May 1, 2007

A bid for the Queen Mary: Even the first offer would clear up a lot of problems, and there could be more.

This appeared on the site:

"A bankruptcy trustee steps in temporarily to salvage a business that's either out of money or into a legal mess. In the case of the Queen Mary, it was both. But the job is nearly done.
Some of us thought the court-appointed trustee, Howard Ehrenberg, was overdoing the optimism when he first suggested a positive outcome for the company holding the ship's lease, Queen's Seaport Development Inc (QSDI). Now we wonder if he was overdoing the caution.

The first bid out of the box was $41 million, and it looks like there will be others. For the money, a developer gets the right to spend much more developing the acreage surrounding the forever docked and aging ocean liner.

The bid came from Q&S Holdings of Santa Monica, a company that develops entertainment and retail centers and owns 80 properties. Paul Orfalea, one of the founders, who also started the Kinko chain, offered no details about what the company intends to do with the site other than to say it presents an unrivaled draw for tourism with value unrealized by previous operators.
Well, that's true. One of the operators, the Disney Co., picked up the Queen as part of a bigger acquisition and, other than talking about a grandiose theme park that never happened, quickly abandoned ship. The only operator who put some real energy into it was Joseph Prevratil, the retired head of QSDI who was ever underfinanced and ended up at sixes and sevens with his City Hall landlords over the definition of rent credits.

What might become of the Queen Mary?

Nobody's saying yet, but the ship needs more than refurbishing. It needs a vision as clear as the one that launched her: not as a transportation vehicle but with a suffusion of romance to entice potential passengers.

And the site needs more than a shopping center, which is what O&S has done before, although imaginatively. But the company, even in its brief statement, seems attracted by the challenge.
As for the financial part of the bankruptcy, $41 million tidies a lot of messes. If another bidder comes up with even more, then everyone will emerge happy, if not completely whole.

For a bankruptcy trustee, that's the ultimate.

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