Sea Island seeks adviser for possible sale
Wednesday, January 27, 2010
One week after having announced that it will host a PGA Tour event, Sea Island is back in the news.
This time, there was no celebratory news conference.
Sea Island Co., parent of the exclusive coastal resort and its Seaside Course (No. 2 on Golfweek’s Best in Georgia), said it will hire an investment bank to review its “strategic options,” which could include new ownership, the Atlanta Business Chronicle reported Jan. 27.
Bill Jones III, chairman and chief executive officer of the resort, said at a meeting of about 500 members that an investment-banking firm will be retained, the Chronicle reported, citing an anonymous attendee. Jones said that the debt-laden resort has reached a forbearance agreement with its lenders.
The Chronicle, citing its source, said members were appreciative about having Sea Island’s perilous financial situation clarified.
The news stands in contrast to the joyous mood just last week, when the PGA Tour completed its 2010 schedule by securing Sea Island’s Seaside Course for The McGladrey Classic on Oct. 7-10. Davis Love III, a Sea Island resident whose foundation will be the tournament host, will be tournament chairman. Zach Johnson, another Sea Island resident, will serve on the tournament board.
The Fall Series event, which will offer a $4 million purse, will not be affected by Wednesday’s news, the Chronicle reported, citing a Sea Island statement. Day-to-day operations at The Cloiser and Sea Island Lodge hotels and the golf courses also will proceed uninterrupted, the company said.
Jones, a grandson of Sea Island’s founder, was quoted by the Chronicle as saying “we know that we can’t dig out of this financial situation by ourselves.’’
Sea Island’s troubles can be traced to a massive expansion completed in 2008 that reportedly cost more than $500 million. Concurrently, the economic downturn slammed the brakes on home sales and slowed the flow of vacationers to the storied five-star resort.
Last summer, Sea Island had announced a debt restructuring of about $400 million. In October, the company said it would plan to sell nearly 18,000 acres.
“Reaching an agreement with our lenders is an important step for Sea Island because it gives our company the necessary time to address our loan situation in an orderly manner,” said David Bansmer, Sea Island president and chief operating officer. “We expect our investment banking partner, which we anticipate will have a strong record in advising on corporate transactions, to provide us with important strategic options for consideration. Meanwhile, we at Sea Island will remain focused on what we do best – providing superior service to our members and guests.”