Riverhead Resorts wants more time … again

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10/24/2010 2:37 PM |

Riverhead Resorts is requesting more time from the Riverhead Town Board, which is planning to vote on a resolution to terminate its contract with the company Tuesday.

Riverhead Resorts owes the town nearly $6 million in payments for three extensions it has already received. Under the terms of their contract to purchase 755 acres of land at the Calverton Enterprise Park from the town for $155 million, the deal was to have closed by May 15, but Riverhead Resorts could buy up to five three-month extensions for $1.98 million each.

Mitch Pally, an attorney for Riverhead Resorts, said he met with three Town Board members individually Friday and spoke with another by phone in regard to the request for more time.

Mr. Pally said Resorts now has a signed contract from a financing entity, but just needs more time to work out details like the timing of the closing.

The signed contract is with a London-based company called Solutio Financing, which will provide an initial funding package of $25 million, Mr. Pally said. From this amount, the $5.9 million owed the town will come, he said.

A second funding package of $222 million will come at a later date, from another financing entity that Mr. Pally said he cannot disclose, because the details of that agreement are still being worked out.

Under the terms of the contract with the town, the full payment will not be made until after the project receives approvals, and that can’t happen until the property is subdivided, a process which might not be completed until next year.

But the $5.9 million in extension payments would go to the town immediately, and would be non-refundable, regardless of whether the sale take place, under the terms of the contract.

The Town Board on Sept. 7 also had planned to vote on a resolution to terminate Riverhead Resorts contract, but backed off.

At that time, Mr. Pally had presented the town with a letter from a funding entity called Global Capital Markets Advisors LLC, indicating that that the GCMA was “preparing to lend Riverhead Resorts the sum of $25 million for an initial round of project financing.”

Mr. Pally said Friday that the deal with GCMA fell through, but that they had an alternate funding entity in Solutio Financing.

While the contract calls for the land to be sold for $155 million, both sides have since said they agreed informally to make the deal for $108  million.

Mr. Pally acknowledged that Riverhead Resorts also will need to undergo a new public hearing to determine if they are a “qualified and eligible” sponsor under Urban Renewal law, because they now plan to eliminate Bayrock Group from the ownership of Riverhead Resorts.

In the original hearing, which is designed to determine if the company has the experience and financial wherewithal to complete the project they propose, papers submitted to the town indicated that Riverhead Resorts was half-owned by Baldragon Homes, a Scottish company owned by John Niven, and half-owned by Bayrock Group, a New York company that has worked with Donald Trump on a number of high-profile projects.

Mr. Pally said that while Bayrock Group initially intended to be part of the project, they soon “lost their ability to finance it,” and have not been active in the financing or management of Riverhead Resorts for about two years.

The owner of Bayrock Group, Tevfik Arif, 57, reportedly was detained in Turkey this week on suspicion of setting up a high-priced prostitution ring on a yacht in Turkey.

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