What will Diamond do to Bluegreen?

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

Now that Bluegreen has signaled it's intent to be acquired by Diamond Resorts, I'd like to get an idea of what they are likely to do when they become the resort developer and club manager. Can current Sunterra/Diamond owners provide us some insight?

The Bluegreen Vacation Club operates a lot like the big Club trust of 14 or so resorts. In fact, I believe they are both created under the Florida Multi-site timeshare plan.

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

Bluegreen signs LOI to be acquired by Diamond Resorts for $500 mln -

Now that Bluegreen has signaled it's intent to be acquired by Diamond Resorts, I'd like to get an idea of what they are likely to do when they become the resort developer and club manager. Can current Sunterra/Diamond owners provide us some insight?

The Bluegreen Vacation Club operates a lot like the big Club trust of 14 or so resorts. In fact, I believe they are both created under the Florida Multi-site timeshare plan.

STFB!!!

Bluegreen signs LOI to be acquired by Diamond Resorts for $500 mln - Update
Monday, July 21, 2008

(RTTNews) - Bluegreen Corp. an operator of vacation ownership plans, on Monday, said that it has signed a non-binding letter of intent with Diamond Resorts International under which Diamond Resorts would acquire Bluegreen for $15 per share. Excluding debt, the deal values Bluegreen at about $500 million.

The price of $15 per share offered under the letter of intent was more than double over Bluegreen's Monday closing price of $6.44.

The letter of intent allows Diamond Resorts an exclusive right of negotiation through September 15, 2008, during which time Diamond Resorts will conduct more extensive due diligence.

The acquisition is subject to the completion of due diligence and the execution of definitive agreements. It is envisioned that the definitive agreement, whereby Diamond Resorts would acquire Bluegreen, would include a customary "go shop" provision permitting Bluegreen to actively seek transactions that would provide greater value to its shareholders.

Woodbridge Holdings, which is being led by Bluegreen's chairman and owns 9.5 million shares of Bluegreen's common stock, has indicated that Woodbridge would be supportive of a transaction with Diamond Resorts at the terms stated in their letter of intent.

The Boca Raton, Florida-based Bluegreen markets a real estate-based vacation ownership plan that provides access to over 40 resorts and an exchange network of over 3,700 resorts and other vacation experiences such as cruises and hotel stays. With more than 186,500 owners, Bluegreen Communities has sold over 56,300 planned residential and golf community homesites in 32 states since 1985. Founded in 1966, the company currently employs over 6,000 associates.

Bluegreen has been hit by the ongoing slowdown in U.S. housing market that have resulted in lower sales at its communities. In May, the company reported lower first-quarter profit of $1.4 million or $0.04 per share, compared to $5.33 million or $0.17 per share a year-ago. Total operating revenues fell to $139.35 million from $146.66 million in the same quarter prior year.

Diamond Resorts, based in Las Vegas, Nev., is one of the largest vacation ownership companies in the world with 110 branded and affiliated resorts in 14 countries. In April 2007, Diamond Resorts acquired Sunterra Corp. for approximately $750 million.

Shares of Bluegreen closed Monday's regular trading higher by 17 cents or 2.71% at $6.44. In the after hours, the stock gained $6.86 or 106.52% to trade at $13.30.

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

I guess only Mr. Steve C will be able to answer that.

Be a devloper, I would guess BG hold rights to a lot of lands that can develope. Plus if he wants to consolidate two club into one, there is a lot of opportunities. But he may already found from the Diamond conversion what he can and can not expected

If they do consolidate, it will be the biggest TS company.

Jya-Ning

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

Sure was the day to own BG stock, not timeshares.

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

Sure was the day to own BG stock, not timeshares.

Depends on when and how much you bought them. So not sure if I need cry or need happy. I guess I can happy.

Spence, after Diamond, does anything changed from Sunterra's point of view (besides the name)?

Jya-Ning

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

As a Club member, what is the impact on me? More options/destinations and availability? Or, more people chasing after limited inventory?

[Schooner Member Find all posts View Profile Close Schooner]

Now the hiring of all the high paid help makes some sense ... some empire building is underway. The legal, structural and financial business plan issues will no doubt steal the show in the short term. Hopefully, someone on the team in Nevada is well schooled in the "people side" of change management, and the fine art of balancing corporate, cultural and customer integration. This is precisely where most corporate takeovers fail.

IMO DRI has bitten off an awful lot at a time when they have only just begun to taste what they have on their plates with the former Sunterra. This could be great for DRI and owners if they can manage it ... let's hope so!!!

[Maggie Member Find all posts View Profile Close Maggie]

This is just my opinion and I'm an optimist.

If this deal actually happens, I am guessing that it will result in more options and opportunties being provided for current Bluegreen owners.

In the short term I doubt they will do much to negatively impact existing Bluegreen owners because why would they want to piss off 200,000 plus customers who will potentially buy some kind of enhanced package.

Undoubtedly they will find a way of offering an enhanced ownership allowing usage of all DRI resorts (for a price) and we'll all have to evaluate if the new benefits offered are worth the added costs.

You can be pretty sure they aren't going to increase your options without increasing your membership cost in some way. However when we became eligible to use Shell Connections it doesn't really cost us anything unless we use it. I can live with that.

[Xolodno Member Find all posts View Profile Close Xolodno]

Well....

When we were with Epic....good times...until they went belly up and the resorts went to pot and service hit the crapper. It looked like Bluegreen was going to eat Epic at that point...then Sunterra showed up in some sort of last minute bid and took the company (isn't ironic Bluegreen is now being eaten?). As an owner, well, we did have low maintenance fee's prior to the buyout...but they went up considerabley when Sunterra assumed the mantle. Sunterra did improve the lot of the resorts and belive me, I was certainly happy to go from 6 resorts to a multitude. I've never had to use customer service too much (*knocks on wood*), but when I have, I found Diamonds CS superior to Sunterra's by virtue of speaking to somebody whose primary language is english. Of course my expecations of CS is low in this day and age, so my opinion most likely doesn't have a lot of worth.

And yes, I expect the BG people to get some sort of option, with a fee, to go into the Club plus a "presentation" to buy more points. From 14 resorts to something around a 100, I'm guessing most will go for the conversion. It doesn't make business sense to try and sell the people in the larger pool already for 14 more resorts.

From what I read thus far, Diamond will get another Las Vegas property (from what I hear wanted for awhile), thoroughly have Florida saturated, gets resorts where they have none and its my understanding Bluegreen owns a bit of land? Question is, where will they get the funding to build brand new resorts? IPO for Diamond anyone?

Also, considering the construction industry is a bit in the tank right now, I'm guessing they can build resorts a lot cheaper than say two or three years ago.

Edit: Bluegreen doesn't have 14 resorts, but in the nieghborhood of 45. Head cold is getting to me I think.

[rikkis_playpen Diamond Club Contributor Find all posts View Profile Close rikkis_playpen]

I have to admit I'm nervous, Jim... My concern and question is more to the effect of what legal rights do Bluegreen members really have- since the ownerships are not deeded but simply another form of trust. Will this give Diamond the ability to do virtually anything they want with the program? I would expect that BG members will have the right to choose if they join the Club, but..........

Can Diamond force a club conversion similar to the situation Epic owners faced- and if so would this practically eliminate resales and make the foreclosure process as simple as the punch of a button on a keyboard? I certainly hope not, but Mr. Spence can tell you the recent issues that current Club owners have been facing..

BlueGreen members have been blessed with a fairly steady resale value over the years. I'm keeping my fingers crossed!

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

Jim can clarify, I'm sure...aren't BG ownerships all backed up by deeds? For example, my points are based from week 52 at Christmas mountain and week 28 at Solara Surfside...don't I always "own" those weeks at the end of the day? I have first dibs on reserving those weeks even before Premier Platinum or whatever don't I?

I have to admit I'm nervous, Jim... My concern and question is more to the effect of what legal rights do Bluegreen members really have- since the ownerships are not deeded but simply another form of trust. Will this give Diamond the ability to do virtually anything they want with the program? I would expect that BG members will have the right to choose if they join the Club, but..........

Can Diamond force a club conversion similar to the situation Epic owners faced- and if so would this practically eliminate resales and make the foreclosure process as simple as the punch of a button on a keyboard? I certainly hope not, but Mr. Spence can tell you the recent issues that current Club owners have been facing..

BlueGreen members have been blessed with a fairly steady resale value over the years. I'm keeping my fingers crossed!

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

Jim can clarify, I'm sure...aren't BG ownerships all backed up by deeds? For example, my points are based from week 52 at Christmas mountain and week 28 at Solara Surfside...don't I always "own" those weeks at the end of the day? I have first dibs on reserving those weeks even before Premier Platinum or whatever don't I?

Could be wrong, but I believe there are two different groups. One is the older BG owners. Who get week, and converted it to BG point. They do have their deed. The other is club that created by BG when they sell their points. They are more like WM where club owns all the deeds. So whoever manages the club or sit on club has duty to the member to make sure the inventory does not get pull out from the club.

Jya-Ning

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

The older BG resorts still have deeded weeks, which at least would prevent DRI from cherry picking valuable properties to close and sell like they did at their London resort after buying Sunterra. There may be newer resorts, however, without any deeded weeks.

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

I have to admit I'm nervous, Jim... My concern and question is more to the effect of what legal rights do Bluegreen members really have- since the ownerships are not deeded but simply another form of trust. Will this give Diamond the ability to do virtually anything they want with the program? I would expect that BG members will have the right to choose if they join the Club, but..........

Can Diamond force a club conversion similar to the situation Epic owners faced- and if so would this practically eliminate resales and make the foreclosure process as simple as the punch of a button on a keyboard? I certainly hope not, but Mr. Spence can tell you the recent issues that current Club owners have been facing..

BlueGreen members have been blessed with a fairly steady resale value over the years. I'm keeping my fingers crossed!

This is where Bluegreen owners are in luck. Bluegreen is a timeshare plan that is registered with the State of Florida under it's Multi-site timesharing plan statutes. As part of those statutes, all of the rules governing the ownership must be registered with the state of Florida. And, any bylaw changes must be submitted on an annual basis.

The Bluegreen Vacation Club is based on underlying deeded weeks that are placed in a Vacation Club trust. Owners have what are called Owner Beneficiary Rights under that plan according to a set of reservation rules and point values. Those rules cannot just be changed on a whim. And, the underlying deeded weeks must be redeeded into another trust if they want to make changes. So, a sales effort must be employed to change the ownership significantly.

Bluegreen does have a provision where they are in control of the board. But, if they try to do something like dramatically change the nature of the Club, I am sure that the Florida Attorney General would get involved. It is not likely that DRI would want that fight. They would probably try to change things slowly over time and provide the sales team with the opportunity to upgrade customers to the larger Club.

After thinking through the likely scenarios, I am not really worried too much about what DRI will do. They will do what is in their best interests. As long as we know what that is, we can find the ways to capitalize on the new opportunities that manifest themselves. There will be nice new loopholes for getting into the resorts which will be fun to learn about.

Jim

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

The older BG resorts still have deeded weeks, which at least would prevent DRI from cherry picking valuable properties to close and sell like they did at their London resort after buying Sunterra. There may be newer resorts, however, without any deeded weeks.

They can't cherry pick and resell underlying deeded weeks from Bluegreen. They are owned by the current owners who have fundamental rights based on those deeds such as the priority week. Points are deeded that way.

They would have to buy up the deeds and then redeed them in a different way. I don't think they would do it since they are a point company.