Sunterra Acquires Maltese Islands Resort

SAN GILIJAN, MALTA-Sunterra Corp. has acquired the Eden Bay Resort, a 46-unit five-star resort here that sits within the InterContinental Hotel Malta. The seller was Eden Leisure Group, which is headquartered in St. Julians, Malta. Malta’s San Gilijan is a coastal area located a short ways north of the capital city of Valletta. The Maltese islands are a popular choice for holidaymakers in the UK. Sunterra did not previously own a resort on the Maltese islands.Sunterra’s purchase includes access to amenities within the InterContinental Hotel Malta, including a pool that overlooks St. George’s Bay; a fitness center with an aerobics studio, indoor pool, climbing wall and squash courts; a beauty spa with saunas and steam room; and several restaurants. The acquisition price was not disclosed because, according to a source at Sunterra, “it’s a small deal.” In a prepared statement, Sunterra CFO Steven West said, “We are … replacing inventory that we have sold … in the past year with an attractive new destination at a reasonable cost.” Sunterra is one of the world’s largest vacation ownership companies with 100 branded or affiliated vacation ownership resorts and about 300,000 paying members. Earlier this month , GlobeSt.com reported that Sunterra has agreed to acquire the remaining 69.57% partnership interest it does not presently own in Poipu Resort Partners LP, the owner and operator of the Embassy Vacation Resort Poipu Point, 219-unit oceanfront property on the Hawaiian island Kauai. The purchase price is $27 million, which the company plans to finance with debt.Prior to that announcement, however, the company announced a “cost-reduction initiative” for its European operations. Specifically, Sunterra said it is consolidating its UK telemarketing operations to reduce volume in less profitable marketing channels and to focus on the company’s most profitable sales centers. Additionally, the company has reduced management and staff headcount levels in several areas. The savings is estimated at $3 million annually.”The European market for timeshare ownership has been under significant pressure over the past eighteen months, in part related to the changes in the package tour business and the speculative boom in ‘buy to let’ markets in certain parts of Europe where we have significant operations,” said Sunterra president-chief executive Nicholas Benson in a prepared statement. “This will result in our European revenues for fiscal 2005 being approximately 20 percent below our previous expectations, while North American revenues will be largely in line with our expectations. We believe this difficult period is temporary and in the long term, very healthy for our business.”Sunterra’s share price ended June at $16.21. It closed trading yesterday at $14.15. In noontime trading Tuesday, shares stood at $14.05.