Sunterra says slump no cause for local concern |

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.

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