Maui Prince Hotel closing, 380 lose jobs

The Associated Press

HONOLULU — The operators of the 310-room Maui Prince Hotel — which is being foreclosed upon — said the resort and neighboring golf courses will close in two weeks.

Prince Resorts Hawaii President Donn Takahashi said Monday 380 employees will lose their jobs when the resort is shut down on Sept. 16. Most employees have worked at the resort for more than five years, and many joined the hotel when it opened in 1986, he said.

"This is a heartbreaking scenario," Takahashi said in a statement. "The Maui Prince Hotel is a well-run operation with a great heritage, excellent potential, and wonderful employees that has fallen prey to the economic downturn."

The announcement comes one week after a consortium of lenders led by Wells Fargo Bank filed a foreclosure complaint against Makena Hotel LLC, which owns the Maui Prince and thetwo golf courses.

Barry Sullivan, an attorney for Wells Fargo Bank, said the bank on Tuesday planned to ask the Second Circuit Court on Maui to appoint a receiver who would arrange new management for the resort.

"We look forward to a smooth transfer with Prince Hotels," Sullivan said in a statement.

The foreclosure complaint filed last week accused the partnership of Maui-based developer Dowling Co. Inc. and Morgan Stanley Real Estate of defaulting on a $192.5 million loan taken out to buy the resort in 2007.

The partnership bought the resort from the Seibu Group of Japan for $575 million, the largest amount ever paid for a Maui hotel and housing development. The company had plans to build up to 1,100 luxury homes, condos and apartments in the Makena region of West Maui. The 15-year project was expected to cost $800 million.

The partnership's total debt for buying the property from Seibu amounted to $411 million.

Takahashi said the Maui Prince must close because Makena Resort's creditors were unable to guarantee the hotel the funding it needed to continue paying employees and operate the hotel.

The state's Department of Labor and Industrial Relations said it's dispatching officials to help affected employees sign up for unemployment and medical benefits. The state will also be offering the newly jobless career planning and skills training.

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September 01, 2009 12:41 AM EDT

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