Arrow administrators reveal debts of more than $21m

Tuesday, 26 March 2019

Construction is under way again at Hawke's Bay Airport several weeks after the collapse of Arrow brought the project to a halt.

The administrators of Arrow International have have revealed debts of about $21 million, and advertised the sale of a development property to raise cash.

The administrators Andrew Bethell and Colin Gower at accountancy firm BDO have been managing the handover of development sites to new companies or arranging for projects to be completed.

Some of Arrow's building projects are under way again such as a Dixon St high rise in Wellington under a new company.

They have yet to pay March Construction an arbitrated award of $4.2 million, which was the catalyst for Arrow owners Ron Anderson and Bob Foster to call in the voluntary administrators.

Bethell and Gower told creditors recently that Arrow owed $15m to unsecured creditors and $5.6m to contingent creditors.

Arrow International owners and directors Bob Foster and Ron Anderson have handed over administration of their company to BDO.

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They expected the figure to rise as creditors put in claims.

The company's bank and bond issuer have agreed not to place the company into receivership at this stage

A moratorium remains in place preventing enforcement of debt demands by creditors, and allowing for possible restructuring while the administration is in place.

The next important milestone wil be a watershed meeting of creditors at the end of May where creditors will decide if the company is to be liquidated or handed back to directors, or a deed of arrangement is set up.

Bethell and Gower have also obtained a court order allowing them to act as liquidators either by creditors or shareholders.

They held a meeting where they told creditors of the aims of the voluntary administration to to try and save as much as possible of the business, which employed 250 people.

If this was not possible the administrators hoped to provide a better return for creditors and shareholders than would result from an immediate liquidation.

They had secured 10 of 15 sites being developed by Arrow.

One of them was the remaining 15 hectares at Portlink Industrial Park in Christchurch being developed by Arrow subsidiary Arcus.

The sale of remaining titles at Portlink could potentially raise several million dollars, but may take some time.

Matt Currie, chief executive of development company Arcus, said the 30ha Portlink had been a cornerstone asset of Arrow's business.

'Portlink has provided Arrow with a solid pipeline of development and design and build work over the past 10 years. Over this time, major tenants including Kathmandu, Online Distribution, Elastomer Products and NZ Express Transport have seen the value of locating their businesses there,' Currie said.

Colliers agent Sam Staite has been appointed to sell the remaining sections in the Portlink development located on the tunnel road to Lyttelton Port.

'Given the administrators' instructions, all offers for the Portlink sites will be considered,' Staite said.

Arrow bought the former rural block in 2006 through, Arcus Property, with the first titles issued in 2012.

Approximately 70 per cent of the developed titles have been sold.

The sale by deadline private treaty, closing May 1, comprises eight developed titles ranging in size from 697square metres to 13,210sq m, approximately 2.8ha of semi-developed land plus approximately 9.7ha of raw undeveloped land. The smaller sites are $260 a square metre.

Staite said there was significant interest in the Portlink catchment, and it had come to market at a time of buoyancy for the industrial market.

'Over the past two years, we've sold more than $100m of property in the area including most Castle Rock Business Park recently for $53 million to an Augusta fund.

'There's a perception that there's a lot of available industrial land across Canterbury but it is extremely tightly held.

'Christchurch's industrial market, like the rest of New Zealand, is strong, driven by low interest rates and the high levels of capital being invested.

'Our vacancy levels are dropping again and this is fuelling demand for land and new builds,'

He said that having some titles available at Portlink immediately for development or sale offered the new owner an ability to de-risk the development quickly.