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Resort firm
Sunterra declares
bankruptcy
But its Hawaii unit
By Russ Lynch
is not affected
Star-BulletinInternational resort operator Sunterra Corp. filed for Chapter 11 reorganization bankruptcy today, but its Marc Resorts Hawaii unit was not included in the filing, the company said.
Sunterra acquired Marc Resorts, which manages 19 properties, two years ago. Sunterra also is a partner in two Embassy Vacation Resort operations in Hawaii, one on Kauai and the other on Maui.
Sunterra, based in Orlando, Fla., describes itself as the largest international owner and manager of vacation ownership resorts, with 90 time-share properties worldwide and 300,000 owners and members.
The company, which had losses over the past two years and ran out of cash, last week announced plans to close several operations and lay off more than 900 employees. Hawaii operations were not included.
Sunterra said today it has a commitment from a lender willing to provide $25 million in interim financing as soon as the court allows Sunterra to remain as debtor-in-possession, running the company itself while it reorganizes. The lender, Ableco Finance LLC, has agreed to expand the credit line later to $51 million, subject to the completion of certain other conditions, including court approval, Sunterra said.
Sunterra lost $16 million in the first quarter and said it was in default on about $5 million in payments. Its stock, which has dropped 97 percent so far this year, fell 9.3 percent yesterday, to 34 cents from 37 cents. Trading in the shares was halted today by the New York Stock Exchange.
Sunterra, previously Signature Resorts Inc., acquired Marc Resorts from its founder, Michael V. Paulin, in 1997.
