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To the Lenders currently identified in Project #1186
1st Mortgage charge on 712 Wilmington Island Road, Savannah, GA
Borrower: Wilmington River Development Co. LLC
November 6, 1997
As indicated in our letter to lenders dated October 22, 1997 we will be providing information to lenders through regular project updates. Unfortunately, due to the poor quality of Eron's accounting and lender records we are presently unable to answer all the questions you may have. However, based on our initial findings we can address the frequently asked questions set out below. We stress that the information available to us is subject to verification and accordingly our findings are subject to change as more information becomes available.
Eron was paying me a good rate of return on my money, why was it closed down ?
In many instances payments to lenders were being financed by money received from new lenders or lenders to other projects. Few of Eron's projects were actually producing a return on investment. Our investigations to date indicate that many lenders will incur substantial losses because of these practices. Clearly this situation could not be allowed to continue.
What is the current status of the project ?
The funds in this project were used to close on a residential property that is in a key location for securing a position towards a waterfront condominium development. The adjacent properties include an existing historic hotel and golf course along the Wilmington River in Savannah Georgia. The borrower has arranged to purchase the development property with another financier.
The 1st mortgage on this residential property matured on September 19, 1997. We are awaiting appraisal information prior to any decision on a strategy. This information will be available shortly.
How much was supposed to be raised for the project ?
$404,939 USD
According to Eron's records how much was actually raised for the project ?
Approximately $548,955 USD.
According to Eron's records how much was advanced to the project ?
Approximately $355,000 USD.
What happened to the rest of the money ?
It was either used by Eron to pay commissions, fees or interest owed to other investors.
When will you know where my money went ?
It will be at least two months before we are able to account for all funds received by Eron.
What security was taken on the project ?
A 1st Deed of Trust in the amount of $335,000 USD.
Are there any mortgages or other loans in priority to the project security ?
It would appear that there are no prior claims on the property.
What is the value of the project ?
We have commissioned a valuation report of the property, which is to be received by the end of November. We prefer not to speculate on the value, rather we will advise you of the result of this report.
Are there any other security or guarantees which might increase recovery on the project ?
Yes, the following additional security would appear to be available:
- Guarantee of Wilmington River Development Company LLC
- Promissory Note in the amount of $404,939 USD
- Personal guarantees of Edgar Winkeer and Jerry Whitlow.
- Assignment of Limited liability company membership interest
The value of this collateral is not yet known, we anticipate gathering this information by the end of November.
Will I get my money back ?
It is too early to tell definitively how much of your money will be recovered. However, at this early stage it appears unlikely that full recovery will be realized.
When will I get any money back ?
It is likely to be many months before any money is available to lenders.
We caution you that the information available to us is still incomplete and limited in scope. Nothing in the foregoing should be construed as guaranteeing any return of funds. We will keep you informed on a regular basis and will issue a further project update on or about November 30.
In the meantime if you have any further questions or information concerning the project please contact us in writing at the above noted address or by fax at (604) 688-6128, clearly marking your correspondence as relative to the "Savannah(Wilmington) Project".
Yours truly,
Price Waterhouse Limited
Judicial Trustee
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