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Recent Destination Club News

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DC News articles on UE and CRO:

This seems to be mostly from the 8-K, but still a nice summary.

http://destinationclubnews.com/News...te_Escapes_Appointment_of_CRO_Sheon_Karol.php

http://destinationclubnews.com/News_CRO_Sheon_Karol_And_His_Plans_For_Ultimate_Escapes.php

"...Earlier this week, Karol prepared a marketing plan identifying properties of Ultimate Escapes to be marketed and sold, including an "expected sales price" and "minimum sales price" for each. Following the approval of this plan by CapitalSource, Ultimate Escapes will begin listing such properties commercially.

Any offers that Karol deems to be "in the best interest" for the lender will be submitted to CapitalSource for approval. Offers above the minimum sales price however won't need approval from CapitalSource to be sold.

Karol will also be responsible for "creating and implementing an operating strategy designed to optimize cash flow from operations, formulating and directing the process for any potential sale and/or merger of UEH (Ultimate Escapes Holdings) or the Company’s vacation clubs, proposing, implementing and leading the Borrowers’ restructuring initiatives, formulating and directing the Borrowers’ asset disposition process, including the proposed sale of certain of the Borrowers’ specified properties, and evaluating and recommending the retention of any professionals, including an investment banker and/or real estate broker, to assist in accomplishing any of such actions...."
 

Kagehitokiri2

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I can't wait to share my story...I should find out tomorrow whether my confidentiality agreement is no longer valid and I can open my mouth
I apologize for being a bit premature on the big news posting. It seems that others that I am involved with continue to believe that our conflict of interest phase is still in effect. I don't agree. Out of respect to the group I will resist posting my story a little while longer. .
those others believe your conflict of interest is in effect until when?

We will find out on Friday, most likely Chapter 11 is file on 09/10/2010 or 09/13/2010.
why those dates? so tomorrow (friday) or next monday?

dont know where Q stands on RC turks and caicos, but >
http://online.wsj.com/article/SB10001424052748704392104575475832271292878.html?mod=googlenews_wsj
Properties that Gencom still is trying to rescue include the Ritz-Carlton Kapalua and the Ritz-Carlton Molasses Reef project, stalled in construction in the Turks and Caicos islands in the Caribbean
 
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Kagehitokiri2

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http://www.sherpareport.com/destination-clubs/exclusive-resorts-new-members-0910.html
We’ve heard from Exclusive Resorts that June and July this year were the best back to back months for new members joining the club, in over two years.

The club has added over 100 new members so far this year, and has also seen about 70 current members upgrade their membership plan to enable them to travel even more with the club. The number of upgrades to date are more than the club saw in the whole of 2009.


150 new members joined [Exclusive Resorts] in 2009 and December was our best new member acquisition month of the year.
Prospects took approximately 450 [sponsored guest] trips during the year, which resulted in about one-third of our new membership sales in 2009.
33% x 150 = 50
50 / 450 = 11% :rolleyes:

from BR-YIR2008-01.pdf >
The Club sold 380 new memberships in 2008 and exceeded $125 million in new and upgraded member sales.

Over 200 members purchased additional days in 2008 alone.
Exclusive Resorts had a record year for membership upgrades, with over 200 members purchasing more days of usage.
[unclear whether upgrade or just additional days]

In 2008, almost 40% [152] of our new membership sales involved a referral from an existing member.
 
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Desties

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why those dates? so tomorrow (friday) or next monday?

The SEC filing had listed the 10th as CapSource's extension. Since UE probably has until the end of the day, I'm guessing that why Wilkes went with tomorrow -- or Monday.

One uninspiring sign (for those like me who was hoping something would happen to avoid Chapter 11): I just pulled up a quote on ULEI. It had been locked with a Bid at $1.40 and Ask of $1.45 nearly everytime I pulled up a live quote (once every few days -- I'm not that anal). But I pulled it up just now and it's Bid $0.56 and Ask $1.30.

If ULEI files for Chapter 11 over the weekend, the stock would probably be worthless (since I'm fairly sure that member redemptions -- though behind CapSource -- have priority over common shareholders). The sharp drop (and wide spread) aren't very comforting.
 

Kagehitokiri2

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The SEC filing had listed the 10th as CapSource's extension. Since UE probably has until the end of the day, I'm guessing that why Wilkes went with tomorrow -- or Monday.

It had been locked with a Bid at $1.40...now and it's Bid...
ah.

http://destinationclubnews.com/News...ip_Callaghan_Remain_With_Ultimate_Escapes.php

Tomorrow is the forbearance termination date as outlined in Ultimate Escapes Form 8-K, the date that lender CapitalSource specified in their forbearance agreement with the club.
Both Keith and Callaghan have one year agreements with the club concluding on October 29, 2010. Both are subject to an automatic renewal of an additional 12 months upon the expiration date, unless terminated by either party 90 days before the end of the current term. The two highly experienced executives account for a combined salary of $750,000 and are both eligible for a "performance-based bonus as additional cash compensation."

The 90 day window prior to the automatic renewal date has already passed, meaning that if the pair haven't already been notified of an upcoming termination, they will be entitled to a severance package of six months compensation and the prorated amount of bonuses earned during the current fiscal year if they are relieved.
:rolleyes:
 
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the question could be answered soon

I guess I may have to change my screen name---what defines making it? Making it to chapter 11? Cotinuing to travel? Being absorbed into another club? Any help pondering this question will be appreciated and even better if someone finds a solution for the members but as the clock ticks I get more and more concerned that our fate will be sealed by others.
 

ClubsRDead

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Did anyone see the UE email and presentation tonight? What a friggin joke. This guy wants to charge everyone a bundle and convert it to stock calling it a member owned plan, but not eliminating all the debt. Nice try JT, see if you can get your own share price up, retain your job and leave everyone still with debt on the club. And he expects people to approve this? File a damned bankruptcy and sell it in pieces. This is purely a ploy for him to get cash for himself and his mgmt team. And to wipe out his debts to us by eliminating our redemptions.
 

Kagehitokiri2

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how much did they raise in march?

wonder what theyll raise this time. whats the deadline? will it be extended?

(no one is surprised, are they?)
 

AKTHUE

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Makes no economic sense

JT calls this a conversion to a member-owned club, but it's really a muddled mess where the key is that he's selling $15 million of new equity to members at $3.97/share, when the shares are worthless!

The current reality is that the value of the club is less than the amount owed to CapitalSource. Existing equity is worthless (as is management...)

A more realist proposal is that if members come up with $15 million, then CapitalSource agrees to cut their debt to $60 million, the members own everything, and JT is thrown out on his a$$.

I have no doubt that members will not get a clear description of the existing capital structure or obligations, but if they agree to this conversion, I'm sure that JT will have a favorable employment contract, and probably retains various warrants or options or convertible shares that suddenly he owns a majority of the club again.

JT is appealing to the members with the pitch "unless you agree to this you will lose your valuable membership and travel opportunities". Will he succeed at tricking the members again?
 

Jack1234

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Wish I could say I was surprised by this but it seems like more smoke and mirrors. No way could I support this based on a quick first read. Let's go for one of the other options and have a real change.
 

msscarlet

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It was hard not to laugh during JT's presentation especially the slide which described "The Best of Times." It was hard not to scream when he talked about management's sacrifices....

Even if one thought there was value in the company (AND I DECIDEDLY DO NOT) there is no way that any outside investor in the proposed time frame (or possibly at all) could understand the self-dealing and smoke and mirrors that this management team has created. I have a bridge to sell to anyone who is prepared to give one cent to them.

At least with a bankruptcy filing we can claim a loss for our deposits and get some tax shelter.

I tried to respond immediately to the poll but was unable to find it on the website. Has anyone else had that problem?
 

msscarlet

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I thought he said four outside 'independent' board members (the majority out of 7)? As a public company they have already had the requirement for a majority of the board to be independent and we have seen what that got us.
 

msscarlet

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JT calls this a conversion to a member-owned club, but it's really a muddled mess where the key is that he's selling $15 million of new equity to members at $3.97/share, when the shares are worthless!


AMEN.
 
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comment re Board and other notes

I thought he said four outside 'independent' board members (the majority out of 7)? As a public company they have already had the requirement for a majority of the board to be independent and we have seen what that got us.

I am asking about the existing board members he claims are involved in the decision process now.

The four independent members you mention relate to the plan of a new Board after the members buy a lot of worthless stock at $3.97 per share and JT continues to own his boatload of shares.

The whole thing is nuts - UE shares don't trade, but if they did it would be for pennies. So JT says "buy shares at $3.97 so I can stay in actual control (after all, he alone would have 3 seats - the other four scattered among a large base of shareholders) or else."

And, the $15 million will only pay off the current A/P, overdue interest and make absolutely no reduction in the CS debt....thus the debt remains and the club fails again...AMAZING...!!!

With 33 million shares out after members make another $15 million gift, the valuation of the club is over $120 million even though the $100+ million in CS debt would still be outstanding. All this on maybe $80 million in current value of real estate....and a money losing business model and the same old management.

I vote no.
 

SciFrog

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UE real estate is only worth $80m? That seems awfully low.
 

ClubsRDead

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This is all about JT and company cutting a deal for themselves, getting people to raise the share price through conversion - which doing quick math would put about $20MM in his pocket. Screw this. There's other people "bidding" and working on conversions and I think we just need to see what pans out. Just like at TH no one bought into the mgmt run plan (though as I recall it wasn't too horrible compared to where we are now) no one is going to buy into anything that Jim and his overpaid crew are doing. The Board is listed on the web site under investor info / governance, and presumably the "restructuring committee" is comprised of the 3 other than Rich Keith, who probably can't be on it. Those three I think all came from the SPAC public offering jerkoff process and are there for their paychecks and free membership. Holding my breath that the rumors of a real deal is pending are actually accurate. I hope so because I'm not sending this guy any more money and frankly doubtful he's going to honor any of our trips. Who does he think he is to issue the releases and calls he's had when it turns out he wasn't even paying debt service? We paid him $16MM last year in bs assessment and he didnt even reduce the debt with it, just went public, filed for huge pay increases. Turns out he's sold a bunch of our houses to pay operating costs and now has all these leases that are likely cancelled. Same day, different story. There is no "member owned" when Jim still owns the majority. Vote no to Jim and lets hope the CRO is running a process to evaluate proposals. If the CRO approved this they should be gone too. And no way Capital Source is going to buy into this garbage which Jim will be using to get an "extension." We send in what, $30M a year and he doesn't even use 1/3 to reduce debt, not just pay interest? If the stock was worth a shit we'd have bought it all and done a Gordon Gecko on his dumb a** by now. Thank you Jim and "restructuring committee," you have convinced us, for good, that you are a poor manager, worse leader and financially incompetent, and for that -- you expect us to bail you out. Again?
 

3DH

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At least with a bankruptcy filing we can claim a loss for our deposits and get some tax shelter.

...not necessarily. While I am NOT a tax professional, we were told with the LUSSO bankruptcy that we couldn't justifiably take the write-off unless it was ruled -- in court -- a "theft loss". :annoyed:
 

ClubsRDead

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Recap...

Let's recap the call: He blames his "crisis" on global economics, not his own poor management. He says the club is just now ready to break even with all of the recent cuts, yet his last quarterly loss was over $6MM. He implies there is a market for sales (for him) yet says other clubs like ER and Q are having trouble. He makes it sound like Capital Source is the unreasonable party, yet he didn't pay them with OUR money? He says he can't sell memberships for 60 days - he hasnt sold them for 2 years? And says he cant sell equity, but then proposes we give him some? And threatens us with loss of reservation or (I guess) planning services. He JUST closed the Colorado office, why was it ever opened? He gives 5 plans, all of which suck (member owns, yet he still owns, permanent dues increase, merger or sale, or BK (noting that filing is likely eminent anyway). All options suck, but BK is probably the best. **(Note - how did he buy our club from TH and owe never reduce the loan balance after all of this time after all of the money we gave him?)** He says "some believe" these are the dollars we need to charge you to keep it running - not solve it, or fix it. Who is "some people?" $30k, $40k and $50k conversion fees per club member are you out of your friggin mind? I hope you have some money to buy this website too because you are smoking the pipe Jim. Or, tell us he will double our dues for every year. Wow. His big push for "member owned" means "Jim owns." He believes in it so much why didn't he do it initially and before he got stock? he says he will show the "plan" next week based on our vote of support for it. he wants our dollars to wipe out a 2nd mortgage which he owes to JDI and which would convert it to stock, putting serious cash in HIS pocket at almost $4/share. He says they are a company with $80MM of liabilities, yet they owe much more. He claims they've cut their pay (since when) and would work for 1/2 going forward, he makes $500k now. He wants to "negotiate" a new salary agreement. How about unemployment? He should have been making cuts months, years ago - not since last month. This is a threat, nothing less. Basically, if you dont support this, your trips get cancelled. If people agree to this then pigs truly do fly.
 

Desties

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I don't buy the $80 million property figure. The number of owned properties was 94 at the end of June. As bad as the real estate market has been, there's no way that the average property has a market value of $850k. Is the figure higher or lower than the $145 million figure in the books (based on cost minus depreciation & amortization)? I would think lower, since vacation real estate devaluation has decreased at a faster pace than D&A, but I'd be shocked if the 94 owned properties are worth less than $120 million or so.

Whatever happened to identifying the properties up for sale and sending out to memebers who may be interested in buying them?

And tripling-quadrupling the number of shares in a recapitalization will NOT raise the stock price. Just look up YRC Worldwide, Sirius XM Radio or any other company that diluted the share count in a push to stay solvent -- the price drops. The $3.97 figure is just a way to save face with the RAP conversion folks last year and eliminate the RAP liability at a deep discount. The end result is that the balance sheet will look a lot sweeter (including the $10 million in debt that will be converted at that rate), but it's not a ticket to a higher share price until the fundamentals seriously improve.
 
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...not necessarily. While I am NOT a tax professional, we were told with the LUSSO bankruptcy that we couldn't justifiably take the write-off unless it was ruled -- in court -- a "theft loss". :annoyed:

Definitely consult your tax professional, but a theft loss generally gets you a much better write off (IIRC it is deductible from current income at ordinary income tax rates). Again IIRC, it has to be above 10% of AGI and the transaction had to have been entered into for profit (in the DC context, it seems you would have at least had to have had the possibility of a higher redemption on the back end, which some memberships provide). Problem with a theft loss as 3DH points out is there actually had to be illegality involved and a criminal intent. Not sure that a court ruling or criminal conviction is actually required, but it would certainly be a good fact from a tax perspective.

Other things to look at depending on the structure, membership plan and what happens would be is if it is a nonbusiness bad debt deduction or capital loss. It all depends on the facts though. Definitely talk to your tax advisor.

As a general matter, I don't know how management has any credibility at this point with members. I don't think you can say everything is going great, and then out of the blue say we may have to file for bankruptcy unless you give us a big chunk of money. Particularly more than once. Just for comparision sake, it seemed that Q handled this in a much more proactive and communicative way IMHO. I know that members could take the initiative and delve into the SEC filings, but I don't think most members do that. The folks on this board are the exception, not the norm.

Significant additional cuts in salaries, staffing, and offices are being made currently before a threatened bankruptcy. I bet most members don't get why this wasn't done previously.

As a member, I would want certainty and stability in my membership reservations, not to have to pony up additional funds in order to avoid losing my vacations every year or two. To me, given all of the other offers out there, the only way that I would put in money would be is if it paid down debt and actually bought me equity in the real estate in a separate member's entity that management had no part or ownership interest in. Again, that's just me. The amount of debt has to be addressed one way or another at some point. Either the debt is lowered and/or the dues are raised in order to fix it it would seem. It has always seemed crazy to me that clubs with the highest debt levels have the same or lower dues structures.

Good luck to the UE members. Hopefully, the CRO will come up with some good options that will provide more long term stability.
 

PuntaEscape

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Questions

The UE plan asks us to raise the important questions and I think we should do so.
The $10 M first mortgage holder is listed as a name of an organization, who are the underlying shareholders of this, who will benefit from the payout of this first mortgage? Is it Jim and Rich? Not clear also how many shares there will be in the hands of Jim and other principles when all is done. We should know that.
It is also not clear to me, what a non-binding poll will do with regard to Capital Source. This is really only a delaying tactic. A real danger here is that people cancel forward reservations and stop using the club which effectively drives them under. Also if sales are coming from referrals, how could any of us recommend friends join this club now. Fundamentally I don't know that I trust Jim at all or Rich a little. Ed Powers was let go in the Fort Collinas move, I felt he was one with integrity. Customer service has been greatly effected by the FC layoff, the club will never be the same
 
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I don't buy the $80 million property figure. The number of owned properties was 94 at the end of June. As bad as the real estate market has been, there's no way that the average property has a market value of $850k. Is the figure higher or lower than the $145 million figure in the books (based on cost minus depreciation & amortization)? I would think lower, since vacation real estate devaluation has decreased at a faster pace than D&A, but I'd be shocked if the 94 owned properties are worth less than $120 million or so.

Maybe the $80 million is low - I was just trying to guess what the homes subject to the CS loan would go for in a BK environment and a forced, quick liquidation sale.

As I understand it, the CS loan does not cover all the homes since the ones from PE and the other smaller deals came in with their own debt attached, so if there really are 94 owned homes (some may have been sold recently), many (20...??15...?? - who knows) have their own debt separate from the CS loan. The $80 million figure was a guess at the liquidation value of the ones related to CS with the assumption that the other lenders would simply take the homes they have loans against.

Anyway - let's all hope someone comes along with a far far better deal for the members than JT's ridiculous idea of "give me yet more money and I'll keep doing the same thing until the next crisis..."

Didn't someone once say that the definition of insanity is doing the same thing over and over and expecting a different result...?????? Are the members insane..?? I hope not...
 
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solution

I think you are right re: the debt that only some of it is CSE which will be a complicating factor.

I also agree that last night probably sealed the deal for many members and they would only follow a new management team---especially with their $ if not their confidence.

I believe BK is a necessary evil to clear out the current equity/warrant holders, litigation, leases, and the extent/terms of the CSE debt even.

However I hope people can see value in the muck of a decent place to invest in this real estate and tag along a large membership with $20+ million of dues which could help service a reasonable amount of debt at today's rates with a reasonable overhead structure for the size/condition of the entity.

When is the time to invest? Buy low and sell high right? if this is not the bottom it surely looks a heck of a lot more like the right time than when most of the clubs were formed and invested--hence there has to be a good risk/return possibility for the right investors if they regain the confidence of the membership via fair and accurate representations and treatment.

How do you think members would react if membership levels/dues were simplified/standardized to eliminate over some transition period a lot of the special deals and eliminate all the free deals? Wouldn't you think that could raise some more dues if there is not too much churn? your thoughts?
 
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