VACATION CHARTERS FINDS NEW LENDERS

Source: Vacation Charters Ltd.

February 25, 1999
Vacation Charters Ltd., the company that owns the Resort at Split Rock and other Pocono resorts, has announced that it completed a $6.7 million refinancing deal, and expects to emerge from Chapter 11 bankruptcy soon.

The company was forced to declare bankruptcy in June1993 when local banks merged with large lending institutions, drying up lines of credit the company needed to develop resorts and related businesses.

Vacation Charters, which also sells timeshares and owns an entertainment complex called the Galleria, is Carbon County's largest employer and taxpayer. The company pumps some $22 million a year into the local economy -- $9 million in payroll and timeshare sales commissions, $12 in goods and services, and $1 million in taxes.

Following the company's reorganization after filing for Chapter 11, PNC Bank was left holding a mortgage, and the bank didn't want to finance the hospitality business. During bankruptcy negotiations that concluded in November 1996, Vacation Charters agreed to pay PNC $5.5 million to settle the mortgage and $1.2 million to other creditors.

Vacation Charters then found new lenders, but before completing the deal they had to pay off back taxes and penalties. When company President W. Jack Kalins found it was impossible to pay off all the taxes and penalties, he asked Carbon County, Jim Thorpe School District and Kidder Township to forgive a portion of the penalties. The school district forgave Kalins $25,518 of interest from back taxes, and Kidder Township forgave Kalins $40,398. The county on Feb. 12 forgave $40,000 in penalties, allowing the company to close the deal, and the company has now paid its back real estate taxes through 1998.

In a news relase, the company pointed out that all of the financing is coming from out of state. The largest lender in the refinancing is Ocwen Federal Bank of West Palm Beach, Fla., which lent the company $5 million. Litchfield Financial Corp. of Williamstown, Mass., is putting up a $700,000 loan and Liberty Bank of Middletown, Conn., is lending $340,000. The U.S. Department of Agriculture's Rural Business Cooperative Service, which promotes jobs for rural areas like Lake Harmony, backed 80 percent of the loan from Ocwen.