SAIPAN GOLF COURSE SOLD AT $50 MILLION LOSS

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By Agnes Donato

SAIPAN, CNMI (Saipan Tribune, Jan. 6) – The battered Commonwealth of the Northern Mariana Islands economy claimed another victim yesterday as the Saipan Laulau Development Inc. bared plans to sell the company to United Micronesian Development Inc. at a loss of about $50 million.

Saipan Laulau Vice President Hiroyuki Saito said the company has invested a total of $61 million to the Laolao Bay Golf Resort in Kagman. However, Saipan Laulau is now negotiating to sell the company to UMDA for an amount between $8.5 million and $10 million.

Saito explained that the company has been operating the golf resort at a substantial loss in since the Asian economic crisis hit the tourism industry in 1997.

He said that the company's annual gross revenue now reaches only about half the $11 million SLDI used to earn before 1997.

"It's been difficult for us to continue investing in this business because the shareholders would not allow this. At the same time, we wanted to leave a legacy to the Commonwealth. When we were looking for a buyer, we recognized that the UMDA is a local company and the government is a major shareholder. We believe a transaction with them would be for the benefit of the CNMI. They could turn Laolao into the CNMI's first locally-run golf course," Saito said.

In a step that paved the way for the purchase, the Marianas Public Lands Authority approved yesterday the assignment of Saipan Laulau's lease to UMDA.

The MPLA board of directors also directed management to conduct a review to ensure compliance with the master lease and the corresponding amendments, and a background check on UMDA.

Further, the board required that UMDA assume all of Saipan Laulau's lease-related obligations and liabilities within 90 days from yesterday.

The original lease for the property was signed between the then Marianas Public Land Corporation and S.C. Properties (Saipan) Inc. on Oct. 13, 1989. The lease was assigned to Saipan Laulau on Aug. 5, 1993.

According to the lease agreement, the leased should not sublease, assign, or transfer all or any part of its interest in the lease agreement without the written approval of the MPLA board.

Saito expressed hope that with the purchase, UMDA will put in additional investment, renovate the golf facility, and have an easier job marketing the facility to Japanese or Korean tourists.

"Right now, everybody is worried that Saipan Laulau is having financial problems. It's difficult to market your destination if people are constantly worried that you would go bankrupt. With UMDA taking over the company, the CNMI has a bigger chance of attracting more tourists," Saito said.

January 6, 2005

Saipan Tribune http://www.saipantribune.com

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