Creditors opt to sell Mackay hotel, club, restaurant

THREE Mackay businesses directed by high profile developer John Cowley have gone into administration

Mackay Grande Suites has gone into voluntary administration. Picture: Isabella Photography

UPDATE Wednesday 4.20pm:

ADMINISTRATORS Ernst and Young will launch a campaign to sell Mackay Grande Suites, AM Bar and Grill and Cactus Jacks.

The companies, directed by John Cowley, went into administration last month, along with Dirty Martinis, Movidas and Rabbit Hole.

The first creditors meeting was on Tuesday, where it was decided the three nightclubs would close as it "was not in the creditors interests to continue operating".

Mackay Grande Suites, AM Bar and Grill and Cactus Jacks would continue trading as a campaign was launched to sell them and associated assets.

The three assets were on the market earlier this year, and had been expected to sell for $30m.

UPDATE, 7.55PM:

RABBIT Hole, Dirty Martinis and Movidas have all been closed until further notice.

"The Rabbit Hole is closed until further notice," their Facebook page read at 7pm.

"Dirty Martinis is closed until further notice," Dirty Martini's page had announced an hour earlier.

"Movidas is closed until further notice," that page read at 7.30pm.

So far, at 7.50pm, there is no sign of the AM Bar being closed, with trivia still happening tonight.

Already people are firing up on social media, upset the popular clubs are closed. But even more people were crossing their fingers that the AM Bar remained open for the time being.

Carolyn Everett: Please not the AM Bar...Great Bar to go once the Hotels closes. Great live Music.

Vama Fatiaki: If Am bar goes we are doomed macktown will be a ghost town

Mandy Bosma: Don't care about the other places but please don't let AM Bar close!

Tyler Roberts: Am Bar and cactus Jacks are running as per usual!!!

INITIAL:

THREE Mackay businesses directed by high profile developer John Cowley have gone into administration, prompting him to warn banks are on track to "kill regional Australia".

On March 23 Mr Cowley, who has been building in the town more than 35 years, appointed voluntary administrators Ernst and Young to his Sinadel, Gundwane and Dambre businesses, which trade as Mackay Grande Suites, AM Bar and Grill, Movidas, Rabbit Hole, Dirty Martinis and Cactus Jacks.

The first meetings of creditors take place at Mackay Grande Suites, between 12-2pm Tuesday.

It is not yet clear how much debt the companies are in.

While Mr Cowley said the downturn in the Mackay economy, rising rates, insurance and power bills had all made running the business more difficult the past few years, the real trouble started when Mackay Grande Suites was valued at $30m last year. When he built it 10 years ago, it was worth $48m.

That wiping of $18m in value meant the loan he'd taken out on the business was in default. He said, in the past three months the bank has lifted his interest rates from 7.9% to 11%.

"This massive increase in interest took all the income of my profitable hotel. No other bank would refinance my hotel as it's in Mackay," he said.

In February the property developer listed Mackay Grande Suites, AM Bar and Cactus Jacks for sale, and with that planned to spend the next six months taking a break "watching mermaids on Hamilton Island".

But those plans were interrupted as he learned that although two buyers were interested, he claimed banks would lend them only 40% of the purchase, meaning they would have to tip in almost $20m upfront. He said it was normal for banks to loan 70% of a hotel's value.

This is backed up by the 'Home Loan Experts' website, which stated banks would generally lend 70% of going concern valuation for a leasehold hotel, if it had gaming and accommodation.

However, Mackay's 4740 postcode area has frequently been put forward as at high risk of mortgage default in the past year, which may have brought on the tougher measures.

"No matter how big you are that's a crazy amount of cash to find and fund up front and it is commercial insanity," he said.

"I have been in building, developing and hotels for over 35 years in Mackay and have never seen or experienced anything like this downturn where interest rates are the lowest in Australian history and the banks are not lending in regional Queensland and they are answerable to no one. Banks are killing regional Australia by restrictive and discriminatory lending practices and if politicians don't do something about this inequality and discrimination it will be a disaster."

Mr Cowley said he feels like he's lost 11 years of his life, as well as the $13m cash he's put into the hotel.

Federal MP George Christensen said Mr Cowley was "absolutely right on all fronts".

The businesses are continuing to trade.

Originally published as Creditors opt to sell Mackay hotel, club, restaurant