Diamond Resorts closes Sunterra deal

Polo Towers developer Stephen Cloobeck completed his return to the time share industry Friday after a three-year absence, taking control of Sunterra Corp. in a $700 million buyout through his privately held Diamond Resorts.

The transaction is one of the largest time-share industry acquisitions ever, analysts said.

Las Vegas-based Diamond Resorts will become one of the industry’s largest companies, rivaling such giants as the Wyndham hotel chain, Marriott’s vacation ownership division and two privately held time share operators, Westgate Resorts and The Berkley Group, according to the American Resort Development Association of Washington, D.C., the largest time share trade organization.

Sunterra, which operates almost 100 time shares in 17 states and 13 countries and employs more than 3,300 people, including 400 in its North Las Vegas corporate offices, will become a wholly owned subsidiary of Diamond Resorts.

“It’s never had leadership with time share experience,” Cloobeck said. “I plan on being an active CEO in running this company. We have an incredible platform with 355,000 homeowners worldwide and a tremendous employee base.”

Cloobeck, 45, said Diamond Resorts will open new corporate headquarters in Las Vegas to include the Sunterra staff. He hopes to unveil a growth strategy over the next 90 to 120 days, which could include expansion into Middle Eastern markets, areas of Mexico, South America and Asia. In the United States, the company might look to increase its presence in Hawaii and Florida.

“We have a tremendous opportunity to fortify and expand, and we may look at assembling other brands,” Cloobeck said. “We intend to focus on the customer and enhance the customer’s vacation experience.”

Howard Nusbaum, American Resort’s president, said the purchase of Sunterra gives the time share industry a new player with experience. Sunterra grew quickly in the 1990s but went through a Chapter 11 bankruptcy reorganization earlier in this decade. The company field for bankruptcy in 2000 and shed it in 2002.

“It’s good for everybody in the industry when someone like Steve Cloobeck, who has experience and a proven track record, takes a big role in a company,” Nusbaum said.

In Las Vegas, Sunterra operates the Desert Paradise Resort on Tropicana. The Polo Towers, he said, will become part of the Sunterra system.

Cloobeck opened the Polo Towers in 1993 as the Strip’s first high-rise time share. He sold his majority ownership in the resort in 2004 but kept his hand in the time share field. Cloobeck’s Diamond Resorts helped design the Marriott Grand Chateau time share near Harmon Avenue and the Strip.

He said Las Vegas may not figure in on the company’s expansion plans right away.

“It maybe a little oversaturated (with time share properties),” Cloobeck said.

In the buyout, Diamond Resorts took Sunterra private by paying $16 a share for all outstanding shares, 35 percent above the March 8 closing price. Sunterra had been traded on the Pink Sheets. Diamond Resorts also assumed $375 million in Sunterra’s debt.

Credit Suisse helped finance the buyout and Cloobeck also invested “a sizable personal stake” into the transaction.

Cloobeck likened the deal to a gaming industry buyout in the 1990s, when the ownership of Gold Strike purchased the much larger Circus Circus Enterprises. The company eventually evolved into Mandalay Resort Group.

He credited his friend, MGM Mirage President and Chief Financial Officer Jim Murren, with encouraging his return to the time share industry.

“Murren told me to get up off my ass and get back into it in a big way,” Cloobeck said. “So I did.”

News Headlines
pos-2 — ads_infeed_1
post-4 — ads_infeed_2
Local Spotlight
Home Front Page Footer Listing
You May Like

You May Like