one hell of a platform

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

$700 million for Sunterra
Wed, 14 March 2007
By Greg Ruland
Larson Newspapers
________________



Diamond Resorts will pay $700 million for Sunterra Corporation under the terms of a deal announced Monday, March 12.

The deal means four Sedona timeshare properties will change hands before the end of June.

Diamond Resorts Chairman and CEO Stephen Cloober reassured Sunterra employees working in Sedona about the sale.

“Your jobs are safe,” Cloober said.

Few management changes are planned right now, he said.

The sale should bring stability to Sunterra, which has grown in recent years by buying up smaller timeshare companies.

The strategy has led to some instability in upper management, Cloober said. The new deal will stabilize things.

Cloober said the deal will make publicly traded Sunterra private.

To acquire Sunterra’s outstanding common stock, Diamond Resorts plans to offer shareholders $16 per share, Cloober said.

Diamond Resorts plans to make the offer official in the next five days. The offer will remain open for 40 days, Cloober said.

The transaction was widely reported in the financial press last week, pushing Sunterra’s price per share to a high of $26, according to The Wall Street Journal.

Cloober said he bought an interest in Sunterra last year, then investigated whether the company made a good target for acquisition.

Sunterra’s brick and mortar assets attracted Cloober first, with resort and vacation properties in 13 countries and seven states.

Cloober said the Sunterra timeshare reservation and property management systems make “one hell of a platform” to operate a timeshare business.

What Sunterra lacks and Diamond Resorts brings to the table is a “hospitality infrastructure,” he said.

That means Sunterra timeshare owners will now enjoy high-quality amenities standardized throughout the Diamond Resort properties — soaps, lotions, towels, sheets and blankets, among other items, Cloober said.

Once culminated, the deal will pay shareholders a 35 percent premium, or increase in value, on their shares, Diamond Resorts reported.

Cloober toured Sunterra’s many properties last year, including the four in Sedona, before deciding Sunterra was a good buy.

“It’s a spectacularly beautiful place,” Cloober said. “More people should go there.”

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

What Sunterra lacks and Diamond Resorts brings to the table is a “hospitality infrastructure,” he said.

That means Sunterra timeshare owners will now enjoy high-quality amenities standardized throughout the Diamond Resort properties — soaps, lotions, towels, sheets and blankets, among other items, Cloober said.

OMG - I'm excited!

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

I laughed as I was sitting here reading this. Multi-million dollar properties vs. the bar of soap and shampoo.

Sounds like a good marriage to me, too!

[I-DE-HO Senior Member Find all posts View Profile Close I-DE-HO]

To acquire Sunterra’s outstanding common stock, Diamond Resorts plans to offer shareholders $16 per share, Cloober said.


The transaction was widely reported in the financial press last week, pushing Sunterra’s price per share to a high of $26, according to The Wall Street Journal.

Sounds like a $10 per share lose if the current price stays at $26. How many shares do you want?

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

So, how reliable is a story which can't even spell the new CEO's name correctly? He's Steven Cloobeck.

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

Here's a bio of Steven Cloobeck from the Nevada Cancer Institute's web pages. Mr. Cloobeck is a major donor to this institution.

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

There won't be bedspreads; there would be duvets

Sunterra buyer offers vision
The time-share company, based in Orlando until 2002, changes hands in a $700 million deal.


Christopher Boyd | Sentinel Staff Writer
Posted March 13, 2007

A Las Vegas vacation-ownership company agreed Monday to a $700 million deal for long-struggling Sunterra Corp., an international time-share development and management company that had headquarters in Orlando until 2002.

Diamond Resorts LLC has agreed to pay $325 million and assume $375 million in Sunterra debt, for a company that ranks among the largest in the time-share industry. Sunterra has 326,000 owners, with nearly 100 branded or affiliated properties in 13 countries.

Diamond Resorts' offer is worth $16 a share to Sunterra stockholders. The deal, which has Sunterra's board's approval, awaits a shareholder vote. If ratified, Diamond Resorts expects the sale to close this spring.

Sunterra's share price rose nearly 5 percent Tuesday. It shot up 35 percent Friday after the company confirmed a Wall Street Journal report that a deal was in the works.

Diamond Resorts plans to keep Sunterra's European operation, which Sunterra had considered spinning off.

Stephen Cloobeck, Diamond Resort's chief executive officer, said he would invest in Sunterra's resorts with what he called a "hospitality overlay." He plans to follow the lead of large hotel chains that have invested heavily in room decor and furnishings during the past several years.

"Diamond resorts has a vision for Sunterra," Cloobeck said. "There won't be bedspreads; there would be duvets. There will be flat-screen television."

Cloobeck plans to lead the combined company, which would be privately held with headquarters in Las Vegas. Sunterra has a dozen properties in Florida, about half in the Orlando area.

Sunterra grew rapidly in the 1990s, only to stumble. It moved to North Las Vegas from Orlando nearly five years ago after emerging from bankruptcy reorganization.

Last year, the company fired its accountant and acknowledged problems with its European operation that included underpayment of withholding taxes in Spain. Later in the year, it fired its president and chief executive officer, Nicholas Benson.

In September, several investor groups filed lawsuits alleging financial improprieties. Philip Kim, an attorney representing one investor group, said it was unclear how the sale would affect his suit, but he doubted it would be dropped.

Howard Nussbaum, president and chief executive officer of the American Resort Development Association, a time-share trade group, said Sunterra's sale would benefit the industry.

"I think this is good for the [Sunterra's] owners and for all the people in the time-share industry," Nussbaum said. He said Cloobeck has extensive experience managing vacation-ownership property, which he said would benefit Sunterra.

"Developing and operating a time-share company is complicated," Nussbaum said. "I'm glad this is someone who knows this industry and this company."

[riverdees05 Platinum Contributor Find all posts View Profile Close riverdees05]

I am feeling so much better now about my Sunterra Lake Tahoe weeks

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

Improved amenities come with increased costs. In Polo Towers situation, that cost was an SA over $1,000 per two bedroom unit. Reserves for PT's two bedroom weeks are less than $50/year compared to over $100/year for the HGVC and Marriott properties in Las Vegas. Management at PT's for 2007 seems to have kept the MF's the same by lowering even further what is collected in reserves for maintenance, upkeep and improvements.

while I might agree that PT's was an industry leader when it was originally developed, it is my opinion that post developement it lags behind the rest of the industry leaders in upkeep.

I was a little curious about the comment of brining standardized amenities to Sunterra. How hard can it be to standardize amenities at two timeshare which share the same building? DRI believes it will be as easy to standardize amenities between all of the Sunterra resorts in the U.S.A. and 13 other countries?

The more I look at this, the more I think this appears to be a lucritive management contract in which owners will have a tough time gaining control of their BOD's. Keep the ship afloat and keep the money coming in. My own personal experience with DRI leads me to believe that they'll do just enough to keep the masses happy and keep the $$ rolling in.

There have been rumblings that PT's was in danger of losing it's 5 star rating with I.I. if the SA was not passed. DRI seemed to have a lot of difficulty getting the word out to owners how important it was to upgrade the units, failed in it's first attempt to pass a smaller SA, required mult. extensions to get a quorum on the persent SA which did pass and has something of a cloud of questionability of how the votes were tallied since I have read owners post that they were having trouble getting their vote submitted or recognized.

I still have yet to see any paperwork on the cost breakdown of the SA, any official statement of when the work will begin and be completed or how it might affect reservations as units will need to be shut down during the renovation. In short, there is a complete lack of information or accountability to the owners (disregard of owners if you will) by DRI IMO.

Now DRI says it will bring stability to Sunterra by bringing continuity to them. They're having issues getting information out to two timeshare's that share one building and 23 units at the Kona Reef resort. Those are all the resorts I'm aware of that DRI manages at the present time. There was some indication in the past that DRI was attempting to purchase or had purchased weeks from Carriage House in the past. Exactly how involved DRI might or might not be with CH I am not certain.

Fern,

Steven Cloobeck might be a great friend to the city of Las Vegas and he might do great things for the city and it's charities. But as a timeshare management company I feel that DRI has fallen FAR short of being an industry leader such as Marriott, Hilton, Starwood or Disney. With better communication and feedback solicitied from it's owners and then acted upon it could be but, as it stands now, there is almost no communication and when there is, it is not always accurate.

Please keep in mind that these are ONLY my opinions as I see them.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

…
Steven Cloobeck might be a great friend to the city of Las Vegas and he might do great things for the city and it's charities. But as a timeshare management company I feel that DRI has fallen FAR short of being an industry leader such as Marriott, Hilton, Starwood or Disney. With better communication and feedback solicitied from it's owners and then acted upon it could be but, as it stands now, there is almost no communication and when there is, it is not always accurate.

Please keep in mind that these are ONLY my opinions as I see them.

In the current situation, all he has to do is improve Sunterra's current operations.

Which is about as difficult as finding pork in the federal budget.

[timeos2 Senior Member Find all posts View Profile Close timeos2]

What do they plan to do

I'm reading with great interest the plans to "upgrade and standardize" units in the Sunterra portfolio. How will that be proposed to resorts that have affiliations with Sunterra but are not under management or control of Sunterra? I can say that if the new owners want to come to our Board with a proposal to upgrade (replace) our tv's with new flat screens AND they offer a good chunk of the cash needed to do it we're on board. Same with changing the bedspreads to a more modern look. But we're not going to finance changes like that until the next planned replacement/renovation cycle rolls around in 2010 for our resort. We already know from painful experience (both to scores and our pocketbooks) that piecemeal improvements thrown around in an uncoordinated way aren't successful. You need to go in with a total concept and do the work correctly. You also need the money in the bank - not look to owners for Special Assessments to keep the property in top shape. If they want to propose new ideas and fund them we're on. If they buy into our ongoing upgrade/improvement plans we'll all be happy and we're happy to go along when the look matches our units. But we won't buy into rushing improvements we aren't ready for just to be "standardized". And we won't spend money we don't have or special assess. We have a strict policy of planning, doing work correctly the first time and funding on a slow but steady process. It works.

[Ryne08 Senior Member Find all posts View Profile Close Ryne08]

Timeos2, I agree with you 110%, Sunterra in my opinion could learn a lot if they would follow the model of Cyprees Pointe Resort management.

In the past three years the resort scores from exchanges from both RCI and II have improved by over 20%.

The renovations of CYP Villas compares with some Marriott's t/s renovations.

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

I'm reading with great interest the plans to "upgrade and standardize" units in the Sunterra portfolio. How will that be proposed to resorts that have affiliations with Sunterra but are not under management or control of Sunterra? I can say that if the new owners want to come to our Board with a proposal to upgrade (replace) our tv's with new flat screens AND they offer a good chunk of the cash needed to do it we're on board. Same with changing the bedspreads to a more modern look. But we're not going to finance changes like that until the next planned replacement/renovation cycle rolls around in 2010 for our resort. We already know from painful experience (both to scores and our pocketbooks) that piecemeal improvements thrown around in an uncoordinated way aren't successful. You need to go in with a total concept and do the work correctly. You also need the money in the bank - not look to owners for Special Assessments to keep the property in top shape. If they want to propose new ideas and fund them we're on. If they buy into our ongoing upgrade/improvement plans we'll all be happy and we're happy to go along when the look matches our units. But we won't buy into rushing improvements we aren't ready for just to be "standardized". And we won't spend money we don't have or special assess. We have a strict policy of planning, doing work correctly the first time and funding on a slow but steady process. It works.

I read this and almost laughed out loud. IMO, this ain't happenin'. At least not if they do it like they've done at PT's. While they have maintained the units, upgrades seem to have come with SA's and even then their record shows it takes longer than it should to get the work done.

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

Williamsburg, VA

The Daily Press in Williamsburg, VA reports that Cloobeck may build an upgraded kiddie water park at the Powhatan Plantation (nothing massive, but a nice addition anyway) as well as upgrading the amenities at both Powhatan and Greensprings Plantation.

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

In Hawaii, The Star Bulletin reports:

Once the deal closes, Diamond will operate 10 Hawaii properties: the Kaanapali Beach Club, the Point at Poipu, Fairway Villa, Kapaa Shore, Papakea, Pono Kai, Royal Kuhio, Sea Mountain, Sea Village and the Valley Isle.


No immediate personnel changes are expected to take place in Hawaii, Cloobeck said, but added that Diamond Resorts does plan substantial reinvestment and amenity upgrades such as improved bedding and guest hospitality kits.


Diamond will also assume Sunterra’s ongoing negotiations to acquire several other Hawaii properties, he said. During the last several years, Sunterra has been particularly aggressive in pursuing expansion opportunities in the islands.

How can they say this? Vacation Internationale has these resorts; Sunterra has nothing to do with their operations and has only limited access to their inventory through agreements from when SRM did hold the management of the limited rooms at each of the bolded resorts that VRI now manages.