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Prince Resorts Hawaii to Terminate Management of the Maui Prince Hotel;
Lender Wells Fargo Seeking a Receiver

By Robbie Dingeman, The Honolulu AdvertiserMcClatchy-Tribune Regional News

September 1, 2009 --The company that manages the Maui Prince Hotel and neighboring golf course said it will terminate its contract with the hotel's owner on Sept. 16 in the wake of foreclosure proceedings against the resort, a move that could affect the jobs of the resort's 380 employees.

The employees received layoff notices yesterday in accordance with state law.

But a consortium of lenders led by Wells Fargo Bank said they are taking "immediate steps" to find a new management company and "keep the hotel operating for guests and workers" beyond the Sept. 16 date.

Wells Fargo attorney Barry Sullivan said the lender will ask the 2nd Circuit Court on Maui today to appoint a receiver to take over operations of the resort.

Wells Fargo did not say how many of the hotel's 380 unionized workers might be rehired by the new management company. Any change in terms of the workers' labor agreement would have to be negotiated with the International Longshore and Warehouse Union, which represents the workers.

The lenders filed a foreclosure complaint last week against the owner of the resort, Makena Hotel LLC. The complaint alleged that Makena Hotel LLC, which owns the Maui Prince Hotel LLC, Makena Golf LLC and other affiliated companies owning land in the Makena Resort, defaulted on its loan secured by the resort.

The hotel and golf course are managed by Prince Resorts Hawaii.

Yesterday, the resort notified all 380 full-time, part-time and casual workers that they will receive up to 60 days' wages and benefits in compliance with Hawai'i's Dislocated Workers Act and the Federal Worker Adjustment and Retraining Notification Act.

Prince Resorts president Donn Takahashi said the lenders were unable to meet the funding terms and conditions required for Prince Resorts to continue as the management company.

The upscale hotel operator "has no recourse but to give notice to terminate our management contract and cease operations," he said. "This is a heartbreaking scenario.

"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," Takahashi added.

Takahashi said some of the employees have worked there since the hotel opened in 1986, while a majority of employees have worked at the resort more than five years.

"Maui Prince Hotel LLC cannot continue to operate the hotel without adequate assurance that funds will be made available to pay for payroll and operating expenses for the hotel and golf course," Takahashi said.

He said the company did not receive funding from the owner or the lenders to pay for past due account payables by a Friday deadline, and as of yesterday had not received a favorable indication from the owner or the lenders that they are willing to guarantee the required funding going forward.

"We understand the lenders are trying to get a receiver appointed by the court as soon as possible so that the receiver can step in and continue the operations of the hotel and golf course with another operator," Takahashi said.

Sullivan, the Wells Fargo attorney, said, "if approved, the receiver and its team will transition to a new management company to be approved to operate the Maui Prince Hotel and Makena Resort. We look forward to a smooth transfer with Prince Hotels."

Maui Prince Hotel LLC and the the International Longshore and Warehouse Union will be working together to assist any workers displaced by the management change, he said.

The state Department of Labor and Industrial Relations also announced that it activated its Rapid Response Team to assist Maui Prince Hotel employees who may be affected.

The Rapid Response Team plans to provide information on an array of available services for the affected workers, including skills assessment, individual counseling, career planning, employment development, occupational skills training, on-the-job training, entrepreneurial training, job-readiness training and adult education.

Participants will also be given information about welfare assistance and medical benefits, out-of-area job search assistance, relocation assistance and other support services, which may include childcare, transportation assistance and job related certifications, uniforms and equipment.

Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com.

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Copyright (c) 2009, The Honolulu Advertiser

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