The Various Parties Interested In Acquiring Ultimate Escapes

By: Destination Club News
Date: December 6, 2010

Shortly after Ultimate Escapes filed for bankruptcy, restructuring firm CRG Partners was in contact with over 400 potential buyers, actively engaging several parties in more advanced discussions about acquiring the world's second largest destination club. Ultimately, Demeure was selected the winning bidder and just last week closed on select assets of the failed club, but court documents have since revealed some of the other parties that expressed interest in Ultimate Escapes including some notable players who tossed their name in the hat.

Diamond Resorts International
With nearly 200 branded and affiliated resorts around the globe, Diamond Resorts is one of the largest vacation ownership companies in the world. Each year, roughly 1.5 million guests, members, and owners enjoy travel to the timeshare's residences.

On the day Ultimate Escapes filed for bankruptcy, Diamond Resorts requested additional information about the club for analysis and Ultimate Escapes executives Philip Callaghan, Jeff Sparks, Robert Glinka and others would begin discussing a potential acquisition. CRG's Stephen Gray and Todd Michalik traveled from Boston to New York City for a four hour meeting with Diamond to discuss the "possible purchase of Ultimate Escapes" with representatives from lender CapitalSource also in attendance.

A conference call was conducted on September 24, 2010 with CapitalSource, Diamond, and CRG all on the line. Diamond Resorts would submit a proposal and counter offer in the next two days and would follow up with CRG multiple times in the days following via phone, including a potential 363 sale structure.

It appears that talks slowed down at this point as Diamond Resorts isn't mentioned again until the middle of October when offers from Diamond and Demeure were discussed.

Member Owned
Quickly shot down by members, CEO Jim Tousignant strongly advocated a partially member owned club option even prior to the bankruptcy announcement. Under the proposed plan, members would have the ability to convert their membership into shares of the club by paying a one-time transition fee that would give Ultimate Escapes between $15 million and $30 million. According to court documents, Bluegreen would manage the club moving forward.

When the proposal was introduced to members, we identified several problems with the concept, highlighted by the fact that a large portion of the debt owed to CapitalSource would not be paid down. In addition, members would be converting their membership into stock at $3.87 per share but the stock was trading at a mere $0.60 at the time.

Needing approximately 750 members to move forward, members voted down the proposal by a two to one margin.

Mike Shelton
An Ultimate Escapes member and an experienced destination club executive, Mike Shelton spent a great deal of time with CRG about a potential acquisition of the failed club. A common thread from start to finish, Shelton, CapitalSource, and CRG were unable to finalize a deal.

Tavistock
A privately held investment company whose portfolio includes real estate, hospitality, financial services, and more, Tavistock executed a non-disclosure agreement with CRG Partners to learn more and spoke with Stephen Gray about a potential asset sale.

Only a small number of communications were logged as discussions were dominated more by Diamond, the member owned option, Mike Shelton, and Demeure.

Equity Estates
One of the leading players in the equity side of the destination club market, Equity Estates inquired about select assets of Ultimate Escapes. Instead, the club would acquire new properties in Snowmass and Anguilla with four new properties scheduled to be added to the portfolio in the coming months.

Quintess, LRW
Club Holdings and subsidiary Quintess will likely land several former Ultimate Escapes members even with Demeure acquiring Ultimate Escapes, but there were talks between Club Holdings and CRG Partners about the club. Documents show that Stephen Gray conducted a telephone call with Alex Preiser regarding a "Quintess bid."

Quintess and Ultimate Escapes fought over a membership offer distributed by Quintess to Ultimate Escapes members. Since then, Club Holdings has launched DUO by Quintess and has created a special offer to Ultimate Escapes members.

Multiple other parties were discussed in the document that you can find here, including Global Leisure Partners, Waters Winery, real estate agents, and others.