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Developer wins mill auction
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| THE DURANGO-GEORGIA Paper Mill, which has been dormant since the company declared bankruptcy in November 2002, was auctioned to the “highest and best” bidder Wednesday in Savannah. The closing date for the sale, worth $42.086 million, is April 30 and creditors will see their money soon after. The site will be residential, probably with shops and a hotel and eventually a marina may be built there, as well. |
By Renee M. Liss
The long, arduous process of auctioning the Durango-Georgia properties came to an end late Wednesday night as the bankruptcy trustees announced Osprey Cove developer LandMar as the highest and best bidder out of three qualified, interested parties.
Based in Jacksonville, Fla., LandMar has been a part of the St. Marys community for several years, developing the Osprey Cove subdivision off St. Marys Road and the Winding River subdivision along the Crooked River. The final bid by LandMar/North River LLC was $36.45 million with $18.5 million in cash at closing and the remainder to be paid over a three-year period at 8 percent interest. They also included a 50 percent share of any savings under $5 million in the demolition of the paper mill.
That means, if it costs $4 million to demolish the mill, LandMar will keep $500,000 and the trustees will get $500,000.
LandMar's bid did not include the four timber tracts or the paper mill’s equipment and was valued initially at $40.05 million.
That valuation changed, however, when Adam Reich, co-president of Michael Fox International, bid $2.8 million on the equipment on behalf of Michael Fox and Perry Videx LLC. A company by the name of Van Zant bid more than $2 million on the Williams, Lee and Buie timber tracts and Mark Drury bid $650,000 for the Gross tract. No further information was available on Drury or Van Zant.
The next closest bid to LandMar was Cherokee St. Marys, LLC/Cherokee Investment Partners and East West Partners. The developer offered $16.5 million cash, with $5.5 million at closing and an $11 million promisory note to be paid at 8 percent interest over two years. They also offered 23 percent of net profits to the trustee over 10 years, initially valued by the trustee at $41.04 million. However, Cherokee spokesman David Geiger, a bankruptcy attorney, said he believed the actual value was close to $60 million.
Cherokee also offered a 50 percent cost-saving share under $5 million for the demolition of the mill and did not include the equipment in its bid.
After the final valuations, Cherokee’s bid was less than LandMar’s by less than $100,000, and Anthony Schnelling, a member of New York City-based Bridge Associates, LLC, which was the firm acting as trustee, said the bids were essentially the same in value.
What put LandMar ahead was that its offer was cash and was not based on possible future earnings, Schnelling said.
Charlie Atkins argued for Cherokee that the developer has more experience than LandMar in remediating former industrial sites (brownfields), however, that argument did not sway the trustee.
Brownfields are real property, the expansion, redevelopment or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant or contaminant, states the Environmental Protection Agency’s Web site, www.epa.gov/brownfields/.
Cherokee also was unable to name a closing date and offered a Sept. 30, 2006 date for either party to opt out if closing did not occur by then. LandMar is set to close April 30, 2006, should the bankruptcy court uphold the trustees’ decision Dec. 12 in Brunswick.
Asked if the company was willing to serve as a back-up bid if the LandMar deal fell through, Geiger said no.
“The critical factor from the point of view of the creditors is certainty,” Schnelling said. “North River provides greater certainty.”
A third bidder, Chip Drury of Atlanta, who is purchasing the Laurel Island Links Golf Course from the City of Kingsland, dropped out of the process early, his last offer valued at more than $38 milllion. He bid under the name Gilman Mill LLC.
The Peacefull Valley/North River Partnership also bid on the Gross tract, and Boatright bid unsuccessfully on the railroad, offering $50,000 and assumption of all debts and liabilities.
Absent from the bidding process was stalking horse bidder St. Marys Redevelopment Group, owned by RealtiCorp out of Greenville, S.C. The company proposed building 1,100 homes on the property, plus a hotel and town center. Its bid was $15 million plus 18.5 percent of all future gross sales. That bid set the floor for the Dec. 6 auction.
The total netted at the auction was $42.086 million.
Based in Jacksonville, Fla., LandMar has been a part of the St. Marys community for several years, developing the Osprey Cove subdivision off St. Marys Road and the Winding River subdivision along the Crooked River. The final bid by LandMar/North River LLC was $36.45 million with $18.5 million in cash at closing and the remainder to be paid over a three-year period at 8 percent interest. They also included a 50 percent share of any savings under $5 million in the demolition of the paper mill.
That means, if it costs $4 million to demolish the mill, LandMar will keep $500,000 and the trustees will get $500,000.
LandMar's bid did not include the four timber tracts or the paper mill’s equipment and was valued initially at $40.05 million.
That valuation changed, however, when Adam Reich, co-president of Michael Fox International, bid $2.8 million on the equipment on behalf of Michael Fox and Perry Videx LLC. A company by the name of Van Zant bid more than $2 million on the Williams, Lee and Buie timber tracts and Mark Drury bid $650,000 for the Gross tract. No further information was available on Drury or Van Zant.
The next closest bid to LandMar was Cherokee St. Marys, LLC/Cherokee Investment Partners and East West Partners. The developer offered $16.5 million cash, with $5.5 million at closing and an $11 million promisory note to be paid at 8 percent interest over two years. They also offered 23 percent of net profits to the trustee over 10 years, initially valued by the trustee at $41.04 million. However, Cherokee spokesman David Geiger, a bankruptcy attorney, said he believed the actual value was close to $60 million.
Cherokee also offered a 50 percent cost-saving share under $5 million for the demolition of the mill and did not include the equipment in its bid.
After the final valuations, Cherokee’s bid was less than LandMar’s by less than $100,000, and Anthony Schnelling, a member of New York City-based Bridge Associates, LLC, which was the firm acting as trustee, said the bids were essentially the same in value.
What put LandMar ahead was that its offer was cash and was not based on possible future earnings, Schnelling said.
Charlie Atkins argued for Cherokee that the developer has more experience than LandMar in remediating former industrial sites (brownfields), however, that argument did not sway the trustee.
Brownfields are real property, the expansion, redevelopment or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant or contaminant, states the Environmental Protection Agency’s Web site, www.epa.gov/brownfields/.
Cherokee also was unable to name a closing date and offered a Sept. 30, 2006 date for either party to opt out if closing did not occur by then. LandMar is set to close April 30, 2006, should the bankruptcy court uphold the trustees’ decision Dec. 12 in Brunswick.
Asked if the company was willing to serve as a back-up bid if the LandMar deal fell through, Geiger said no.
“The critical factor from the point of view of the creditors is certainty,” Schnelling said. “North River provides greater certainty.”
A third bidder, Chip Drury of Atlanta, who is purchasing the Laurel Island Links Golf Course from the City of Kingsland, dropped out of the process early, his last offer valued at more than $38 milllion. He bid under the name Gilman Mill LLC.
The Peacefull Valley/North River Partnership also bid on the Gross tract, and Boatright bid unsuccessfully on the railroad, offering $50,000 and assumption of all debts and liabilities.
Absent from the bidding process was stalking horse bidder St. Marys Redevelopment Group, owned by RealtiCorp out of Greenville, S.C. The company proposed building 1,100 homes on the property, plus a hotel and town center. Its bid was $15 million plus 18.5 percent of all future gross sales. That bid set the floor for the Dec. 6 auction.
The total netted at the auction was $42.086 million.
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| Developers line up for mill, papermakers left out? |
