Hawaii agency approves billionaire's bid for Lanai
HONOLULU (HawaiiNewsNow) - The deal for billionaire Larry Ellison to purchase the island of Lanai from fellow billionaire David Murdoch has been in the works for at least two months, according to documents released by the state Public Utilities Commission Monday.
Lanai Island Holdings, Ellison's company and Castle and Cooke Resorts, Murdoch's company, filed an amended sale agreement for the island of Lanai with the state of Hawaii under confidential seal on May 2, according to an interim PUC decision paving the way for the sale of the island's three utilities. Since the sale agreement was "amended" in early May, the potential deal had been underway two months before it became public last week.
The purchase price has not been disclosed but current owner Castle and Cooke has said Ellison, the CEO of Oracle software company, is paying hundreds of millions of dollars for the island.
In a 57-page interim decision, the PUC Monday gave its preliminary approval to the sale and transfer of Lanai's three utilities: its water and sewer services along with a public transportation company.
"The indirect transfer of the three public utilities will not adversely impact their respective operations, management, or customers," the PUC said in its decision.
A member of the grassroots organization that's dealt with water issues on Lanai for the past 20 years is concerned about the speed with which the deal is being approved.
"Our main concern is what does he (Ellison) know about the water system? I mean, I don't know what he knows about the water system. I don't know what his people know about the water system," said Ron McOmber, a member of Lanaians For Sensible Growth. A former contractor, tugboat captain and scuba charter boat operator, McOmber, 73, has lived on Lanai for 42 years.
Lanai's resorts and other operations are said to have been losing between $20 to $30 million a year.
In its decision released Monday, the PUC said the closing date of the Lanai sale is closely tied to Castle and Cooke's willingness to fund shortfalls up to only a certain date.
The PUC said Ellison's company must take over as owner of Lanai by June 27 or there will be no commitment to provide funding in the ordinary course of business.
Any delay in completing the sale adds to the risk that the deal could fall through and a replacement buyer could take years to find, the PUC said, potentially endangering the economic future of Lanai.
Lanaians for Sensible Growth has filed a motion to intervene in the PUC case, saying it is helping the ensure the rights of the community are not compromised by the expedited transfer request.
"The unprecedented speed with which Castle and Cooke Resorts is seeking to transfer Lanai utilities to an otherwise unknown entity, coupled with a complete lack of transparency at the community level caused LSG to take this step," said Butch Gima, a spokesman for the group, in a news release Monday.
The filing said the sale of the utilities will be debt free.
As a condition of the deal to transfer the utilities, the state Consumer Advocate is requiring Ellison's company to spend $10 million on Lanai water and sewer upgrades, without charging ratepayers for the improvements.
"What are these upgrades going to be," asked McOmber, the longtime Lanai resident. "Nothing is being detailed up front."
The deal will make Ellison owner of 98 percent of the island's 141 square miles. It's not clear what he plans to do with the island where about 3,200 people live.
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