 86 rooms, enough to lift it over the 200-room threshold for a casino-permit.
The $26-million project – financed by Scotia Bank – was scheduled to be completed by December of 2011, but this never happened. More than one-and-a-half year past this target date, the buildings stand forlorn and unfinished next to the part of the resort that is open. The construction site has been closed off and looks deserted.
When manager Haresh Manek signed the contract with Liccom on August 5, 2010 – an event for which the local media were invited and whereby Liccom said it has jobs for 100 workers on this project– he grabbed the opportunity to “kindly ask the government to issue a casino license” while the work is in progress.
That license has indeed been issued and the Dunes Casino is open for business, but the additional rooms have so far not been completed. With the invitation to potential buyers to show their interest in this project, it seems that the completion of the Liccom-project will have to wait until there is a new owner.