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TPC Sawgrass Resort files for Bankruptcy

02 March, 2010

TPC Sawgrass Resort files for Bankruptcy

2nd March 2010

The owners of Florida’s Sawgrass Marriott Resort, the site of the U.S. PGA Tour’s Players Championship, sought bankruptcy protection this Tuesday after Goldman Sachs Group Inc. filed a foreclosure complaint.

The TPC Sawgrass Stadium course is currently ranked 2nd best in Florida, 31st in USA and 56th in the world.

RQB Resort LP listed assets and debt of as much as $500 million each in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Jacksonville, Florida. RQB Development also sought protection. The resort is where Tiger Woods apologized on Feb. 19 for his marital infidelity.

The 508-room hotel resort has rights to 85 percent of starting times each day to the Players Stadium Course through 2089.

In July 2006, Goldman Sachs helped finance the $220.5 million purchase of the 65-acre resort in Ponte Vedra Beach by RQB Resort and RQB Development. Goldman, which is owed about $192.5 million as of Jan. 10, hasn’t been paid since August. RQB representatives met Goldman last March and said then that they might have “liquidity issues” by August.

In June, the owners hired Perella Weinberg Partners LP to broker a solution with Goldman. After almost three months of negotiating, the owners believed that Perella had reached agreement with Goldman on a restructuring with the exception of one issue, according to the bankruptcy filing.

In October, Goldman told the owners it “intended” to foreclose on the resort. “When asked in early November why the restructuring was no longer an alternative, Goldman Sachs stated that its management had changed its mind and preferred to own the resort,” RQB said in court papers.

During that meeting the resort owners asked for additional time to find alternative capital, which Goldman said it was “prepared to give only in the event the debtor gave up their rights to file Chapter 11, among other restrictions,” according to court papers.

After talks, the owners hired Jones Lang Lasalle Inc. to raise capital to help pay Goldman. That effort “was significantly compromised” when Goldman issued “without notice” an acceleration note on Dec. 14 and filed a foreclosure complaint in state court on or about Jan. 8, according to the filing.

Jones Lang Lasalle had “five qualified investors, any one of whom was prepared to invest at least $40 million in the resort,” the company said in court papers. Jones Lang Lasalle “has not been able to progress these discussions with Goldman Sachs which has refused to deal with JLL,” the resort said in court papers.

TPC Sawgrass, which didn’t file for bankruptcy, is the headquarters of the U.S. PGA Tour. Its Stadium Course, built to accommodate spectators, hosts the tour’s Players Championship, won last May by Sweden’s Henrik Stenson. The tournament has a $9.5 million purse.

The course is known for its iconic 17th hole. Architect Peter Dye, a member of the World Golf Hall of Fame, placed the green on an island in a small lake. It has since become a magnet for pro and weekend golfers, who hit some 120,000 balls each year into the surrounding water.

RQB Resort is the owner of the hotel and cabana club. RQB Development is the owner of the golf villas, the spa and related development rights.

“The current economic recession and associated disruption in the debt and equity capital markets have been extremely challenging for the debtors,” RQB said in court papers.

The resort is the exclusive partner to the PGA Tour’s Tournament Players Club at Sawgrass, known as TPC Sawgrass, court papers show.

The new owners spent $30 million upgrading the resort, according to court filings. Sales rose 10 percent in the first full year. Then the economic decline reduced the number of conferences, which account for 65 percent of sales. The resort’s revenue for 2009 was $42.6 million, down from $56.7 million the previous year, according to court papers.

In the third quarter of 2008, the owners announced a plan to cut costs by $4.5 million. Sales fell 25 percent in 2009, “resulting in a lack of liquidity for the resort and the inability of the debtors to pay,” the company said in court papers.

The owners said the company may emerge from Chapter 11 “in time for the stabilization of the economy in 2011.”

Michael DuVally, a Goldman Sachs spokesman, declined to comment yesterday.

The foreclosure proceeding was halted by the bankruptcy filing. Under bankruptcy law, all litigation against a company or individual who seeks protection is put on hold while the case is pending. A judge can grant a request to allow the claims to proceed outside bankruptcy court in some instances.

By: Dawn McCarty and Dara Doyle - Business Week


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