MIYAZAKI – U.S. investment fund Ripplewood Holdings LLC said Friday it will take over the operations of the failed Seagaia resort complex in Miyazaki Prefecture.
Ripplewood, which made headlines last year by becoming the first foreign firm to buy a Japanese bank, will now become the first foreign company to take over a failed semipublic entity.
The deal comes only two days after the New York-based private equity firm said it would take a 42 percent stake in Nippon Columbia Co., the troubled Japanese audio manufacturer.
Ripplewood is expected to hand operations of the Seagaia resort to U.S. hotel group Marriott International Inc., sources familiar with the deal said.
Phoenix Resort Ltd., the operator of Seagaia, and its two affiliates filed for court protection from creditors in February, with debts of 326.1 billion yen, in what is the largest failure of a semipublic entity in Japan.
Ripplewood said it has been appointed by Yasumasa Sato, Phoenix Resort’s court-appointed trustee, as sponsor for the rehabilitation of the assets and businesses of Seagaia Resort and certain associated properties in Miyazaki Prefecture.
The Miyazaki District Court has approved the appointment and decided to go ahead with the rehabilitation process, Ripplewood said.
The U.S. firm and Sato are expected to cooperate on hammering out a court-mandated rehabilitation plan by July 11, the sources said.
Ripplewood has put up some 30 billion yen for the deal, of which 18 billion yen will be used to purchase Seagaia’s operations and the remainder to improve the resort’s facilities, the sources said.
“We are enthusiastic about the potential of Seagaia. This is a unique property with a great location and excellent assets, and we believe it can become one of the premier destination resorts in the Asia-Pacific region,” Tim Collins, Ripplewood’s chief executive officer, said in a statement.
“Nevertheless, we do not underestimate the enormous amount of hard work and commitment that will be required on the part of Seagaia employees, local government and many others to achieve this turnaround,” he added.
The Miyazaki prefectural government, which has a 25 percent stake in Phoenix Resort, had been looking for a sponsor to operate Seagaia without breaking it up.
It felt that, compared to other would-be investors, Ripplewood would be best able to provide stable management.
Phoenix Resort was set up in December 1988 by the Miyazaki prefectural and Miyazaki city governments as well as 11 private companies. The resort boasts a 43-story building, golf courses, a zoo, tennis courts, and the world’s largest indoor pool.
But it failed to draw visitors, forcing Phoenix Resort to file for court protection from creditors Feb. 19.
Ripplewood has been actively investing in Japanese companies in recent years. It is best known for buying the failed Long-Term Credit Bank of Japan — currently Shinsei Bank — in March 2000.
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