By TOM CALLIS
By TOM CALLIS
Tribune-Herald staff writer
A corporation recently formed in Hawaii has made the top bid for the Naniloa Volcanoes Resort.
But they’re not quite the new kids on the block.
Ramco Properties LLC of Honolulu is offering $3.7 million for the troubled hotel on Hilo’s Banyan Drive. The bid narrowly beats an offer of $3.5 million submitted by America Asia Travel Center Inc. last month.
Both bids are significantly under the $6.1 million the current owner, Hawaii Outdoor Tours Inc., which is going through bankruptcy, paid for the hotel in 2006.
According to documents filed in U.S. Bankruptcy Court, Ramco Properties is owned by the RAM Corporation, which is the majority owner of the Hilo Hawaiian Hotel, also located on Banyan Drive.
Ramco Properties was formed Oct. 15, according to the state Department of Commerce and Consumer Affairs.
The sale would essentially put the company in control of East Hawaii’s two largest hotels.
The Hilo Hawaiian, which recently undertook a $5.8 million renovation project, has 286 rooms.
The Naniloa has 383 rooms (some remain closed due to incomplete renovations) and a nine-hole golf course.
Both are located on Hilo Bay.
Mayor Billy Kenoi, an outspoken critic of Naniloa’s management, said he sees the offer as a positive sign.
“We want a qualified bidder, a qualified operator, someone who has the resources,” he said.
“Someone who is willing and capable of … making the necessary investments and the repairs.”
Kenoi said the bidder may be the right one for the job.
“The owners of Hilo Hawaiian have shown a commitment to our community,” he said.
In addition to the sale price, Ramco Properties is offering $1.5 million to cover defaults on lease payments to the state Department of Land and Natural Resources and state and county taxes. America Asia Travel Center had made the same offer.
Ramco Properties submitted its bid Tuesday, but there is still time for other bids to be submitted.
The company’s offer was considered in a court hearing Wednesday in Honolulu.
At the hearing, Judge Robert Faris expressed concern over whether that amount would be enough to cover the defaults and whether unsecured creditors will be covered, said David Farmer, Naniloa’s bankruptcy trustee.
“He’s not happy with the deal,” Farmer said. “He’d like it to be tweaked a bit.”
The offer will be considered again in court Tuesday, he said. Additional bids, which must be at least 10 percent higher, would have to be submitted by then to be considered.
Under the current offer, First Citizens Bank & Trust Co., the mortgage holder, would be out $7 million. The bank is not opposing the sale.
The hotel defaulted on a $10 million loan with the bank and entered foreclosure in August 2012. It went into bankruptcy last November.
Owner Ken Fujiyama had made a last-ditch effort to maintain control of the hotel, but his plan was rejected at the Wednesday hearing. Fujiyama’s plan would have involved a $14 million deal to cover the hotel’s debt.
The money would have came from sale of real estate from HPAC, LLC, an affiliated company of Ken Direction Corporation, of which Fujiyama is CEO.
“As of right now, we’re out of the picture,” Fujiyama said.
“So we don’t know what we’re going to do.”
Fujiyama declined to talk about details of the plan, including what real estate would have been sold.
“At this point it’s just moot,” he said. “The judge didn’t want to hear it.”
“He said it’s too late,” Fujiyama said.
The county has recently cited the hotel for about a couple dozen building violations.
Kenoi had said that shutting the hotel over the violations was an option due to health and safety issues.
On Wednesday, he dismissed the possibility of that happening while a sale is in the works.
“We will work with any bidder to properly and legally restore, rebuild and maintain the property but we will not compromise public health and safety,” he said.
Email Tom Callis at tcallis@hawaiitribune-herald.com.