Bluegreen Corporation Signs Non-Binding Letter of Intent to Sell Company to Diamond R

[tonyg]

A switch to II would undoubtedly mean dual affiliation as every time I have heard of a change in affiliation it means dual affiliation (at least for current owners at the change).

[BocaBum99]

We are talking apples and oranges. Every undrelying Bluegreen resort has either an affiliation with RCI or II or Both. And that affiliation was for the most part negotiated long ago for the older resorts and they remain.
The newer resorts are all afffilated with RCI only.

What the Bluegreen Vacation Club does is provide an RCI membership for all owners. All resorts individually affiliated with RCI can be used for deposits into RCI. Same with II.

It would not be hard for Bluegeen to change the high level affiliation to II. Owners can still deposit with RCI, but they can sign an umbrella agreement for all resorts going forward.

What I want is a WorldMark or DRI like interface into II. It's request first and points just get deducted from your account. The trading power value is high and the resorts that go into II are select by the Resort manager, not the owners. This gets maximum trading power for owners, a great interface for request first and flexchange and the prime weeks are reserved for owners use, not deposits. It's the best possible affilation agreement. I've asked Bluegreen to consider this approach. With DRI, it would be easy to do since they already have such an affiliation.

[GeckoSnow]

If your RCI membership fee is bundled into your Bluegreen Club fees, then as the master affiliation agreement goes, so goes your individual affiliation. If you pay the membership fee on your own-then I agree, you can vote for whatever exchange company you want. As I've understood though-its the former and not the later. I seem to remember hearing that the Master affiliation is due for renewal soon; like in the next 1-2 years...

Again, this would be a huge blow to RCI... And as was posted upthread-it is going to be an interesting ride for all of us in the industry to watch play out.

Also begs the question of further consolidation in the industry if this does go thru...

[BocaBum99]

Originally Posted by GeckoSnow

If your RCI membership fee is bundled into your Bluegreen Club fees, then as the master affiliation agreement goes, so goes your individual affiliation. If you pay the membership fee on your own-then I agree, you can vote for whatever exchange company you want. As I've understood though-its the former and not the later. I seem to remember hearing that the Master affiliation is due for renewal soon; like in the next 1-2 years...

Again, this would be a huge blow to RCI... And as was posted upthread-it is going to be an interesting ride for all of us in the industry to watch play out.

Also begs the question of further consolidation in the industry if this does go thru...

It wouldn't be a huge blow. It would be like a large company losing a midsized account.

In addition, only a very small percentage of Bluegreen owners exchange through RCI. They reported the number at the last annual meeting. I don't recall the exact number, but I do recall it being extraordinarily low. Something like 2-5% of bookable points actually deposited into RCI.

[swirg53]

This may clarify (or muddy!!!) some of the questions posed in this thread.....these are excerpts from notes at the September 2007 Annual Owner Meeting and Annual Board of Directors' meeting............be sure to send in your proxy when that time comes up (which should be very soon, I would think) so they can actually do business at the owner meeting....the first note below is about what they have to have for a quorum.

Susan

Bylaws say must have 15% proxies submitted/in attendance for quorum

4359 submitted/7 owners present
No quorum – cannot formally convene

Cannot convene, go ahead and discuss info items

Owner Utilization:
Owner use of points/BT 69%
51% points
11% bonus time
Exchange – 9319 room nights 1%

Sampler – no exchange or BT – one time 9000
69000 room 7.8% of all available room nights – Only can be used at certain resorts and cannot be used in the summer months.

Renters – 60250 room nights – less than 7% (this is not when an owner privately rented to a renter but when BG rented out excess inventory or rented for owners--a program that since has been discontinued)

Employee use – 3 days before check-in, blackout dates/holiday
19500 room 2.2% of all

Maintenance – one week per year – 5%

In excess – 165000 room nights, 18.5% UNUSED

EXTENSION OF RCI AGREEMENT
Scheduled to expire 12/31/07 = 6/30/2009 – extended So there is an RCI agreement that stands for now; I'm guessing if BG didn't extend with RCI, they could change existing RCI resorts over to II or wherever, although Boca is usually right about these things but if he is right, then I don't know why they would even have brought this up at the annual meeting.

Later notes from the Board of Directors' meeting said:
Master affiliation agreement to 09 = RCI affiliation to extend to June 30, 2009 – passed

9000 members use RCI = 7.5%

Marketable vacation time purchase agreement…. Over 2 years - allows BG to purchase banked inventory from RCI – allow BGVC owners to use – Summer mostly – BUY from select resorts, certain times – have done it for last 3 years

60 intervals purchased back – only BG inventory

$400 spent to get it back

Next meeting date: Tuesday Sept 23, 2008 @ 10 am

(Excerpted from files area of the Bluegreen Yahoo Group)

[GeckoSnow]

Thank you for posting that.. that actually helps clear up some of my idle thoughts... it helps explain how the Select Connections partnership came about since so many of BXGs owners do not use RCI... but it also shows that BXG still 'wasted' a lot of inventory in deposits to accommodate the owners that never used them... and the 18.5% of unused owner allocation is *huge*... apply a low $79.99 ADR (pick a number) to those room nights and there is HUGE lost revenue there. Now don't get me wrong... I come from a different world... but any room that goes unoccupied is a lost opportunity. It doesn't matter if it was an owner room or not. If it sat empty-WE ALL LOST MONEY (owners, developers, exchangers, etc.). That room can never be sold again.

I don't have the time (or inclination tonight) to figure out exactly how much money this is... but... you can.. How many rooms does BXG hold? Total those up and add a CONSERVATIVE $79.99 per room night to 18.5% of that total number of rooms and you will start to see where this rental animal comes into play... and why DRI or others may want it. Its cash flow and I see DRI going right down that same cash flow drain that turned the first iteration of Sunterra upside down. The sad thing is... those 18.5% of rooms went empty because there was no automated way of protecting owners usage while still marketing the rooms for sale to the rental market. You cannot do this on a large scale without automation. BXG doesn't have it. Neither does DRI.

Same square peg going into the same round hole. The regulators in both Florida and California are getting wise to this via the existing lawsuits so...

as Boca said... stay tuned... my guess-if the regulators in Florida have any say (and I think they will), they will derail this.

[Aashlee]

Got back from Owners' Update last night. As we suspected, the on-the-floor salespeople know no more (maybe even less) than we do. We would not have talked about the possible DRI acquisition unless my husband hadn't brought it up. Our salesperson said that it would be a good thing, as DRI has 130+ resorts worldwide, but she couldn't go down that road once I told her that DRI also sells access to resorts in "collections," and that unless you buy a certain number of points or packages, you may not have access to everything.

As for everything else, there was nothing new that I didn't already know: Atlantic City, New Orleans, the additions in the Branson area ... I did see the new benefits chart that included the bronze and platinum categories, though. Platinum people can get on the wait list four months ahead of everyone else. They also get lower bonus time rates and free upgrade opportunities further ahead of everyone else. I can see it being attractive to some who's retired or has some serious vacation time.

[Jya-Ning]

The market does not seem to believe $15 per share will hold. Or the deal will actually go through.

Jya-Ning

[BocaBum99]

Originally Posted by Jya-Ning

The market does not seem to believe $15 per share will hold. Or the deal will actually go through.

Jya-Ning

I think the market came to the exact same conclusion I did yesterday. That conclusion is how can a one resort private company 2 years ago swallow a $750 M whale and then only 15 months later swallow another $500M whale?

Who will be willing to finance a $500M acquisition of a company that is 50% in Residential Real Estate for a 150% premium over stock market cap?

What is the possible out for the investors? Why would this be a strategic acquisition with tremendous cost or revenue synergy? Take common and preferred stock in an already overleveraged company? Or, secure debt with sinking real estate assets?

The financing of this deal is far from assured. Even if it is, I wouldn't want to be the CEO with private equity firms up my tailpipe all the time about my quarterly results and debt convenances that would scare genghis khan. Investors would be foolish not to install their own CFO so that the CEO is handcuffed to the business plan.

That said, this is why they pay the CEOs the big bucks. If they can pull it off, Stephen Cloobeck will be a star. Got to have nerves of steel to try that one.

[swirg53]

Keep in mind also that DRI's offer to BG was (supposedly) totally unsolicited. Although it certainly does make you wonder why an exec from BG AND Shell went to work for DRI. And if that had anything to do with an up and coming offer to buy BG.

I must say one thing: Diamond Resorts International sure does have a lot more flavor in its name than Bluegreen does! LOL! While lakes often look bluish green; so does algae!

What's in a name? A rose by any other would smell as sweet.