Recent Destination Club News

[TarheelTraveler]

Clearly people on the boards are much more well informed than the general DC member, but just curious whether members are being apprised of these issues.

The 8-K indicates that CapSource is agreeing not to proceed on the following default events until September 10 for:

"(i) the Borrowers’ failure to make interest payments due on or before each of June 5, 2010, July 5, 2010 and August 5, 2010 under the Loan Agreement, (ii) the Borrowers’ failure to maintain the minimum cash balance required under the Loan Agreement, (iii) the Borrowers’ failure to pay certain home owners association fees which have resulted and may in the future result in the creation of liens upon the Borrowers’ assets, (iv) the Borrowers’ default in the payment of indebtedness for borrowed money in excess of $500,000 with respect to a property owned by an affiliate of the Borrowers and (v) the Borrowers’ anticipated failure to make the interest payment due on or before September 5, 2010 under the Loan Agreement."

I find it odd that there is no mention of this (and the prior quarter's earnings) on the club's investor portion of the website, and the Facebook page has a ton of travel destination postings today and members are asking about snorkeling in the T&C when there are filings that should cause a member concern over those travels. According to the earlier filings, payroll was missed at least once, yet membership sales emails are still going out. That dichotomy is odd to me. Maybe the rationale is to preserve the value of the members as much as possible while things are worked out (rather than having members head for the hills so to speak).

 

[Kagehitokiri2]

That dichotomy is odd to me.

seems bizarre because of the filings (are there many examples of this level of ridiculousness? the dichotomy i mean.) and also why theyre filing when they requested delisting..

 

[DCMember]

TT- They have made no mention of the financial trouble to the members at all. If we are not reading it here (or were at DC4MS) we would have no idea of how bad the financial situation at UE is. Once again, I think that IMHO Jim and/or Rich are just hoping that the members can be kept in the dark and fed fertilizer and all will be fine. If that is the case than I would be thrilled but sadly I do not see how that could be the case.

Travel continues...reservations are made and tickets purchased. I hope for all that these trips can occur. Thank goodness we are currently away on a trip right now in a lovely location enjoying an amazing "over the top" home. I spoke some to the local host and was told that they are still being paid in a timely way. This host, for what it is worth, said that the new CRO was known to my host and was very highly thought of. Also stated that things were expected to be solved one way or another in September. Does the host know anything beyond whether their checks arebouncing...who knows! My 2 cents is with the group who feels that 1100 members willing to pay dues is a very attractive group for any club so think we will continue to be traveling. Will it be to the current crop of UE homes? No idea but I would guess we are too valuable to just be dropped. Many clubs have excess capacity and could easily absorb us along with the cold hard cash we are already happily paying. Remember that annother assessment can't be done without a vote and I would guess many will say no this time or would want it paid to a new owner with stronger footing and lower overhead (high, high, high senior mgmt salaries that are getting too much like HCC)

I do know that for my part I am happy that my trip will be completed in a few days and will not be buying tickets for the next trip requiring flying until all is settled.

Again this is just my 2 cents and what I was told at my current location. Can't say where as I don't want to fall on the wrong side of UE. They might want to buy me out with their stock! :hysterical:

 

[wilkes591]

TT- They have made no mention of the financial trouble to the members at all. If we are not reading it here (or were at DC4MS) we would have no idea of how bad the financial situation at UE is. Once again, I think that IMHO Jim and/or Rich are just hoping that the members can be kept in the dark and fed fertilizer and all will be fine. If that is the case than I would be thrilled but sadly I do not see how that could be the case.

I just traveled over the 8/20 weekend and the local host confirmed the same thing, the host was being paid, the bills on the property were paid. I question the information given the public financial statements and the host did not hide her concern over the current situation. I agree with the body of your post and the value of the paying members. I question what is in the quote, the company is public, there is no hiding the current financial problems. If a member chooses to upgrade, pay advance dues, or recommend a "friend", it is on them. The information is public, the risk should be know by someone doing due diligence. When it was private I could see blaming JT/RK and I am not defending them, I am just saying a person joining today or a current member not aware of the current financial conditions, only need to look in the mirror for blame.

Typically companies trying to survive, do not advertise the difficult financial situation until it is over. However, they did a press release about the CRO. Not exactly smart, if your still trying to attract new members.

 

[willmyclubmakeit]

future

I have also heard that the escape planners have been paid and they are still working on members trips. This is good. Its also hard to complain that anyone is hiding anything when the company is making press releases, 8k, 10q, and other filings stating the situation. I don't like the situation they or we are in and hope that management, the CRO, and Capital Source finds a way out for the Club and its constituents including of course the dues paying members. If it were not for us the answer would be simple just shut it down but we represent more value than the fully leveraged properties and I'm sure someone will realize the value of $10+ million of dues per year from members (and 1100 or 1200 of us that only one club--ER--has been able to duplicate).

 

[Desties]

Even after this morning's bleak filing, I pulled up a stock quote and it was $1.45 on the bid, $1.50 on the ask. A week ago the stock had dipped to $0.60.

I took the Fort Collins closing as a good sign (save for those who lost their jobs). After all, if the CRO was brought in strictly for a bankruptcy filing, why close Fort Collins when DIP financing would be on the way?

There have been no member communiques, unfortunately. My stays this summer have been seamless, thankfully.

As a public company, it's naturally grim to see the sausage factory open for all to see. We don't know what happened behind the scenes before Lusso/HCC or even how dire things were at PE before the merger was consummated or even at ER before the rate rebalancing. This isn't meant to sugarcoat UE's position. It's not pretty. However, we don't know if any of the other players are going through even darker stretches -- or HAVE gone through darker stretches -- and lived to tell the tale.

And even if the CRO does file for bankruptcy, there's a material diffference between Chapter 7 and Chapter 11.

 

[BestHC]

A New Story

I can't wait to share my story...I should find out tomorrow whether my confidentiality agreement is no longer valid and I can open my mouth

 

[ClubsRDead]

So what's the big story....do tell. Lemme guess, Jim and company came up with $200MM and are going to save the day?

 

[DCMember]

Wilkes- I agree that with a public company nothing nothing is being hidden but UE is certainly not communicating the info to the members. I understand why they are not doing it and would likely do the same but it would be nice if they at least put a notice on the member's only website announcing when a filing had been made and what it contained. I don't track when their filings are due so appreciate it when somebody here does let me know. That said we are very much enjoying our current trip (glad we are not on the outer banks!) and have always paid our dues and assessment on time to support the company and try to keep it going. Just my 2 cents for a little more info from Jim et al.

 

[willmyclubmakeit]

I am sure if it was good information it would be posted. I would bet that they have their hands full trying to save their equity/options, employment agreements, jobs for their team, and our club. I hope a solution is found that allows the club to continue.

 

[wilkes591]

Wilkes- I agree that with a public company nothing nothing is being hidden but UE is certainly not communicating the info to the members. I understand why they are not doing it and would likely do the same but it would be nice if they at least put a notice on the member's only website announcing when a filing had been made and what it contained.

I agree a little more transparency with members would benefit the club in the end. I was alluding to poster's who post "the poor people joining the club" and similar junk, since the club went public. No excuses, the information is there now. Have a great time and I am hoping we all get to enjoy more great travel opportunities with the club. The 10th is right around the corner, I guess a Web meeting will happen before then. If not, I do not think the silence is a good sign.

 

[wilkes591]

So what's the big story....do tell. Lemme guess, Jim and company came up with $200MM and are going to save the day?

You are confusing UE with Quintess. They have the sugar daddy that gave them 200MM. Must be nice!

 

[Kagehitokiri2]

quintess investment is over time. (cant imagine it cant be canceled.)

UE is presenting 2 different sets of facts. obviously one is not factual. thats not really up for debate.

BestHC is obviously talking about some kind of settlement with NDA. i presume UE violated their part of NDA? wow. not smart, but what DC has done anything smart, besides take advantage of people who keep paying? look forward to getting more detailed information. bombshells???

 

[SciFrog]

Quintess $200mio is over 10 years. Still anonymous fortune 500 benefactor, still paying on time (of course the longer he pays, the more likely he will go all the way). If anything also shows UE business model is not sustainable.

 

[ClubsRDead]

Haven't heard much about Quintess lately, does anyone from there post on here? Are they selling? Refunding? Line of members wanting out (or in?). Their homes look nice at least. What is the latest on ER from this group - last I read was a big bunch of people wanting out (on here) and Case tossing cash in? I would suspect no one is really adding new money to any club - are they? M or AK, the "equity" models, are they growing? Another bankruptcy in this arena will certainly slow it down just as bad as the Private Retreats or Tanner one did, or so I would think. Thoughts? Are any of these candidates to merge with Ultimate? And what happens to the PE members when this goes down, do they all go down together?

 

[Kagehitokiri2]

IIRC Q claims with investor they are break even.

i think ER claims the same with dues hike, after case put in, what was it, $20MM?

luxus is the only club that does 0 debt and 0 leases.

 

[Kagehitokiri2]

http://destinationclubnews.com/News_Quintess_Names_Top_Destinations_To_Travel_With_Children.php

4 US and 1 mexico

 

[SciFrog]

IIRC Q claims with investor they are break even.

i think ER claims the same with dues hike, after case put in, what was it, $20MM?

luxus is the only club that does 0 debt and 0 leases.

It is easy, the investor pays for the debt interest, the members dues pay for running the club. So the club can run a few years without growing. Why is there debt? The homes are nicer (ie more $) than ER or A&K, yet deposits and dues are the same.

The club has a few leases, but it is to match the deferred deposit for a limited number of new members. The home portfolio has been actively worked on, removing the unpopular ones replaced by better destination and/or homes.

 

[ClubsRDead]

It would seem to me (not knowing full details of Quintess, or of the involvement or role of their investor) that what you're saying is they are basically running yet another unsustainable club. If they have debt and interest that cannot be covered by dues and member fees, then it's too high - right? And their dues already seem relatively high, or "market place" from a casual glance. One has to assume if the investor is carrying the loan costs, then he owns the collateral being secured by the loan - or has a receivable against the club. Or am I missing something? The club is worth nothing without dues paying members, but it's worth even less with high debt. Isn't that the problem we're seeing this very moment at Ultimate? Dues won't cover expenses and debt costs?

 

[Buon Viaggio]

Seems like Case is injecting the $20 mil just to bridge the gap until the new dues structure is completely phased in. The new member sales have been increasing every month, inventory is being adjusted and the 3 in 1 out ratio remains in effect. A majority of members on the waitlist still pay dues and travel. ER lives within it's means more so than Quintess and so the long term stability and prospects are much stronger. Members are very happy overall.

 

[SciFrog]

It would seem to me (not knowing full details of Quintess, or of the involvement or role of their investor) that what you're saying is they are basically running yet another unsustainable club. If they have debt and interest that cannot be covered by dues and member fees, then it's too high - right? And their dues already seem relatively high, or "market place" from a casual glance. One has to assume if the investor is carrying the loan costs, then he owns the collateral being secured by the loan - or has a receivable against the club. Or am I missing something? The club is worth nothing without dues paying members, but it's worth even less with high debt. Isn't that the problem we're seeing this very moment at Ultimate? Dues won't cover expenses and debt costs?

The current debt was created because the early members paid less deposit, the home price/deposit ratio can now allow to get homes without debt because homes are cheaper. The original plan was to raise deposits, but there is less need for that now. There are savings when more members will join, their dues will also cover some of the interest. But of course the club will need to grow at some point, but that is a few years away. Also once the club will be full, it will move to one in one out and should get revenue from the non refundable portion of the deposits. Well, at least this is how I see it. Not ideal but somewhat sustainable.

And if anything just shows how UE has little chance to survive.

 

[SciFrog]

Seems like Case is injecting the $20 mil just to bridge the gap until the new dues structure is completely phased in. The new member sales have been increasing every month, inventory is being adjusted and the 3 in 1 out ratio remains in effect. A majority of members on the waitlist still pay dues and travel. ER lives within it's means more so than Quintess and so the long term stability and prospects are much stronger. Members are very happy overall.

Of course ER is in a better position, they were much bigger and established when the crisis hit. Q had not reached a critical balance yet.

 

[Desties]

And if anything just shows how UE has little chance to survive.

As the naked emperor due to the public filings, we know that UE's viability is challenged in this dicey climate. September 10 will either be a good day or a terrible one.

However, even in this gloomy stretch for vacation real estate, UE still managed to add more new members than those that went on the resignation list. If Quintess and other clubs bent over backwards to offer Lusso refugees sweetheart deposit-free deals, the value of UE's much larger base of dues-paying members should be even more compelling in this dry lead market. We're the Glengary leads!

I'm hoping it doesn't come to that, and that either a sugar daddy, a realistic CapSource, or a friendly buyout surfaces, but the only reason that all three of the largest non-equity clubs aren't self-sustaining at the moment is that investors aren't making up their investments in real estate appreciation. If you believe that the devaluation of luxury travel properties is temporary, then so is the lack of viability of the model itself.

UE isn't in a position of strength right now, but it still has the smaller resignation list among the three largest non-equity clubs (unless something has changed at Q or ER since the DC4MS days) and -- unaware of trends at ER or Q -- it has been able to grow its membership base through the first half of this year. UE's major shortcoming is that it began the year without the seemingly healthier cash backing at the other clubs. It has had to pay the price for that shortcoming this summer, but the model isn't as broken as it is not all-weather. These just happen to be the days of galoshes and ponchos.

 

[ClubsRDead]

I don't really understand your theory. A smaller resignation list doesn't really mean much. Realizing that maybe 1/2 of their membership is from TH and another 1/3 or so from PE, those members have no redemptions right now, so what would they be resigning for? They're basically dues paying members for travel only, right? Bringing in new members is one thing, but bringing in new members with cash is another. It looks like none of the clubs have been able to do that. Today a member, perhaps next week a creditor. We've all seen this before. UE likely has a chance to redeem themselves if they come up with a large cash capital partner, but who would do that at the current debt levels on the homes?

 

[Kagehitokiri2]

i think if nonequity was transparent, and not high margin, that would be totally different from seeming like a scheme, whether a scheme was the intent or not. some of my thoughts >
http://tugbbs.com/forums/showthread.php?p=882883&highlight=nonrefundable#post882883

ER has gotten a lot of nonrefunable deposit payments >
http://tugbbs.com/forums/showthread.php?p=882265&highlight=nonrefundable#post882265