ORLANDO, Fla., May 16 (Reuters) - Sunterra Corp.(NYSE:OWN), the largest international owner and manager of vacation
ownership resorts, reported a first-quarter loss and said it was actively pursuing alternatives to maintain liquidity,
including the sale of major assets.
Shares of Sunterra closed off 5/8 to 3/4 on the New York Stock Exchange on Tuesday.
Sunterra reported late Monday a net after-tax loss of $15.6 million, and a diluted loss per share of 43 cents for
the first quarter of 2000. This compares with a net profit of $10.0 million and earnings per diluted share of 27
cents a year ago.
The first-quarter results included a $3.8 million after-tax charge for severance and other costs related to a first-quarter
restructuring of headquarters and U.S. operations, and a $1.8 million after-tax write-down of an asset based on
bids received as part of the sale of certain non-core assets.
Sunterra also said it did not make Monday's scheduled payment of $6.475 million on its $140 million in senior notes;
however, there is a 30-day period before this becomes an event of default. In addition, the decline in the company's
net worth as a result of the quarter's net loss has resulted in violations of certain requirements of its credit
agreements.
Moreover, the company said it did not make a mandatory paydown on May 1st of $4.0 million under a senior bank credit
facility and $1.1 million on the pre-sale line, which has resulted in a default under these agreements. Sunterra
said it does not have waivers on these violations.
Sunterra said that currently there is no availability under any of its existing credit facilities and cash on hand
is also very limited. The company said it is actively pursuing alternatives to maintain liquidity, including the
sale of major assets. However, if these efforts are not successful -- and there is no assurance they will be --
the company said it is unlikely to be able to continue operations.
Sunterra said it is seeking additional sources of liquidity and is in talks with banks and financial institutions.
If Sunterra defaults under any of its agreements, it said it might cause all of the company's debt to become immediately
due and payable.
Revenues for the first quarter of $98.1 million declined 14 percent from last year due to 12 percent drop in vacation
ownership interests sales. The first-quarter loss reflected higher advertising, sales, marketing and legal expenses.
Sunterra, based in Orlando, Fla., operates 90 resort locations around the world and has about 300,000 worldwide
owners and members.