Sunterra says slump no cause for local concern
Despite recent reports of a fourth-quarter loss for Sunterra Corporation, its management is not concerned this setback will have an effect on its holdings which include several South Lake Tahoe properties.
On March 15 Sunterra announced a net loss of $58.4 million and diluted loss per share of $1.63 in its quarter ended on Dec. 31, 1999. Compared to its 1998 fourth quarter, it had a net income of $11.5 million and diluted earnings per share of 31 cents.
“This loss was because we were down in our mortgages receivables,” said Keith Brown, vice president of corporate development in Orlando, Fla. “People didn’t pay as expected.”
This loss resulted in a $43 million after-tax charge in the mortgages receivable department. Although this number was in range, actual earnings fell below those forecast.
The company also faces liquidity risks due to exceeding its limits with many of its creditors. Discussions for advancements and waivers are being addressed with these lenders, but until they are finalized, the threat of liquidizing remains.
As a result, Sunterra has implemented a host of actions to rectify the situation. Reduction of staff size, postponement in constructing a new headquarters building and the termination of several acquisitions were some of the adjustments made.
“We believe we have a strong franchise and a bright future,” Brown said. “We don’t see this having any impact to Lake Tahoe. It’s a very important market to us. We have a lot of properties there and are very excited about our prospects.”
Lawdy Flanagan, general manager for the Tahoe region, agreed.
“This won’t affect us at all and we will continue to operate as is.”
For the year, Sunterra reported a net loss of $17.4 million and diluted loss per share of 48 cents. Sales of vacation ownership for the year were up, however, at $423.7 million, or 18 percent ahead of 1998.
Besides its sales center in Roundhill, Sunterra still has unsold time shares in the Tahoe Beach and Ski Club, Embassy Vacation Resort on Ski Run Boulevard, Ridge Point and Ridge Tahoe, and Tahoe Seasons.
Support Local Journalism
Support Local Journalism
Readers around the Lake Tahoe Basin and beyond make the Tahoe Tribune's work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Your donation will help us continue to cover COVID-19 and our other vital local news.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User