CIEL Makes $108 Million Bid For Tanner & Haley Assets

By: Destination Club News
Date: November 28, 2006

Following the announcement that Ultimate Resort acquired Tanner & Haley's assets, the upstart ultra-luxury destination club CIEL is making a substantial eleventh hour bid to acquire the industry pioneer.

"Our development of CIEL provides many benefits to Tanner & Haley members," said CIEL's Joe Ricketts, TD Ameritrade's Chairman and Founder. "Two immediate benefits: First, every member will be offered an opportunity to join CIEL with Tanner & Haley Legendary Retreat Members receiving a membership with no membership deposit. Second, for Tanner & Haley members who choose to join (New Club), the services and crafted experiences developed for CIEL will be made available to them."

This as yet unnamed club will function as a "mid-range complement" to the ultra-luxury CIEL and will consist of members of Tanner & Haley's Private Retreats and Distinctive Retreats if the bid is accepted.

Tanner & Haley filed for Chapter 11 bankruptcy in July of this year, citing several key reasons why the industry titan needed to restructure. "They have rarely refused a member's travel request," said Tanner & Haley's Chief Restructuring Officer Holly Felder Etlin. "If a desired property in their portfolio was unavailable, they commonly entered into a costly short-term lease with a third party. In addition, many destination club members received their memberships at a deep discount and/or locked in low annual dues and daily usage fees."

Ultimate Resort released a press release earlier this month stating that they "will acquire substantially all of the real estate assets of Tanner & Haley for cash considerations of approximately $98 million." Unanimously approved by the Tanner & Haley Unsecured Creditors' Committee, members at all three club levels within the club will be offered a unique membership structure through Ultimate Resort.

The transaction is subject to approval by the bankruptcy court and is expected to be received as soon as December 19. Most of the $98 million would be used to repay Tanner & Haley's borrowings under its existing $82 million debtor-in-possession credit facility.

CIEL's additional $10 million bid does make the acquisition much more interesting. "We have been studying and aggressively pursuing this acquisition since mid-July and we were a finalist in the informal sales process," said CIEL's Jonathan Harding. "Over the past week and holiday weekend, we have continued our analysis and due diligence and we concluded that we can provide a higher and more complete bid that will better address the needs of all of the Tanner & Haley creditors. We have also used the past week to study the viability of the competing offer and our analysis has raised serious questions that we know are addressed to the members' benefit in our offer."

CIEL and Ultimate Resort couldn't be on further ends of the spectrum. Ultimate Resort launched as "the most affordable luxury destination club" in 2005 and has grown organically to just shy of 100 members. CIEL has identified their target audience as those who already own second homes and have a net worth in excess of $30 million. Still very young, the club has yet to acquire an establish base of members.

It will be interesting to see what the $10 million delta does to this transaction. No matter which way the bankruptcy court leans, the destination club landscape will be significantly reshaped based on the decision. Check back frequently to learn more about how the bankruptcy plays out and the future of the club's 874 members.