"The bottom line is we've got a liquidity issue," Thomas C. Franks, Silverleaf's executive vice president, tells GlobeSt.com. "It is serious but not insurmountable." UBS Warburg has been brought on board as the exclusive financial adviser to steer the 12-year-old Silverleaf out of its fiscal dilemma.
Just a week ago, stock trading had quickly halted after Silverleaf announced that talks had fallen apart with its major lender for a credit line extension. With new talks under way, Franks says the belt-tightening process has begun and there's optimism in the ranks. General administrative expenses are gone, calls centers will be consolidated and no more expansions will be undertaken at its 22 time-share resorts until there is a turnaround. At this time, he says there are no plans to sell any resorts in the six-state portfolio, which services 116,000 members. "We are tightening up everywhere," he emphasizes.
In mid-2000, Silverleaf opened its newest resort on Galveston Island. There are five other resorts in Texas, three in Missouri and one each in Illinois, Nevada, Georgia and Massachusetts plus scattered presidential suites in the mix.
The company's year 2000 financial statement is still at the auditors' mercy and Franks isn't sure when it will be completed for the publicly traded company. According to Hoovers Online, Silverleaf had $4.3 million in net income at the third quarter 2000 close, down $1.1 million from the prior year. Assets totaled $603.2 million in comparison to 1999's $438.2 million while liability peaked at $431.9 million, up $151.4 million from the close of third quarter 1999. Long-term debt accounts for $373 million of the liability total. But, all year 2000 figures could change with this audit.
Silverleaf, which had employed 3,561 people in 1999, operates large call centers in Dallas-Ft. Worth: Arlington, Josey Lane, Carrollton, Richland Hills and Empire. Franks says the company is deciding right now which ones will stay and which will go. Other sales and marketing programs won't escape the downsizing that is aimed at keeping the resort owner operational.
"We are going to have a lower sales level to reduce the burn rate of our cash," emphasizes Franks. And, he says, it will be done in short order. The fiscal troubles spell an immediate overall restructuring for the business model and debt. But, Franks tells GlobeSt.com, the time-share model is here to stay. Members pay $9,000 for an annual weeklong stay.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
