The Timeshare Beat
July 20, 2001
In a sudden move that caught many by surprise, King of Prussia, PA-based Epic Resorts has apparently closed several
sales centers across the USA. It is uncertain at this time how many of their eight resorts and five off-site sales
centers have been affected.
In related news, vendors to the company have received faxed notices today from Epic Marketing saying that due to unforeseen problems they will not be receiving vendor checks today and that they will know more about what will be happening with the checks sometime between Tuesday, July 23, and Friday July 27.
Attempts to get confirmation and further information from Corporate Headquarters have been unsuccessful. The Timeshare Beat has called Epic, clearly identifying ourselves and stating that we were attempting to get clarification on the situation so that anything we print will be accurate and include Epic's point of view. The receptionist placed us on hold several times, refused to provide any information, would not pass our calls through to the Exective management team and in fact, as we kept inquiring into this situation, Epic simply chose to hang up on 'The Beat'.
We contacted various Epic sales centers around the country and received recordings at several of the locations stating that they are going through a reorganization period and closures will be in effect for approximately a week.
The Las Vegas office claimed to be in its sales meeting with no one available to speak to The Timeshare Beat; the Hilton Head office provided a recording stating that they are in the process of reorganizing and will be closed for about 7 days to better serve your needs; at the Daytona Beach office a very nervous person begged off from any comment, saying that we needed to talk to someone more important about the situation. Ensuing incoming emails have indicated that the Daytona Beach Regency sales office there has indeed been shut down.
Calls to other resorts, made during normal business hours, reached only voice mail or were not answered at all.
No one has yet returned our calls, from Corporate Headquarters all the way down the line. (see update)
That Epic has been in trouble has been apparent to many for some time, starting with the FTC's "Operation Travel Unravel" in August, 2000, when the FTC filed three complaints in federal District Court seeking to permanently enjoin certain alleged law violations and award consumer redress. The complaints were brought against Leisure Time Marketing, Inc./Discovery Rental, Inc. of Cocoa Beach, Florida; Med Resorts International, Inc. of Clearwater, Florida; and Epic Resorts, Inc. of King of Prussia, Pennsylvania. In each case, the Commission sought a temporary restraining order with asset freeze and appointment of a receiver to ensure that no additional consumers were defrauded while the permanent injunctions are being sought.
During the ensuing time, many complaints have been voiced to The Timeshare Beat concerning Epic's alleged failure to pay vendors in a timely manner, cuts in commission and bonus scales at resorts, and other monetary issues.
In mid June we were made aware that Epic Resorts did not make their contractual coupon payment on their $130 million 13% bond deal on June 15th and were in their 30-day grace period. We were also informed that their primary lender at Prudential had shut them off and that Credit Suisse had not yet stepped up with a hoped-for new loan facility. According to sources close to the events, Epic refused to talk to bondholders about the missed coupon or to correspond with them about the bonds in any fashion.
On June 29, 2001 Epic announced publicly that it was continuing in active discussions with Credit Suisse First
Boston to provide a timeshare receivables purchase facility to meet its funding needs, and that if those discussions
did not result in agreements necessary to provide financing to sustain normal sales and marketing operations, Epic
intended to actively explore alternatives.
In that announcement Epic finally acknowledged publicly that they did not release the installment interest payment
that was due on June 15, 2001 (notes due 2005 issued by Epic and its co-issuer and subsidiary, Epic Capital Corp.),
although it had sufficient funds to do so. According to that press release, failure to pay interest on the notes
when due would be an event of default under the notes if continued for 30 days. Additionally, the monies to make
such payment were not held, as required by the terms of the notes, in a separate escrow account.
The 30-day grace period is now over, and it appears from today's events that Epic's attempts to stabilize its funding arrangements may not have been successful.
Subsequent to the publishing of this article, The Timeshare Beat received a phone call from Ken Knight, VP Operations, asking us to call him at Epic Headquarters to discuss the situation as fully as he is allowed. In the interview that followed Knight advised us that a primary lender to Epic has violated the lending procedures several times over the past 3 years, and this current situation caught them as much by surprise as everyone else.
Although Knight could not comment on specifics due to potiential litigation between Epic and the lender involved in this situation, he was adamant that Epic's priority goal is to pay all vendors, sales and marketing staff and/or anyone to whom they owe money as quickly as possible. He was, however, unable to comment as to when payment could be expected to occur nor could he comment on issues regarding time frames during which sales offices would be closed.
It should be noted, however, that all voice messages, etc., from The Beat's previous efforts to contact Epic were consistent in saying that the closures would be in force for about one week.
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