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Kalahari won't tap tax-free financing
Kalahari Resorts turns down financing package that included $30 million in tax-exempt bonds


Date published: 8/25/2010

BY BILL FREEHLING

Kalahari Resorts is no longer pursuing a financing package for its Fredericksburg complex that would have included $30 million in tax-exempt bonds, but the company says it remains committed to the project.

Kalahari informed city officials this week that it will not be using the $30 million in Recovery Zone Facility bonds from the American Recovery and Reinvestment Act. The Virginia governor's office allocated those bonds to Fredericksburg for the project and can now direct the funds to another economic development project in the state.

The $30 million in RZF bonds would have covered only about one-tenth of the price for Kalahari's hotel, water park and convention center in Celebrate Virginia South. The rest of the money would have come through the sale of higher-priced taxable bonds and money Wisconsin-based Kalahari put up itself.

Kalahari owner Todd Nelson wrote in a letter to Fredericksburg City Manager Beverly Cameron this week that in order to sell the bonds, his family would have had to put up more than double the equity it was willing to commit. Kalahari, which had been working with Merrill Lynch on the financing package, is willing to commit $30 million.

"At this time it is my opinion that the contribution of that much additional equity would not be a reasonable or prudent business or family decision," Nelson wrote to Cameron.

Nelson wrote in the let- ter that the company is still aggressively pursuing financing for the project.

"In other words," he wrote, "do not interpret this letter to mean that we do not have every intention of continuing our efforts to secure the financing necessary to build a magnificent Kalahari resort in Fredericksburg."


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To read the letter Kalahari Resorts owner Todd Nelson sent Fredericksburg City Manager Beverly Cameron this week, go online to the Business Browser blog on fredericksburg.com.

Here is the statement Kalahari Resorts owner Todd Nelson sent The Free Lance-Star yesterday:

Today Kalahari Resorts advised the City of Fredericksburg, its Economic Development Authority and Governor McDonnell's office that we will not utilize the allocation of $30 million of Recovery Zone Facilities Bonds by the October 15 deadline to partially finance the development of a $260 million Kalahari Resort in Fredericksburg, Va.

Due to the current lending climate, Kalahari Resorts has been unable to secure the balance of the financing necessary to build the resort. We have invested significantly in the development of this project and will continue to pursue financing options. We are preceding the deadline with this announcement to make certain that the governor's office has sufficient time to re-allocate the bonds to other projects.

Kalahari Resorts' properties in Sandusky, Ohio, and Wisconsin Dells, Wis., have experienced significant 2010 year-over-year financial results amid difficult economic conditions. We remain committed to opening Kalahari Resort in Fredericksburg, Va., which would provide 1,230 jobs and contribute $174 million to the Fredericksburg regional economy.