Sea Island Co. has fallen on bad times. This 84 year old genteel resort for wealthy vacationers is famous for its Cloister Hotel, four golf courses, executive clubs, a private development called Ocean Forest Golf Club and above all it played host to the G8 summit in 2004. The melt down is forcing them to sell their assets to two investment funds namely, Oaktree Capital Management LP of Los Angeles and Avenue Capital Group of New York.
The two funds together have agreed to pay $197.5 million in cash for Sea Island which is expected to seek bankruptcy protection for debts totaling $340 million. Bill Jones, the CEO and the fourth generation of his family to lead Sea Island had taken the loan to finance a $395 million renovation and expansion plan. This deal is a clear indicator of the changing position of the bankers who are now willing to get rid of distressed assets even at a steep loss.
This wasn’t the case till some time back when the tendency was to preserve capital while the values plunged. A federal bankruptcy-court judge in Brunswick, Ga., is expected to decide how they will divide the $197.5 million in cash proceeds from the sale. Bank of America, Bank of Scotland, Lloyds Banking Group and Synovus Financial Corp who formed the consortium that arranged the $340 million loan stand to loose substantially as a result of this deal.
Via: Online.wsj
