Resort Plan for Dana Point Said Still On Track
A U.S. executive with Qintex Australia Ltd. said Friday that its plans to build a luxurious resort in Dana Point are still on track despite the bankruptcy of a subsidiary.
The subsidiary, Qintex Entertainment, filed for protection from creditors this week after missing a $5.9-million payment to MCA Inc., part of a film distribution agreement.
The bankruptcy is one more sign of troubles for Qintex Australia Ltd., the parent company, which owns 43% of Qintex Entertainment’s stock.
Just last week Qintex Australia Ltd. saw its $1.5-billion purchase of the MGM/UA film studios fall through when Qintex couldn’t scrape together what was essentially a $50-million down payment.
“The companies are completely separate entities,” said the executive, who asked not to be identified. “As of today there’s no indication there’ll be any impact at all on the resort.”
But local officials worried Friday that Qintex may back out of the resort project.
“We’re anxiously waiting to hear something definite on this,” said Dana Point Mayor Eileen Krause. The resort hotel could bring a big increase in the small, newly incorporated city’s tax revenue.
At least one local company isn’t worried, however. Stein-Brief Group said its deal to sell Qintex’s 232 acres in Dana Point for the resort has already closed. Sources said most of the $132-million price had already been paid in cash to Stein-Brief and its partner, Hawaiian hotel developer Hemmeter Corp.
Not closed, sources said, is a deal to sell another 115 acres in Dana Point owned by Chandler-Sherman Corp. to Qintex for $115 million. Chandler-Sherman said it does not talk to the media and declined comment on the deal.
But an Australian stock analyst, Bryan Madden of Prudential-Bache in Melbourne, said Qintex had made only a deposit on the Chandler-Sherman property and was deferring payment on most of the $115 million until 1991. Instead Qintex pays to renew options on the land every few months as Chandler-Sherman tries to get building permits for the land.
Some experts think the project would not work without both pieces of land.
Qintex announced its acquisitions of the Dana Point properties in July, the same time the company was in the midst of its negotiations to purchase MGM/UA.
There is speculation in Australia--as there is in the United States--that Qintex and its brash chairman, Christopher C. Skase, have tried to swallow too much too fast in its U.S. acquisition program and that it has run into financial problems, Madden said.
Qintex operates two large resorts in Australia and one in Hawaii, and owns an Australian television network. While the resort business is run by a separate company, the Australian resorts have been hit hard recently by an airline pilots’ strike that has kept guests away.
Madden estimates the resorts could be losing as much as several hundred thousand dollars a day.
Qintex America says it isn’t all that bad yet because Australia’s tourist season is only now getting under way.
Qintex won’t have to rely on the airlines for the Dana Point resort, which would be its first in the United States. Its guests will come mostly from Southern California.
Qintex paid Hemmeter and Stein-Brief $100 million more for the property than they had paid less than two years before. Local real estate people disagree on whether Qintex overpaid.
Qintex, for instance, will be able to charge more for any houses it builds on the property because the resort and golf course are so near. On the other hand, it will be much more difficult for the hotel to turn a profit because so much was spent on the land.
Qintex says it wants to build a smaller, plusher resort than Stein-Brief and Hemmeter had planned. But it may run into opposition from Dana Point officials who oppose using the space a smaller hotel would save to build houses.
At the Chandler-Sherman property on the Dana Point headlands Qintex is likely to build mostly expensive housing and possibly another hotel, although the company has been vague in explaining its intentions because, it says, it doesn’t yet have a definite plan for the properties. Qintex does say it intends to spend $1 billion developing both sites.
Meanwhile Dana Point officials aren’t the only ones worried by Friday’s bankruptcy announcement.
In Laguna Niguel, officials worry about a promise made by Stein-Brief and Hemmeter to spend $2.7 million improving a park in Laguna Niguel. (The hotel property was part of Laguna Niguel until Dana Point incorporated.) Qintex took over the commitment when it bought the land.
Ben Benson, general manager of the Laguna Niguel Community Services District, said he met with a Qintex official Friday who assured him the company would honor the commitment.
“He told me that the program (for the park improvement) is backed by Qintex Australia and that what happened to Qintex Entertainment in no way affects that operation,” Benson said.
Nevertheless, the park district is insisting on a bond to insure the work is done. Benson said Qintex agreed to provide one.
Times staff writers Bill Billiter and Jonathan Weber contributed to this story.
