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Failed yacht deal costs company

Published: 6:59PM Friday September 05, 2008 Source: ONE News

A boatyard held up as a shining light of Kiwi innovation is now facing a multi-million dollar demand for money. 

Auckland-based Sensation Yachts has been ordered to pay two wealthy Russian investors more than $32 million over a failed superyacht deal.

Sensation Yachts has been fighting a long list of creditors on both sides of the Tasman for the past 12 months and recently gave up its Australia base in Newcastle.

The $90 million deal with the Cheshinsky's was signed up three years ago for five boats and they paid $25 million in deposits.

But no boats were ever completed.

The problems in Auckland are similar to those at Sensation's Australian boatyard in Newcastle.

"They can't afford to pay the rent, they've run out of workers compensation insurance and there's no work for those left to go on with," says Steve Murphy, Australian union organiser.

Sensation opened for business in Australia two years ago, supported by a five year government tax rebate.

The boatyard promised 400 jobs, but unions say only 35 workers were ever signed up and they were left in the lurch when the yard shut a few months back.

Trent Schumi, a former Sensation Yachts apprentice, is still looking for a new job.

"Hopefully I can find another job like that otherwise my trade is going down the gurgler," says Schumi.

A handful of Australian creditors owed more than $400,000 are still trying to put the business into liquidation. And the same has been happening in New Zealand.

 At least 17 creditors have filed statutory demands against the company including Inland Revenue and ACC, but each time, Sensation pays up at the last minute.

Erceg has always played down the many legal disputes and claims against him calling them minor in nature.

"Some have been resolved, others are very days away from being resolved," says Erceg.

But whether Erceg can find $32 million for the failed Russian contract remains to be seen.

He has been fighting workers, unions, clients and creditors for the past eight years.

He has already sold his $17 million Hobsonville mansion and he has also benefited to the tune of millions from the will of his late brother Michael who was killed in a helicopter crash three years ago.

Sensation Yachts has also been given a six million dollar cash injection recently to get itself over the current financial crisis, but its still hard to say if the boatyard will continue to survive.