Jawmin, the company logging sandalwood from former Hokukano Ranch land in Kona, is emerging from its year-long bankruptcy.
On August 12, Bankruptcy Judge Robert Faris granted Jawmin’s motion to close the case after Jawmin arranged for a third-party loan to pay off its chief creditor, Hokukano Ranch. The ranch was owed $8 million in July 2010, when the bankruptcy petition was filed.
According to court records, the loan is being provided by Tango Juliet, LLC, a company whose principal is Honolulu lawyer T.J. Lane. Terms of the $8 million loan call for Jawmin to pay 15 percent interest per year, plus a loan fee of $320,000 (4 percent of the loan’s face value, deducted before the remaining $7,680,000 is paid out to Jawmin).
Wade Lee, one of the principals of Jawmin, told Environment Hawai`i that this was merely a bridge loan, allowing the company to emerge from bankruptcy. He has lined up funds from the U.S. Department of Agriculture’s rural development program and the Small Business Administration that will allow the company to pay off its private debt, but the company had to emerge from bankruptcy before the government funds could enter into play, he said. He anticipates that the Tango Juliet loan can be paid off within 90 days.
Jawmin is required to pay Hokukano Ranch not only the outstanding balance on its mortgage but also fees it incurred during the bankruptcy process, as well as costs incurred by the Chapter 11 trustee appointed by the court.
Meanwhile, Back at the Ranch
At the former Hokukano Ranch property, the sandalwood logging continues, but so, too, does regrowth, according to Lee and Tim Coakley, the principal of Wescorp Pacific, the Australian company now purchasing most of the sandalwood that Jawmin logs. Coakley has visited the site several times. In his most recent trip, he told Environment Hawai`i, he observed the sandalwood to be regenerating quickly. “We are leaving the roots in the ground and they are coppicing like mad,” he wrote in an email. “One area I was in had sandalwood higher than my knees at 10 weeks since we harvested that area. Some of the coppice at 10 weeks were even flowering. I think they might have to actually thin the coppiced sandalwood as it might be too thick.”
Lee, too, is “very excited right now” over the regeneration. “We have had tremendous success growing plants off sections of root. They are flowering within weeks, since they apparently think they’re the same age as the root.”
The nursery operation has also been booming, he said, with 50,000 new iliahi trees being grown from seed. Lee is also working to help the manager of nearby Monoha`a Ranch replant sandalwood. “We’re helping him get set up with a program we’ve found to be successful,” Lee said. “We’ve had 72 percent germination of seeds in a one-to-six month period.” In addition, he said, “we see lots of volunteer” seedlings.
The 3,000 acres Jawmin owns are incompletely fenced and browsing animals – including horses and feral sheep – range over the area.
Rats are ubiquitous, but “if we band the trees, we can gain access to the seeds before the rats get them,” Lee said. “There won’t bee a seed bank in the soil, but we’ll get a lot out of the seeds. Rats are going to be an issue until all of us are old and gone.”
According to Lee, Tom Pace, owner of Hokukano Ranch, has recently brought in logging equipment from Washington state and is removing koa and sandalwood from his remaining property at a rapid pace– “probably three times as much as we take.”
Pace has also applied to Hawai`i County for approval to subdivide 2,700 acres of Hokukano Ranch into 23 lots, ranging in size from 81 to 237 acres. Pace was asked for comment, but did not respond by press time.
Volume 22, Number 3 — September 2011