A trio of investors have reached an agreement in principle to purchase the troubled Balboa Inn in Newport Beach for about $5.8 million.
The purchasing group, First Wellington Las Casitas Associates Inc. of Costa Mesa, is composed of Robert Bicek, former chairman of U.S. Equities Corp.; Bobby Roberts, a movie producer and former president of Lorimar Inc.'s music group, and David Semas, former executive vice president of the Shearson American Express Mortgage Corp.
Owners of the historic, 34-room hotel recently filed for protection under Chapter 11 of the Federal Bankruptcy Code, a move that protects them from creditors until a plan is worked out to pay bills.
The hotel gained attention in 1985 when Griswold Development Corp. of Newport Beach and a group of 11 limited partners, including basketball stars Kareem Abdul-Jabbar and Ralph Sampson, purchased the hotel for about $4.2 million and invested a total of $2 million in improvements.
But cost overruns on the project left the group short of working capital and marketing funds when the work was completed in December of 1985.
Semas said the First Wellington group expects to complete the acquisition by the end of February.
Together with two other partners, Bicek, Roberts and Semas operate Dunhill Compact Classics Inc. of Northridge, a seven-month-old distributor of compact discs. But Bicek, Roberts and Semas, the three founding partners of Dunhill, are moving quickly to establish First Wellington as a significant hotel concern. They recently acquired the 468-room Americana Canyon Hotel in Palm Springs and expect to complete the acquisition of the Las Casitas Resort and Conference Center on Catalina Island by Dec. 15.
Plan for Resort
The group also says it has a plan "in the works" to build a 16-acre resort at an undisclosed location along the Southern California coast.
"Essentially, we are investment bankers and venture capitalists," Semas said. "We are assembling a very unique hotel chain."
If their acquisition of the Balboa Inn is approved by the Bankruptcy Court, the partners say they plan to begin a marketing drive to lure business people to the 58-year-old hotel, which has suffered from low occupancy on weekdays because it has lacked funds to launch an advertising campaign aimed at business travelers. To attract more business travelers, the hotel recently discounted its weekday room rates 40%. Weekday rates now range from $55 to $125 and weekend rates range from $90 to $240.
If First Wellington completes the purchase, Semas says it will refurbish the pool area and the restaurant. It had been remodeled into a formal dining room, but it reportedly did not fit in with the casual style of Newport Beach. The restaurant closed Aug. 1.