Maui Land & Pineapple Co. says its auditors have found the company's liabilities exceed its assets by more than $60 million, raising doubts about its ability to survive.
The property developer, one of Maui's biggest landowners, said in a report filed this week with the Securities and Exchange Commission that it's counting on being able to sell some of its real estate to raise cash and meet its financial obligations. But the weak real estate market may thwart those plans.
The uncertainty about real estate sales "raises substantial doubt about the company's ability to continue as a going concern," the report said.
Maui Land provided the report on Deloitte & Touche's audit to the SEC Monday, the same day it submitted a registration statement announcing plans to sell more stock to current shareholders.
The auditors found the company's future was jeopardized by its financial losses, weak cash reserves, an inability to meet certain financial obligations and an overall balance sheet showing the company's liabilities exceeded its assets.
Maui Land has had to write off all the money it initially invested in the Ritz-Carlton Club and Residences at Kapalua Bay, a luxury condo and hotel development that's suffered from higher-than-expected default rates and lower revenue forecasts for future sales.
The report to the SEC outlines other steps the company has taken to find stronger financial footing, including laying off hundreds of employees to cut costs, shutting down its century-old pineapple growing business, selling a flagship golf course, and rescheduling debt payments.
"We're working really hard to put the company on a firm foundation for the future, and I think if you look at the actions we've taken in the last few months we're in the process of turning the company around and making it a going concern," said John Durkin, Maui Land's chief financial officer.
Maui Land recorded a $92.9 million net loss for the first nine months of 2009 after posting $71.6 million loss last year.
Maui Land shares fell 26 cents, or 4.5 percent, to $5.55 Wednesday.
Information from: The Maui News, http://www.mauinews.com