Bidders line up to buy Promontory
April 14, 2009
Offers are being accepted for a luxury golf and equestrian community with vacation homes on 7,200 acres just minutes from three world class, Park City ski resorts.
The bankrupt Promontory development is on the auction block and investors had until Monday to bid on the real estate situated east of U.S. 40 and south of Interstate 80.
The new owner could acquire two golf courses, several club houses and more than 1,000 potential building lots, according to Rich Sonntag, who manages the gated development.
"Really, more than half of the overall project is what is being acquired by the new owner," Sonntag said. "It’s a big, long-term, future project."
Following Wednesday’s auction, a judge in U.S. Bankruptcy Court is expected to approve the winning bid in a hearing in Salt Lake City April 17 at 9 a.m.
"In theory, at the end of the week, the judge will decide what happens What’s going on this week is a bidding process," Sonntag said in a telephone interview Tuesday. "Whatever the result is on Friday, it’s supposed to preserve the club as an operating entity, preserve the membership agreements, preserve the rights of the owners to what they paid for, and at the same time, keep the club running with essentially the same personnel."
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Sonntag expects to manage Promontory for the new owner but declined to comment about entities approved to bid on the project.
The auction is part of efforts by Promontory to emerge from involuntary Chapter 11 bankruptcy creditors filed against Pivotal/Promontory Capital LLC last spring. The auction was ordered as part of a reorganization plan.
Instead of providing roughly $70 million in exit financing to keep Promontory operational, Credit Suisse, the agent for first lien holders at the project, chose to sell the development at auction, according to recent court filings by Credit Suisse.
"It’s hard to say if there is a minimum bid, because it all comes down to the court finding that there will be enough cash available for the entity to keep on operating through the downturn," Sonntag said. "[The judge] very clearly said that $70 million, it looks like that would be enough."
Last May, real and personal property at the project appraised for about $550 million, Sonntag said, adding that an appraisal by Credit Suisse this year valued Promontory at about $230 million.
"Those are the only indicators that are out there in the record for value at this point," Sonntag said.
Creditors forced Promontory into bankruptcy last year when the sagging real-estate market caused the developer to default on its debt. The project could ultimately encompass about 1,924 houses. More than 700 lots have been sold at Promontory and roughly 300 homes have been built or are under construction.
The new owner must honor the master plan approved by Summit County, according to Sonntag.