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Press Release: Sunterra Corporation
May 16, 2006
LAS VEGAS, NV -- Sunterra Corporation (NasdaqNM:SNRR) one of the world's largest vacation ownership companies,
has acquired leading specialized online rental company Beach Group LLC for approximately $4 million in cash and
future consideration. The acquisition is an integral part of Sunterra's strategy to identify and maximize new marketing
channels that provide efficient access to the company's targeted customer.
Beach Group's rental clientele fits the demographic profile of target customers for Sunterra's premium properties
and Sunterra expects that this acquisition will provide the Company with a new channel for rental opportunities
and vacation ownership sales. Beach Group will be integrated into Sunterra as a profitable enterprise before realizing
any benefits from synergies.
Sunterra's president and chief executive officer, Nick Benson, commented, "I am excited about the acquisition
of Beach Group as it provides the Company with an immediate fit with our recently announced strategic direction
for our North American business. In addition, it is also an example of our focus on developing cost-efficient methods
for generating quality leads which, we expect, will in turn improve sales volume per guest and reduce average sales
and marketing costs."
Beach Group principal John Gilliam will become president of the newly formed Sunterra Beach Group LLC.
Beach Group generated $15.4 million in gross rental activity in calendar 2005, with $1.7 million in net rental
commissions being retained by Beach Group. Further details about the transaction were not disclosed.
About Sunterra
Sunterra is one of the world's largest vacation ownership companies with more than 318,000 owner families and nearly
100 branded or affiliated vacation ownership resorts throughout the continental United States and Hawaii, Canada,
Europe, the Caribbean and Mexico. Sunterra news releases, as well as additional news and information on the Company,
can be found at www.sunterra.com.
Forward-Looking Statements; Risks and Uncertainties
Statements about future results and plans made in this release constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act. The Company cautions that these statements are not guarantees
of future performance, and involve risks and uncertainties and other factors that may cause results to differ materially
from those anticipated at the time such statements are made. For example, future results, performance and achievements
may be affected by our ability to successfully integrate the operations of Beach Group LLC into the Company, to
successfully implement our strategic, operational and marketing plan including the cost reduction plan of our European
operations, the actual amount of the pretax restructuring charge, the actual amount of the cash expenditures associated
with the restructuring plan, general economic conditions, including a global economic downturn, the impact of war
and terrorist activity, business and financing conditions, foreign exchange fluctuations, governmental and regulatory
actions, the cyclicality of the vacation ownership industry, relationships with key employees, domestic and international
political and geopolitical conditions, competition, downturns in leisure travel patterns, risk associated with
the level and structure of our indebtedness, risk associated with potential acquisitions and dispositions and other
circumstances and uncertainties. In addition, potential risks and uncertainties include, among other things: (1)
the results of the Audit and Compliance Committee investigation and review of allegations as described in Sunterra's
press release issued May 3, 2006; (2) expectations as to the timing of the completion of such investigation by
the Committee and its independent counsel, Sunterra's review, restatement, and filing of its previously issued
financial statements and its assessment of the effectiveness of disclosure controls and procedures and internal
control over financial reporting and the review and filing of Sunterra's Form 10-Q for the fiscal quarter ended
March 31, 2006; (3) expectations as to the timing of engaging a new independent registered public accounting firm
and as to the level of cooperation from Sunterra's former accounting firm; (4) should Nasdaq seek to delist Sunterra's
common stock following an untimely SEC filing, the possibility that the Nasdaq Listing Qualifications Panel may
not grant Sunterra's request for an extension to regain compliance with Nasdaq listing qualifications or Sunterra's
failure to regain compliance within any extension period, in which case Sunterra's common stock would be delisted
from the Nasdaq National Market; (5) the effects of any required restatement adjustments to the previously issued
financial statements and possible material weaknesses in internal control over financial reporting; (6) the effects
of any lawsuits or governmental investigations alleging among other things, violations of federal securities laws,
by Sunterra or any of its directors or executive officers; (7) the possibility that any default under Sunterra's
financing arrangements, including our Senior Finance Facility and Senior Subordinated Convertible Notes could cause
acceleration of repayment of the entire principal amounts and accrued interest on such arrangements; (8) the effects
of new accounting pronouncements; and (9) additional risks and uncertainties and important factors described in
the Sunterra's other press releases and in Sunterra's filings with the Securities and Exchange Commission, including
our most recent annual report on Form 10-K and quarterly report on Form 10-Q. Although we believe the expectations
reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that
our expectations will be attained or that results will not materially differ. We undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of new information, future events or otherwise,
except as may be required by law.
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Contact:
Investor Contact:
Marilyn A. Windsor
Sunterra Corporation
702-304-7005
investorrelations@sunterra.com
Media Contact:
Pamela Johnston
PJ Inc.
Pamela@pjinc.net
212-629-8445
Source: Sunterra Corporation