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Western

Weak economy could forestall foreclosure 

Bobby Ginn’s Laurelmor project is struggling financially, but he has one thing in his favor. The real-estate market is so bad that lenders aren’t eager to foreclose — even on the high-dollar acreage of western North Carolina’s largest residential development (cover story, August).

That might buy Ginn wiggle room as he scrambles to restructure $675 million of debt held by Zurich, Switzerland-based Credit Suisse on Laurelmor and three other properties under development by Celebration, Fla.-based Ginn Resorts Co. President Robert Gidel says a real-estate slump forced the company to seek new terms and more time. “It became clear it would not be possible to meet home-site sales objectives necessary to make payments.”

Ginn’s problems — he also faces several lawsuits by disgruntled buyers — are reminiscent of those he suffered with luxury developments on Hilton Head Island, S.C., in the 1980s. There, more than $110 million in debt, he declared bankruptcy. He resurfaced in Florida in the 1990s and has since built — or started — more than a dozen projects. That rebound is in jeopardy now, says Don Tobin, a Florida real-estate analyst.

Laurelmor sprawls across 6,600 acres in Watauga and Wilkes counties. Since sales began in late 2006, the company has sold roughly 200 of 2,500 homes and lots, at prices of up to $1.2 million, but that hasn’t been enough. On June 30, Credit Suisse gave Ginn 30 more days to make payments, though talks continued into August.

Is this a Hilton Head redux? Selling off undeveloped land in a chilly real-estate market could force Ginn to dump assets at less than cost. In one of his Florida projects, lots that would have fetched more than $500,000 three years ago were recently reduced to less than $200,000. In another project, lots originally sold for $300,000 were unloaded by the lender for less than $100,000 after owners defaulted.

Tobin says weak prices might persuade Credit Suisse to give Ginn extra time to work through his pinch. Ryan Juliason, a Ginn spokesman, says the company is seeking more than short-term fixes. “This is more than reducing prices on a few lots trying to get some cash flow. This is about a long-term restructuring.”


FOREST CITYContinentalAFA, which makes trigger sprayers, planned to close its plant here in August. Nearly 220 will lose their jobs. The St. Peters, Mo.-based company blamed the poor economy.

LENOIRThomasville Furniture plans to add about 100 workers by the end of the year, increasing employment to more than 800. The furniture maker says the rising cost of doing business in Asia prompted expansion in North Carolina.

GRANITE FALLS — Two former executives of Bank of Granite agreed to pay the federal government $225,000 to settle accusations that they made false statements in bank records. Former CEO Charles Snipes and former vice president Gary Prewitt did not admit wrongdoing. The bank was not involved in the settlement.

VALDESEKellex will reopen a Hickory Hill furniture factory that closed in July. The North Ridgeville, Ohio-based furniture supplier will invest $1.7 million and create about 50 jobs in three years. About 165 worked there before the shutdown

LENOIRGalexe Pharma Sciences plans to renovate a building and open its headquarters by the end of the year. The subsidiary of Reston, Va.-based PharmSci will spend $8.6 million and employ about 55.

CLYDE Haywood Regional Medical Center might affiliate with another hospital or sell itself. It lost about $10 million in the first half of 2008, mostly because Medicaid and Medicare temporarily stopped reimbursements over concerns about how medications were dispensed.

ARDEN Hasco plans to cut 40 of 50 jobs during the next several months. The German machine-parts maker is phasing out U.S. manufacturing to focus on sales and distribution.

SEVEN DEVILS Hawksnest Ski & Snow Tubing will only open for tubing this winter. Owner Lenny Cottom is frustrated with town officials over a planned expansion. He and his partners have owned the resort since 1992.