Ultimate Resort To Acquire Tanner & Haley For $98 Million

By: Destination Club News
Date: November 21, 2006

Four months after the destination club industry was shaken with the news that Tanner & Haley filed for bankruptcy, Ultimate Resort will acquire the industry pioneer for approximately $98 million. The two clubs have signed an agreement that will bring most of Tanner & Haley's real estate assets into Ultimate Resort, now the industry's second largest club in terms of members.

"This transaction will be good for our company, good for our industry and, above all, good for the members of the combined enterprise," said Ultimate Resort Founder, President, and CEO Jim Tousignant. "It will establish Ultimate Resort as the second-largest destination club in the industry. Ultimate Resort’s existing members will have many more destinations to choose from. Tanner & Haley’s destination club members will become part of an extremely well capitalized company with a prudent and sustainable business model and a highly experienced management team, which will be augmented by many new T&H colleagues. Our entire industry will benefit from the resolution of a situation that has been closely followed by many existing and prospective destination club members."

Leading destination clubs like The LUSSO Collection and BelleHavens have contacted members over the past several months, outlining the details of how they are structured differently from Tanner & Haley, reassuring their luxury travelers that their refundable membership deposits remain protected. Tanner & Haley's bankruptcy has been well publicized in leading publications like the Wall Street Journal and is the destination club sector's first major blemish, affecting 874 members paying as much as $1.3 million to join. Since the bankruptcy announcement, many potential members have taken a step back to further analyze club financials to ensure that the clubs they are considering won't face a similar fate as Tanner & Haley.

As the world's first destination club, Tanner & Haley and their three clubs, Private Retreats, Distinctive Retreats, and Legendary Retreats, all had unsustainable structures reliant upon short-term leases to meet availability needs. Holly Felder Etlin, Tanner & Haley's Chief Restructuring Officer also stated that "many club members received their memberships at a deep discount and/or locked in low annual dues and daily usage fees." The club's ancillary businesses, including wine sales, fine art, and luxury car rentals failed to "generate any substantial revenues during their periods of operation."

The Tanner & Haley Unsecured Creditors' Committee have unanimously approved the transaction. "The members of the Unsecured Creditors' Committee are very pleased with the attractive terms under which T&H members will be able to travel as new members of the greatly expanded Ultimate Resort organization," said Committee Chairman Joel Lawson III. "This will go a long way toward providing T&H members with the travel opportunities they originally sought in joining the T&H destination clubs. Under the circumstances, I and my colleagues on the UCC have unanimously agreed that this is a very good outcome."

In addition to the properties and members that will now be a part of Ultimate Resort, the club will also retain the majority of the Tanner & Haley employees.

Pending court approval, the ruling is expected to be received as soon as December 19. Most of the approximate $98 million will be used to repay Tanner & Haley's borrowings under its existing $82 million debtor-in-possession credit facility.

Check back frequently to learn more about the acquisition and what it will mean for the entire destination club industry.