Mideast Crisis Stalls Sale of U.S. Resort
The Iraqi invasion of Kuwait last month has put on hold efforts by the Resolution Trust Corp. to sell the Phoenician Resort in Scottsdale to a branch of the Kuwait government.
For months the RTC, the federal agency established to oversee the sale of failed savings and loan associations, had been negotiating with the Kuwait Investment Office in London on the sale of the $260-million Phoenician resort.
“That’s all on hold until the Middle East situation clears up,” said Kevin Shields, RTC spokesman in Denver.
The Kuwaiti office has the right of first refusal to purchase the Phoenician because it owns 45% of it and the Crescent, another hotel in Phoenix.
The RTC obtained the remaining 55% interest in the hotels in 1989 when federal regulators seized the failing Lincoln Savings & Loan Assn., which operated the hotels as subsidiaries.
Lincoln was a unit of American Continental Corp. of Phoenix of which financier Charles H. Keating Jr. was chairman. He resigned Aug. 24.
Selling the hotels already had been delayed because of the litigation surrounding Keating, as well as an $18.5-million lawsuit filed by McCarthy Western Constructors, prime contractor for the Phoenician. McCarthy says it is owed that much for work it did at the hotel but was not paid.
That lawsuit was close to being settled, but Mark Nadeau, a Phoenix attorney representing the hotels for the RTC, said the Persian Gulf crisis complicates the situation because some Kuwaiti money would be needed to pay for the settlement.
After Iraq seized Kuwait, several governments, including those of the United States, England and France, froze Kuwaiti investments and assets in their countries to protect them from the Iraqis.
The Kuwaiti office is one of several Kuwaiti institutions set up to invest the massive oil profits Kuwait had earned since 1973, when the first Arab oil embargo sent prices soaring.
The country now is believed to have about $100 billion in foreign assets and investments around the world, including the Phoenix-area hotels.
