Press Release: Sunterra Corporation
February 1, 2002
ORLANDO, FL -- Sunterra Corporation announced that it had filed a Plan of Reorganization setting the stage for
an exit from its Chapter 11 process in the coming months. ``We have worked very closely with our creditors to develop
a plan of reorganization that should be accepted and executed this spring,'' said Gregory F. Rayburn, Chief Restructuring
Officer of Sunterra. The plan contemplates satisfaction of secured and debtor-in-possession claims, and the emerging
company will issue stock and warrants to satisfy unsecured claims.
According to Rayburn, ``this milestone is one of the final steps for what has been a dramatic improvement in the
company's ability to emerge as a dominant competitor in the industry.'' Nick Benson, CEO of Sunterra, added: ``We
will be very well positioned to execute this plan when it is confirmed and we emerge from the constraints of Chapter
11. We are looking forward to re- establishing ourselves as market leaders upon conclusion of this process.''
Sunterra also announced that it had settled its outstanding financing obligations with Finova Capital Corporation,
paying off loans and other obligations for approximately $105 million, representing a discount from par of approximately
$25 million. As part of the settlement, Sunterra and Finova released each other from obligations relating to such
financings and certain other matters. Sunterra obtained a portion of the funds to pay Finova from term loans under
its debtor-in-possession financing agreement with Greenwich Capital Markets, Inc.
At the same time, Sunterra and Greenwich amended the debtor-in-possession financing facility. The amendment increases,
subject to certain conditions, the amounts that may be borrowed thereunder, changes the maturity date of the loans
under the facility from June 30 to April 30, 2002 (subject to the ability of Sunterra to extend such date to June
30, 2002 upon meeting certain requirements), provides for the payment of certain additional fees to Greenwich (including
fees payable in connection with the payment of the Finova loans referred to above) and makes certain other changes.
In announcing these transactions, Mr. Rayburn stated: ``The settlement with Finova represents a substantial benefit
to our reorganization process. It resolves various disputes between Sunterra and Finova, and the payment to Finova
reflects a significant discount from the amount of Finova's fully secured claims. The transaction frees up additional
cash flow for our operations and allows us to access additional financing under our debtor-in-possession financing
agreement,'' Mr. Rayburn added.
Mr. Rayburn also said that in connection with the pending audit of its consolidated financial statements for the
year ended December 31, 2000, Sunterra and its independent auditor, had identified certain matters that, upon further
review, may result in adjustments to Sunterra's consolidated financial statements for 1999 and prior periods. Sunterra
and its independent auditor are continuing their review of these matters, Mr. Rayburn said. Sunterra will announce
the results of the review and any impact on such financial statements when the review has been completed, and pending
completion of the review such financial statements should not be used or relied upon.
Sunterra Corporation is one of the world's largest vacation ownership companies, with owner families and resorts
in North America, Europe, the Pacific, the Caribbean and Japan.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS. Certain statements in this release constitute forward-looking
statements subject to the ``safe harbor'' provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include those regarding Sunterra's proposed plan of reorganization, possible changes
to Sunterra's financial statements and other matters. Actual results or developments may differ from those provided
for in any of the forward-looking statements.
SOURCE: Sunterra Corporation