Diamond Resorts in $700mn acquisition

13th Mar 2007

Diamond Resorts has entered into a definitive agreement under which an affiliate of Diamond Resorts will acquire Sunterra Corporation for $16.00 per share in cash, a 35% premium over the closing price of Sunterra’s common stock on March 8, 2007, the day before rumors of the acquisition entered the marketplace.  The total value of the transaction is approximately $700 million, including $375 million of existing Sunterra debt.
The Diamond Resorts affiliate is expected to commence a tender offer (the “Offer”) for all of Sunterra’s outstanding common stock within the next five business days, which is subject to extension in certain circumstances and will remain open for 40 calendar days following commencement of the Offer.  A bank group led by Credit Suisse has provided a debt financing commitment to Diamond Resorts to support the Offer.

Stephen J. Cloobeck, Chairman and Chief Executive Officer of Diamond Resorts, said, “We are very excited about this acquisition, which will enable Diamond Resorts to build on our position as a world leader in the vacation ownership industry to create the largest pure-play vacation ownership company in the world.  With over 25 years of experience and a successful track record in the development, management, marketing and sales of vacation ownership properties, we are uniquely positioned to capitalize on Sunterra’s assets and enhance its position as a global leader in vacation ownership innovation and quality.”

Mr. Cloobeck added, “We plan to invest in Sunterra’s worldwide platform, including its 96 branded or affiliated vacation ownership resorts throughout the continental United States as well as in Hawaii, Canada, Europe, the Caribbean and Mexico.  Our goal is to acquaint more consumers with the many benefits of vacation ownership and deliver an enhanced hospitality experience to Sunterra’s 326,000 current owner families in 13 countries across the globe.  We look forward to working with Sunterra’s talented managers and employees to grow the Company in the years ahead.”
The Sunterra Board of Directors has unanimously approved the acquisition and recommends that shareholders accept the Offer.  Consummation of the Offer is subject to customary conditions and is not subject to financing.  Diamond Resorts’ acquisition of Sunterra is expected to be completed during the second quarter of 2007.  Following the acquisition of at least 90% of Sunterra’s outstanding shares in the Offer, the Diamond Resorts affiliate will merge with and into Sunterra, with any shares not tendered in the Offer being converted into the right to receive $16.00 per share in cash.  Sunterra will remain headquartered in Las Vegas, Nevada.
UBS Securities LLC, Credit Suisse, Trivergance LLC, Piercy Bowler Taylor and Kern, Certified Public Accountants, and Textron Financial Corporation are acting as financial advisors to Diamond Resorts and Christensen, Glaser, Fink, Jacobs, Weil & Shapiro, LLP, Ballard Spahr Andrews & Ingersoll, LLP and Katten Muchin Rosenman LLP are acting as legal counsel to Diamond Resorts.
The Offer for the outstanding shares of Sunterra has not yet commenced.  This announcement is not a recommendation, an Offer to purchase or a solicitation of an Offer to sell shares of Sunterra.  When they become available, shareholders should read:


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