$315M Tender Offer Commences for Sunterra

LAS VEGAS-An affiliate of privately held Diamond Resorts has commenced its tender offer for all of Sunterra Corp.’s issued and outstanding common stock. At $16 per share, acquiring all outstanding shares would cost the company $315.5 million. The total value of the deal, including the assumption of $375 million of existing Sunterra debt, is estimated at $700 million. Both timeshare companies are based in Las Vegas.

Sunterra Corp. began mulling selling all of the company in July, after perviously looking to sell only its operations in Europe. The deal with Diamond Resorts was signed March 9 and is backed by Sunterra’s board of directors. The offer will be open for 40 calendar days following commencement. The debt financing supporting the offer will be financed by a bank consortium led by Credit Suisse.

The per-share offer price represents a 35% premium to the share price on March 8. If Diamond Resorts’ affiliate acquires at least 90% of Sunterra’s outstanding shares, it will merge with and into Sunterra, with any shares not tendered in the tender offer being converted into the right to receive $16 per share in cash. If it accumulates 80% of the shares, it has the right to acquire newly issued shares of Sunterra in order to reach the 90% threshold.