The historic railway was operated as a tourist attraction by Kingston Acquisitions Ltd (KAL), which went into receivership in November 2009 owing Prudential Mortgage $4.7 million.
Prudential's George Jones and Lindsay McClean, of Malloch McClean, both refused to comment when contacted by the Otago Daily Times yesterday, but the Kingston Flyer veteran manager Russell Glendinning said the parties were struggling to come to an agreement.
"Talks between the two parties have changed track a wee bit and have been left unresolved so far."
The former engine driver said negotiations between Ashburton's Prudential finance company and Kingston Village Development Ltd were under way but had taken a backward step.
Mr Glendinning said the hiccup was due to a disagreement between the parties over land.
"I understand Kingston Development Ltd wanted to develop land in Kingston.
"It is frustrating for everybody that the issue hasn't been resolved yet. There is potential to employ 10 people and it's hard enough to get jobs within the rural area as it is."
Mr Glendinning went to Wellington last month to acquire operating licences from the New Zealand Transport Authority, with the buyer of the vintage steam train expected to have been announced shortly after.
At the time, the buyer was widely speculated to be Blenheim vineyard owner David Bryce, who on May 26 registered with the New Zealand Companies Office as sole director and shareholder of Kingston Tavern Ltd and Kingston Flyer Ltd.
Since the steam train was placed into receivership in 2009, the Flyer's two heritage locomotives have sat idle in Kingston.
The asset portfolio includes passenger cars, a station, the tracks, a parcel of consented subdivision land and the Kingston Tavern, which closed at the end of May under the cloud of uncertainty due to ongoing receivership woes.
Last year, United States rail consortium Railmark entered into a memorandum of understanding with Prudential involving "a complicated series of steps to acquire the Kingston assets under a debt for equity swap".
Railmark chief executive B.
Allen Brown told the ODT last month the company followed all Prudential's requests in the deal and he took "issue with the way Prudential conducted this transaction".
Mr Brown said Railmark twice made cash offers to KAL before it was placed in receivership, both of which were rejected by Prudential, and made another certified offer to receiver Lindsay McClean, of Queenstown, once KAL went into receivership and was again turned down.
