Bluegreen Corporation Signs Non-Binding Letter of Intent to Sell Company to Diamond R

[GeckoSnow Junior Member Find all posts View Profile Close GeckoSnow]

Thank you for posting that.. that actually helps clear up some of my idle thoughts... it helps explain how the Select Connections partnership came about since so many of BXGs owners do not use RCI... but it also shows that BXG still 'wasted' a lot of inventory in deposits to accommodate the owners that never used them... and the 18.5% of unused owner allocation is *huge*... apply a low $79.99 ADR (pick a number) to those room nights and there is HUGE lost revenue there. Now don't get me wrong... I come from a different world... but any room that goes unoccupied is a lost opportunity. It doesn't matter if it was an owner room or not. If it sat empty-WE ALL LOST MONEY (owners, developers, exchangers, etc.). That room can never be sold again.

I don't have the time (or inclination tonight) to figure out exactly how much money this is... but... you can.. How many rooms does BXG hold? Total those up and add a CONSERVATIVE $79.99 per room night to 18.5% of that total number of rooms and you will start to see where this rental animal comes into play... and why DRI or others may want it. Its cash flow and I see DRI going right down that same cash flow drain that turned the first iteration of Sunterra upside down. The sad thing is... those 18.5% of rooms went empty because there was no automated way of protecting owners usage while still marketing the rooms for sale to the rental market. You cannot do this on a large scale without automation. BXG doesn't have it. Neither does DRI.

Same square peg going into the same round hole. The regulators in both Florida and California are getting wise to this via the existing lawsuits so...

as Boca said... stay tuned... my guess-if the regulators in Florida have any say (and I think they will), they will derail this.

[Aashlee Member Find all posts View Profile Close Aashlee]

Got back from Owners' Update last night. As we suspected, the on-the-floor salespeople know no more (maybe even less) than we do. We would not have talked about the possible DRI acquisition unless my husband hadn't brought it up. Our salesperson said that it would be a good thing, as DRI has 130+ resorts worldwide, but she couldn't go down that road once I told her that DRI also sells access to resorts in "collections," and that unless you buy a certain number of points or packages, you may not have access to everything.

As for everything else, there was nothing new that I didn't already know: Atlantic City, New Orleans, the additions in the Branson area ... I did see the new benefits chart that included the bronze and platinum categories, though. Platinum people can get on the wait list four months ahead of everyone else. They also get lower bonus time rates and free upgrade opportunities further ahead of everyone else. I can see it being attractive to some who's retired or has some serious vacation time.

[Jya-Ning Silver Contributor Find all posts View Profile Close Jya-Ning]

The market does not seem to believe $15 per share will hold. Or the deal will actually go through.

Jya-Ning

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

The market does not seem to believe $15 per share will hold. Or the deal will actually go through.

Jya-Ning

I think the market came to the exact same conclusion I did yesterday. That conclusion is how can a one resort private company 2 years ago swallow a $750 M whale and then only 15 months later swallow another $500M whale?

Who will be willing to finance a $500M acquisition of a company that is 50% in Residential Real Estate for a 150% premium over stock market cap?

What is the possible out for the investors? Why would this be a strategic acquisition with tremendous cost or revenue synergy? Take common and preferred stock in an already overleveraged company? Or, secure debt with sinking real estate assets?

The financing of this deal is far from assured. Even if it is, I wouldn't want to be the CEO with private equity firms up my tailpipe all the time about my quarterly results and debt convenances that would scare genghis khan. Investors would be foolish not to install their own CFO so that the CEO is handcuffed to the business plan.

That said, this is why they pay the CEOs the big bucks. If they can pull it off, Stephen Cloobeck will be a star. Got to have nerves of steel to try that one.

[swirg53 Senior Member Find all posts View Profile Close swirg53]

Keep in mind also that DRI's offer to BG was (supposedly) totally unsolicited. Although it certainly does make you wonder why an exec from BG AND Shell went to work for DRI. And if that had anything to do with an up and coming offer to buy BG.

I must say one thing: Diamond Resorts International sure does have a lot more flavor in its name than Bluegreen does! LOL! While lakes often look bluish green; so does algae!

What's in a name? A rose by any other would smell as sweet.

[Maggie Member Find all posts View Profile Close Maggie]

From everything I've been reading, it sounds like when they took over Sunterra they immediately upped the maintenance fees with the premise that they had to build the reserves up because they were so depleted and there was a great deal of renovation that was necessary to bring the substandard resorts up to their level. It's beginning to sound to me like they are looking for a larger customer base to spread these costs. I hope that Boca is right and that the State of Florida can act as a buffer if these are sharks looking to make stockholders rich while milking maintenance fees from a captive customer base.

I'm very happy with Bluegreen's current structure but I would be truly unhappy if after being acquired by DRI I had a 20% jump in my maintenance fees to cover their indebtedness.

I guess I'm hoping that the deal doesn't happen, but all we can really do is wait and see.

[vintner Super Moderator Find all posts View Profile Close vintner]

The market does not seem to believe $15 per share will hold. Or the deal will actually go through.

Jya-Ning

Do not look at the current price of BXG stock and make a determination of what the market thinks about the price. What happened is plain and simple profit taking. This is very normal for a stock with a take over announcement, stock runs up very high and very fast, those with stock sell, take their quick profit and move their money into the next stock. As time comes to close the deal, money will move back into the stock, since it will go for $15, I can hold off until it drops back to 10 or even 8 bucks, put my money in and ride it up to $15. Even if the stock does not go to $15, that is the price that DRI will pay, so unless this falls through, anyone owning stock at the closing (or announced date) will walk away with at least $15/share.

Where this is unusual, is this is a private company buying and you see the actual price they will pay (as was noted in the letter of intent-not the end contract price). Normally you see the take over announcements with a percentage of stock normally with some terms like ‘which at the current stock price equates to XXX per share’. The price is based on a percentage of the current stock price, so the actual end price may be different.

I will be watching the stock and about a month before the close, I may buy the stock, if the price has dipped sufficiently, and I will take the $15 offered.

[dougp26364 Senior Member Find all posts View Profile Close dougp26364]

I think the market came to the exact same conclusion I did yesterday. That conclusion is how can a one resort private company 2 years ago swallow a $750 M whale and then only 15 months later swallow another $500M whale?

Who will be willing to finance a $500M acquisition of a company that is 50% in Residential Real Estate for a 150% premium over stock market cap?

What is the possible out for the investors? Why would this be a strategic acquisition with tremendous cost or revenue synergy? Take common and preferred stock in an already overleveraged company? Or, secure debt with sinking real estate assets?

The financing of this deal is far from assured. Even if it is, I wouldn't want to be the CEO with private equity firms up my tailpipe all the time about my quarterly results and debt convenances that would scare genghis khan. Investors would be foolish not to install their own CFO so that the CEO is handcuffed to the business plan.

That said, this is why they pay the CEOs the big bucks. If they can pull it off, Stephen Cloobeck will be a star. Got to have nerves of steel to try that one.

Mr. Cloobeck is considerably more than just a timeshare CEO and appears to be extremely well connected as far as getting financed. He is very well thought of as a developer and as a timeshare CEO. My bet is that the financing package is already in place.

Mr. Cloobeck was well enough connected that there was speculation that he would run for and become the next govenor of NV. I don't think "he will become a star" fits him so much as he already is a star in certain circles.

One thing I would never do is underestimate Mr. Cloobeck. When he wants to get something done, it gets done.

[dougp26364 Senior Member Find all posts View Profile Close dougp26364]

From everything I've been reading, it sounds like when they took over Sunterra they immediately upped the maintenance fees with the premise that they had to build the reserves up because they were so depleted and there was a great deal of renovation that was necessary to bring the substandard resorts up to their level. It's beginning to sound to me like they are looking for a larger customer base to spread these costs. I hope that Boca is right and that the State of Florida can act as a buffer if these are sharks looking to make stockholders rich while milking maintenance fees from a captive customer base.

I'm very happy with Bluegreen's current structure but I would be truly unhappy if after being acquired by DRI I had a 20% jump in my maintenance fees to cover their indebtedness.

I guess I'm hoping that the deal doesn't happen, but all we can really do is wait and see.

There are no stockholders in DRI. DRI is a privately held company.

Sunterra resorts, IMO, did not have MF's enough to support their resorts. For that matter neigther did Polo Towers after Mr. Cloobeck stepped away from timeshare developement for other interests. It was inevitable that Sunterra resorts would face either a drastic increase in MF's and/or SA's to repair, refurbish and improve some (many?) of their resorts. Polo Towers was hit with a very large SA since an increase alone would not be enough to refurbish the units in short order.

What will tell us if he intends to maintain the resorts, IMO at least, is if they start putting enough money into the reserves for future maintenance needs and refurbishments rather than try to catch everything up all at once like they're having to do now.

If Bluegreen has maintained their resorts and if they have set aside an adaquate amount of money into their reserves for future needs, I don't think you'll see any huge increases in MF's. I do suspect you will see a modest increase in management fee's.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

There are no stockholders in DRI. DRI is a privately held company.

Sunterra resorts, IMO, did not have MF's enough to support their resorts. For that matter neigther did Polo Towers after Mr. Cloobeck stepped away from timeshare developement for other interests. It was inevitable that Sunterra resorts would face either a drastic increase in MF's and/or SA's to repair, refurbish and improve some (many?) of their resorts. Polo Towers was hit with a very large SA since an increase alone would not be enough to refurbish the units in short order.

What will tell us if he intends to maintain the resorts, IMO at least, is if they start putting enough money into the reserves for future maintenance needs and refurbishments rather than try to catch everything up all at once like they're having to do now.

If Bluegreen has maintained their resorts and if they have set aside an adaquate amount of money into their reserves for future needs, I don't think you'll see any huge increases in MF's. I do suspect you will see a modest increase in management fee's.

I don't know anything about Stephen Cloobeck, so I will reserve judgement on whether or not he can pull off this deal. He could very well have the financing in place and have the skill to pull it off, that's what good CEOs do. So far, what he has done looks pretty good to me. He's hired some impressive people and his marketing skill is are as good as any internet firm I've dealt with. All I am doing is setting the table stakes so that if and when he does pull it off, people will know just how much of a superman he really is.

I have been on the top management team of a public company, private equity funded company, ventured funded late round start up and a 4 person start up company. The 2 worst experiences in my life were in a companies that were public and went private. The private equity leveraged buyout was the single worst by far. The debt, debt convenances and preferred stock dividends basically starved the company. I know how investors think and smart money doesn't just say, "oooh, look who's CEO, let's give him our money and we will get rich." That did happen in the late 90's with the internet bubble economy. That, by the way, was the funnest time of my life. Financing is very tough in this environment for anything associated with residential real estate. Paying a 150% premium on a stock that is 50% in residential real estate and taking it private is an eye popping thought exercise for any investment group. If he can swing the deal, he is impressive. He is superman if he can make a merger work.

For me, this is quite exciting to watch. I've been involved in several mergers at the top level of companies. I know what the top managers think vs. the mid and lower level employees vs. what the investors and customers think. Successful mergers take very skillfull managers to blend cultures and plan initiatives that can achieve the synergies that the M&A plan called for and the investors can live with. All these stakeholders create constraints on what the CEO can do. We'll see what Mr. Cloobeck is made of. He appears to have a bold vision for the future. He wouldn't have gotten this far if he didn't. We'll know a lot more in 6 months. Stay tuned, it won't be boring.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Sunterra resorts, IMO, did not have MF's enough to support their resorts. For that matter neigther did Polo Towers after Mr. Cloobeck stepped away from timeshare developement for other interests. It was inevitable that Sunterra resorts would face either a drastic increase in MF's and/or SA's to repair, refurbish and improve some (many?) of their resorts. Polo Towers was hit with a very large SA since an increase alone would not be enough to refurbish the units in short order.

What will tell us if he intends to maintain the resorts, IMO at least, is if they start putting enough money into the reserves for future maintenance needs and refurbishments rather than try to catch everything up all at once like they're having to do now.

If Bluegreen has maintained their resorts and if they have set aside an adaquate amount of money into their reserves for future needs, I don't think you'll see any huge increases in MF's. I do suspect you will see a modest increase in management fee's.

Bluegreen sets aside a significant reserve fund through the various trust funds. I seem to recall that it was between 10-12% of maintenance fees for the 2 main trusts that make up more than 80% of the resorts. I'll have to check my POS when I get home to check out the latest budgets. They appear to be pretty good at resort development, reburbishment and operations. It could be one of the reasons DRI wants them.

I agree with your conclusion about the likely impact to Maintenance and management fees.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

There are no stockholders in DRI. DRI is a privately held company.

If a company is private, that does NOT mean it has no stockholders. If a company is private, it just means it isn't listed with a public exchange company and are not subject to the reporting requirements of that public exchange. They still, however, are accountable to their investors in a way that is determined by its ownership structure. And, the reporting requirements are determined by the board of directors or the key investors.

A private C-corp has stockholders. You just can't trade it's stock on a public exchange. And, it even has stock options, preferred stock and debt, just like a public company.

DRI is an LLC. That means the owners are called members and their percentage ownership is based on units.

So, I would have said, "There are no stockholders in DRI. It is an LLC."

[dale7 Senior Member Find all posts View Profile Close dale7]

If DRI gets BG it would be it's own trust, in DRI there are time shares that are taken care of buy there own assocation so I would think GB would be same.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

If DRI gets BG it would be it's own trust, in DRI there are time shares that are taken care of buy there own assocation so I would think GB would be same.

Exactly! It turns out that the Bluegreen Vacation Club is 5 trusts. So, it would be 5 more trusts.

[Xolodno Member Find all posts View Profile Close Xolodno]

Makes you wonder, who are the members? And do they have any ownership in BG? Or other companies?

If a company is private, that does NOT mean it has no stockholders. If a company is private, it just means it isn't listed with a public exchange company and are not subject to the reporting requirements of that public exchange. They still, however, are accountable to their investors in a way that is determined by its ownership structure. And, the reporting requirements are determined by the board of directors or the key investors.

A private C-corp has stockholders. You just can't trade it's stock on a public exchange. And, it even has stock options, preferred stock and debt, just like a public company.

DRI is an LLC. That means the owners are called members and their percentage ownership is based on units.

So, I would have said, "There are no stockholders in DRI. It is an LLC."