Bike park seeks investors
Backers of a multimillion-dollar Port Hills mountainbike project have targeted a group of 50 investors to stump up $100,000 or more for the adventure park.
Project organisers have issued an information memorandum (IM) to the potential investors of a $25 million Christchurch Adventure Park that should open around October 2016 provided enough capital is raised.
The minimum $100,000 investment in the development of 315 hectares of forested Port Hills land into a park should pay off within four years of the park opening, backer Jay Fry says.
‘‘They should expect to get their investment back after four years of operations.’’
The IM for the park, located between Dyers Pass, Worsleys and the Summit roads, says the first quarterly dividend was set to be paid in the fourth quarter of 2017.
IMs had been sent to 50 people in the hope of raising $4m.
‘‘We’ve got a number of people emailing us, so we’ve got quite a large list now . . . I feel pretty confident that some funding will come from there and it will get us over the line,’’ Fry said.
The park had around $10m of indicative interest from New Zealand and international investors from Singapore and Boston.
‘‘I’ve talked to a number of what I call my hotlist and they’re still there. We’ve got around $10m coming in from them.’’
A further $4m was being sought with the recently issued IM helping bring other investors to the surface, Fry said.
A confirmed $2m cash injection from the Government depends on the project meeting milestones.
Bank debt from China Construction Bank (New Zealand) of about $9m had been secured, Fry said.
The borrowings are subject to a $5m ‘‘shortfall’’ guarantee granted by the Christchurch City Council in case of any default on the bank loan.
Qualified investors, willing to stump the minimum $100,000, have until the end of July to commit to the project.
Fry expects the park to be given the go-ahead by the Overseas Investment Office with construction due to start in November.
The ownership structure for the park will be a limited partnership, known as Leisure Investments NZ LP.
Fry estimates that about 119,000 day tickets, including season tickets and package tickets, sold annually would enable the project to be profitable.
If those sorts of numbers visit the park over a five year period, Leisure Investments is predicting a 20 per cent return on capital employed enabling the dividends to be paid.
Gravity Adventure (linked to Fiona Sutton) and Imisol Ltd (linked to Fry) will hold 20 and 10 per cent stakes in the company given their initial development work.
Sutton owns Select Contracts, linked to the park and other adventure businesses around the world, including the Wadi kayak-surfadventure park in the United Arab Emirates. She is a director of Port Hills Leisure alongside Fry.
Select Contracts will earn a management fee of $432,000 annually for park operations following construction.
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