Thursday, December 21, 2006

Sunterra Update

Following the recent press release and conference call I asked Al Bentley if he could clarify a few points for us as Club Sunterra Members rather than Shareholders. Al has kindly put the following together for us.

I wanted to follow up with you regarding the recent press release that was issued by Sunterra Corporation insofar as it relates to the operations of Sunterra Europe (Sunterra Corporation and Sunterra Europe are collectively referred to as the “Company”). As a public company we follow the guidance issued by the SEC in regards to what information that must be provided and the timing of when such disclosures are to be made. The press release has been made public and a conference call was held by the Company with the analyst that follows the Company’s stock.

The press release addressed the following topics:

The Company has completed the fact finding portion of the independent investigation made by the former employee. The investigation determined that the Company did not maintain effective control over its financial reporting because of significant weaknesses in its internal controls in Sunterra Europe.

These issues do not relate to the resort operations, member relationships, or any financial or other transactions dealing with the members. There have been no allegations or evidence that there have been any financial improprieties that involve member sales, payment of management fees, or use of management fees. In other words, there are absolutely no suggestions that the member’s money has been used inappropriately or that members have been mistreated or mismanaged.

The financial reporting issues referred to above relate to the Company’s reporting of its results of operations and financial position to the Company’s public shareholders. The issues primarily relate to the amount, timing, and recordation of various accruals in the Company’s financial statements

To re-establish reliability and accuracy in its financial reporting, the Audit Committee and management have developed a remedial plan intended to prevent recurrence of inappropriate conduct and to strengthen and improve the control environment, permitting Sunterra’ financial statements to be fairly presented under U.S. Generally Accepted Accounting Principles (US GAAP).

A remedial plan has been developed. The remedial plan includes:


i. Training for all of our employees on a global basis emphasizing compliance with laws, regulations, and financial reporting requirements.

ii. The executive management of the Company has been changed. The corporate culture in place is one of strict compliance.

iii. Certain employees in the Company’s offices in Europe, primarily in the accounts department, have been placed on administrative leave and their continued involvement with the Company is being evaluated. This does not impact on the Company’s obligations and performance of its obligations under the management agreements. The Company has engaged outside professionals to assist the Company during this process to ensure timely and accurate financial reporting.

iv. The Company continues to employee external professionals in Senior Management positions until new management has been retained.

v. The company has engaged an external, independent accounting firm to review its internal control compliance on a global basis.

vi. Additional internal controls are being adopted throughout the organization.
European issues – Restatement and Management Review

The Company has made voluntary payments in Spain relating to the under withholding of certain employment related taxes.

The Company has engaged a team of professionals to review its tax compliance throughout Europe. These professionals, together with management, have determined that additional tax obligations may exist. The Company will be working with these professionals to quantify these payments and record the necessary adjustments in the Company’s financial statements. None of these tax issues relate to the members including any overcharges to members, etc. These are strictly the Company’s issues and not those of the Clubs.

The Company will restate its historical financial statements to reflect these tax adjustments as well as any other changes that may be necessary.

The operational review in Europe highlighted a number of issues generally confined to compliance, deferred maintenance, and resort licensing. Remediation of the compliance issues is underway and involves the expenditure of approximately $1.8 million to ensure that the resorts are compliant with all laws and regulations.

As a result of the Board decision to put Sunterra Europe of for sale, the Company is required to account for this business segment as a discontinued operation in the Company’s fiscal 2006 financial statements. The expected additional tax-related obligations, the remedial costs associated with the European operational review, and the discontinued operations assessment has led the Company to conclude that its investment in Sunterra Europe will be substantially impaired.

Accounting for Sunterra Europe as discontinued operation is an accounting term used under US GAAP. It basically means that the Company will segregate its statement of operations from those that are continuing (the US Operation) and the discontinued operations (Sunterra Europe). Discontinued operation is purely an accounting convention. There is no impact on the resort. The resort operations are not being discontinued. There is absolutely no impact on the member’s use of the property, ability to book reservations, ability to book travel etc. It is just is how we will report our results to the public.

Sunterra has concluded that its investment in Sunterra Europe will be substantially impaired means that the sale of Sunterra Europe may not be high enough to repay Sunterra Corporation for the entire value of its stock in Sunterra Europe and the amount that it has loaned to Sunterra Europe. Impairment means that Sunterra Corporation may take a loss on the sale of Sunterra Europe. Again, while this impacts our shareholders, it has no impact on the Club membership.

Subsequent to the investor call, the Company’s stock increased by approximately 10%.

Update regarding auditors

In a subsequent 8k filing the Company has announced that they have engaged BDO Siedman to be its external auditors. Accordingly, we are moving forward in getting our financial statements audited and our registrations with the SEC.

Thursday, September 28, 2006

Sale of Sunterra FAQs

I have now received the Questions from members with my Answers along with Al Bentley's Clarification of a couple of the points I asked for help on.

I hope this helps to answer your questions and explains better what is actually happening. These FAQs are also now being used by Sunterra to answer questions from members asking about the sale of Sunterra Europe.



Q1. Will our Interval International bookings be safe?

Reply from Interval International: Regardless of the outcome of any sale, we would never cancel existing bookings.

Sunterra Europe "banks" available weeks in advance with Interval International. This means that Interval International is in effect "paid in advance" by Sunterra Europe.

Q2. I thought that being points owners meant that we owned the company so it seems that it is being sold out from under us without consultation!

The entity that is being offered for sale is Sunterra Europe[Group Holdings] plc and its various subsidiaries (referred to herein as "Sunterra Europe" or the "Company"). Sunterra Europe, among other things, sales memberships in Club Sunterra and manages the majority of the Club properties pursuant to various management agreements.

The resort properties that are a part of Club Sunterra are actually held in trust for the members. Sunterra Europe is the largest member of Club Sunterra and the largest beneficiary of the trust as it owns the most number of points in Club Sunterra.

All of the members of Club Sunterra, including Sunterra Europe and the fixed/float owners, collectively own the resort properties. Sunterra Europe is offering its assets for sale which include its beneficial ownership of the Club Sunterra Trust. Sunterra Europe can not sell the weeks or points that are owned by non-Sunterra Europe members (i.e., the more than 45,000 members of Club Sunterra) as they do not own them. Current and future members of Club Sunterra will always maintain their beneficial interest in the property and thus be able to book their accommodations, subject only to the rights of the members to sale or transfer their ownership interest to another party, and the payment of their annual maintenance fees.

In other words, Sunterra Europe is not selling the members interest in the properties or the trust, only its own interest.

Q3. Where does any money for the sale of Sunterra Europe go? Who gets it?

The proceeds of any sale would go to Sunterra Corporation, as they are the owners of Sunterra Europe, the entity that is being offered for sale. The member's interest belongs to the members and is not being offered for sale.

Q4. Will we be offered the chance to sell our points at a reasonable price (should we so wish), so that we get some of the money ourselves?

Sunterra Europe does not have a contractual obligation to buy back points from members. In addition, management of the Company has advised that they do not have plans to buy back points at the current time.

There is no way to know what a potential buyer may or may not do in this regard. However, it is likely that a buyer would step into Sunterra Europe's place in regards to any existing contracts and thus would not be obligated to purchase points from members. While a buyer may choose to repurchase points from members, pursuant to the existing agreements they would not be obligated to do so. The current management of the Company would have no input one way or the other on any plans by a new owner of Sunterra Europe to offer to purchase points from members, including whether an offer were to be made and, if so, at what price.

Q5. Is it possible to calculate the likely cost, say per point, of members buying the company?

This is a question I can't answer as I do not know the price that Sunterra Corporation is asking for Sunterra Europe. An estimate based upon the 48,000 members and the estimated cost of approximately $100 million dollars and you would be talking about $2,000 per member family (if you could persuade them all get involved!).

If the members have an interest in buying Sunterra Europe they would need to form an acquisition company, get financial commitments for a fixed sum in excess of $2,000 per member family from as many of them as possible and then go to an investment banker and ask to borrow the remaining funds needed (as inevitably there will be several thousand member families not interested in doing this). In addition, officers and directors would need to be appointed to negotiate the transaction. There is no prohibition to the members in doing so if they can get organized and raise the appropriate level of funds.

Q6. Why is Sunterra selling?

Sunterra Europe is owned by a publicly traded company, Sunterra Corporation, and they have decided it is in the best interests of their shareholders to sell Sunterra Europe.

Q7. What occurred to make that decision and what period of consultation was made?

An unsolicited offer to buy Sunterra Europe was received by Sunterra Corporation. As a publicly traded company Sunterra Corporation was obligated to assess the offer for their shareholders by having the company valued. Now that this has been done they have decided to offer Sunterra Europe for sale as they already have several interested parties and expect that the announcement will attract more offers.

Q8. Would you be relaxed about booking forward for next year making it necessary to pay part of next years management fees up front? I wish to book now for holidays in March & July 2007 what should I do?

Yes, I don't see any problems with booking holidays. Whatever happens, I can't see any reason why holidays shouldn't continue as they always have. Sunterra representatives have told me that all bookings are safe and will be honoured.

Management fees are due and payable pursuant to the Club rules and regulations. Members should NOT withhold the payment of their management fees as it is in violation of the terms of the Club membership and unfair to those members who do pay on a timely basis.

Q9. Like many members, access to USA, Hawaii and Caribbean resorts have been welcomed. What are the chances of being able to convert our Sunterra Europe points to that of Sunterra America?

There has been no offer from Sunterra Corporation to do this at this time and there are no plans that I am aware of any such offer in the future. What this type of swap would actually entail is essentially a buyback of your Sunterra Europe points by Sunterra Europe and a sale of Sunterra US points by Sunterra US. Personally, I wouldn't do it. I would stick with what we have at the moment until we know what the future holds.

Q10. Can Tony find out which of the European resorts are held in trust and which are not? As the ones that are in trust are more likely to be sold off as a package, whereas those that are not can be sold individually to whoever bids the most money.

We own points, which are converted into weeks, and those weeks are held in trust to guarantee the accommodation is there for us. These weeks are spread over all the resorts apart from the Alpen Club. Sunterra Corporation has specifically said that they are not looking to sell their interest in specific resorts but are seeking a transaction that includes the sale of all the resorts of Sunterra Europe in a package deal.

Q11. Can Tony keep us as informed as possible about developments and when he hears them and not just when the company posts the news on its American website?

What members need to realise is that because Sunterra Corporation is a publicly traded company, they can't tell us anything that they haven't already told their shareholders, which means published the information on the Corporate website. They also cannot tell us anything before information is given to the shareholders. To do so would subject the members to possible insider trading violations.

Q12. It seems to me that Tony is only ever aware of what is happening whenever the company makes an announcement on there so maybe we should be checking there for news rather than paying someone else to do it for us.

Whilst it is true that very often (but not always) I am not aware of what is happening until it is published on the Corporate Website, what I am able to do is find out from the people at the top what the information actually means to us as members. I try to keep members informed with the real information whenever I can.

Q13. Is there anyway that we can be told who any potential buyers are? I doubt that this is possible due to privacy laws, but it would be useful as I am sure that these companies have their own websites and this means that we can have a look at them and see what kind of company it is.

You have answered your own question here there is no way we are going to find out who the interested parties are until a deal is publicly disclosed. This is just the way it is with these situations.

It is likely that the Company will file a disclosure statement on Form 8K with the SEC at various times through the process including the execution of a letter of intent, definitive agreement and completion of the sale.

Q14. There do seem to be a lot of rumours going around on the Internet about who is buying the company and there are some stating that the Member Directors could be fired when a new company takes over Sunterra Europe. How much of the various rumours are true?

If you choose to read those sites then that is up to you, personally I prefer to stay in the real world. I don't see how John and I can be fired when we aren't employed by Sunterra in any way, but are in fact elected directors of the points club legal entity, Club Sunterra Limited.

Q15. Although some past rumours that Tony has stated were not true in any capacity now seem to be acknowledged as fact can Tony apologise for misleading us the members over these.

I don't believe that I have ever misled the members so if you would like to back this statement up then perhaps I can answer it. At the time I was asked for the facts regarding those rumours, I responded about there validity with true and honest answers. The fact that some of those rumours may have later actually happened is beyond my control.

Q16. We have a holiday booked for next year at Pine Lake and assume this is safe. We also do not want to shell out ever increasing management fees if we are not going to have the same sort of service etc that we have been used to from latterly GVC now Sunterra.

I don't think you have anything to worry about re your holiday in Pine Lake next year and expect the service to remain the same as it is now as whoever buys Sunterra would be daft to not take on the staff and systems that have been running the show so far.

Q17. What happens to my week if the company is sold?

I am presuming you are a fixed week owner? If this is the case, then your week will remain at the resort with a different management company, so no real change apart from paying a different company for the fees.

Q18. Will I be reimbursed for all monies invested in this week (i.e. my initial payment, the £50 charge paid for refurbishment of the apartments, of which I've yet to see)?

No, the week is owned at the resort so nothing changes.

Q19. Will Management Fees be rising or will they be frozen (until such time the company is sold)?

The resorts decide management fees so they will only go up by whatever the average of what all the resorts decide. Nothing that is happening to Sunterra will affect the management fees.

Q20. I asked the above because about two months ago I received a telephone call from the Sunterra branch in America. I was asked if I was using my week this year or, indeed, if I was thinking of selling. The caller's name is David and he gave me his telephone number to ring him at any time. He said that the European part of the company was very popular in the States and there is plenty of interest to book holiday weeks in Europe.

Avoid these companies telling you they can sell or rent your week for you. All they are after is an up front fee from you and that is the sole purpose of the call. I have confirmed with Sunterra that there are NO such calls being made by official representatives of Sunterra USA or Sunterra Europe.

Q21. It would have been far better for Sunterra to advise their members in writing, rather than relying on hearsay. What about all those members who do not receive Tony's emails??? - Poor show there!!

I am sure that Sunterra will let members know, as soon as it is practical (probably with the annual maintenance fee billing) that Sunterra Europe is for sale. What Sunterra Europe committed to is informing members of Club Sunterra of any sale of Sunterra Europe and how such a sale would affect them. At the current time, there really is not much information to offer the members as there is no agreement to sell Sunterra Europe in place and in fact no one has even yet to begin negotiating one.

Q22. When are the members going to be officially notified of Sunterra's intention to sell Sunterra Europe or are we going to be kept in the dark until the sale is agreed?

See answer to question 21.

Q23. Post sale, where do the members stand vis a vis the legality of the documentation signed with Sunterra and their rights to the inventory on any subsequent liquidation. In other words will our rights be fully assigned on completion of the sale?

There isn't going to be any liquidation, the management company will change but our rights will remain the same. The trust looks after our interests and will ensure that the inventory is there for us as they do now. As discussed in Question #2 above, the Sunterra Europe is selling only is assets, including its beneficial interest in the trust. The members inventory is owned by the members, not Sunterra.

Q24. If there is any dissolution of our rights or points values as a consequence of the sale, are Sunterra going to offer a refund of our investment in full or in part from the sale proceeds.

The points values for the resorts are set and won't be changing so no they won't be offering any refunds as our rights are the same whoever the management company is

Q25. Will European members still have the ability to book Sunterra accommodation in the USA on the existing terms.

Members of Club Sunterra still do at the current time.

Once there is a sale agreement, I can't guarantee that a continuing affiliation between Sunterra USA and Sunterra Europe will be part of the terms of such agreement, but I think it is very likely that an ongoing exchange system with Sunterra US would be arranged to satisfy members so as not to disappoint either the European or the US members.

In addition, the exchange agreement with Interval International (II) will continue to allow members to exchange into properties anywhere in the world.

Q26. Will points values remain the same for all properties in the portfolio when booking holidays i.e. if a holiday is now 4500 points for say a week in January in the Canaries at ABC resort, is that going to be protected so that it remains the same post sale.

See answer to question 24.

Q27. Once this sale goes through, do we the investors, receive a windfall?

That depends on what you mean by "investors." If you mean that you are a stockholder of Sunterra Corporation, the proceeds and ultimate terms of a sale agreement will affect the value of your Sunterra Corporation stock. If you mean that you are a points owner of Club Sunterra, the answer is no as there is no sale of any of the assets of the points club. The sale of Sunterra Europe will include the points that it owns in Club Sunterra. The members points are not a part of any potential sale transaction. Under either scenario, I don't think a cash windfall is something we can realistically expect.

Q28. After this sale, how will this affect access to the foreign accommodation currently have with Sunterra?

When you say foreign if you mean the European resorts then yes I am sure we will maybe even more depending on who buys Sunterra Europe. As far as the US resorts then this may depend on an exchange agreement with Sunterra US as per my answer to question 25.

In addition, the members will continue to have their exchange privileges through Interval International.

Q29. After this sale, how will this affect access to the foreign accommodation we currently have with Interval International?

Any bookings we already have with Interval will be honoured. Sunterra Europe banks weeks with Interval International on a regular basis. What happens regarding the future will depend on which exchange company the new owners are affiliated with. You can be sure there will be one at least.

Q30. How does this sale affect the current investment and upgrading of the resorts in Europe and the UK in particular?

The refurbishment programs are all agreed with the resorts using resort funds so they should continue as planned.

Q31. Will our management fee be reduced in proportion to the overall reduction of available resorts?

There is no indication that the number of available resorts will decrease. Remember our fees are only based on the European resorts not the US resorts.

Q32. Amongst the members of Sunterra Europe are Entrepreneurs, Accountants, and Directors, in fact we probably have all the knowledge and experience required to set up our own company to take over and run Sunterra Europe. Having seen one successful members buy out I would be happy to lend my efforts in securing our future. Sunterra has a large number of members; good inventory and excellent resorts. Is any one else interested in investigating this possibility?

See answer to question 5.

Q33. Can anyone tell me if there is anything in place to prevent Sunterra ramping up our management fees given they may assume they have nothing to lose now with Sunterra Europe members? Also next year I was intending to bank all my points until 2008 anyone know how this would work?

Management fees are decided by the resorts not Sunterra so there is no chance of them trying to hike them up. Don't forget they have a lot of unsold points that they have to pay fees on so they wouldn't want a big increase any more than we would. (See the answer to question to 19).

Banking of points will continue to work as it always has. Just remember that the banking of points does not delay the required payment of the management fees. Non-payment of management fees will result in the loss of your property.

Q34. What happens to holidays already booked - are they safe or likely to be lost? I am sure that I am not the only one who has booked flights and paid for them!

I am sure you have nothing to worry about and your holiday is quite safe. All flights, cruises, car hire etc. that have already been purchased and those that will be purchased will be provided. As Sunterra Travel is a subsidiary of Sunterra Europe, then it will be included in the sale, and the next company will operate all travel bookings made.

Sunterra Travel is a registered travel agency and maintains all of its required licenses and registrations .

Q35. Who are the 'suitors' for Sunterra Europe?

In general, potential suitors fall into two categories:

Strategic buyers. This type of buyer would likely be a hotel company, vacation ownership company or other company in the leisure industry in general and would be looking to acquire Sunterra Europe to either increase their presence in the vacation ownership market or achieve cost reductions through shear volume of transactions.

Financial buyers. This type of buyer would likely be a hedge fund, private investor, pension plan, etc. and would be looking to acquire Sunterra Europe with the goal of making a profit on its operations.

The specific names of both the interested financial buyers and the interested strategic buyers will be confidential information and nobody will be told until the letter of intent has been executed between the parties and the transaction is disclosed in the Company's SEC filings.

Q36. What will happen to the 'Scottish Action Group' - surely this mess MUST be cleaned up before any sale can have a chance of being a success?

This mess as you describe it involves a tiny number of members that have chosen a going to court route, which they don't seem to have followed through. Sunterra have made various offers in the past some of which have been accepted whilst a small number have rejected all attempts to help them. Depending on the structure of the sale agreement and the buyer involved, pending litigation can be handled by leaving it for the parent company to resolve or transferring it to the buyer for them to resolve. The key point is that not all pending litigation needs to be resolved in order for a sale agreement to be reached; there are several ways to cope with these complications.

Q37. Will there be massive fees to pay to transfer to the new owners?

I don't expect there to be any increase in fees to keep what we already have. We haven't been asked for more money as point's owners in the past when there has been a change of Management Company. The only people who have been asked for more money is people changing from fixed weeks into the points system.

Management fees are set by the members to operate the resorts for the benefit of all of the Club Sunterra members as well as the fixed/float owners. It is the management company's job to prepare a budget, have it approved by the committees, bill the members, collect the fees and administer the property. The level of management fees is reflective of the costs incurred relative to the level of services provided as desired by the Members.

Nobody can foresee the future but if a new management company does want more money from us then they will have a hard job unless they can prove beyond doubt that what we are been offered is worth the money. As I say I don't see it happening but if the value was there we would have decisions to make as individuals.

Q38. What happens to II? It seems as if the number of resorts available to us here in Europe may be drastically reduced.

See the answer to question 29.

Q39. Will management fees continue to spiral up and up?

See the answer to questions 19, 33 and 37.

Q40. Are ALL the 'Spanish Tax' issues now settled?

Sunterra Europe has recognized deficiencies in its calculation and payment of taxes in Spain. In order to resolve these deficiencies, Sunterra Europe filed amended tax returns and made additional payments to the Spanish government, but there has been no audit yet of those amended tax returns or agreement to settle the issues. Just as any other company or individual filing a tax return, the amended tax returns filed by Sunterra Europe are subject to audit and challenge by the Spanish government for a period of time after their filing per the rules and regulations as established by the Spanish government.

Q41. What about banked points will they be affected?

I don't think our banked points will be affected as the numbers of points we have for next year are already in the system.

Q42. What concerns me is management fees for next year. Is it worth paying them?

Our management fees go to the resorts so yes of course it is worth paying them to ensure that the resorts have enough money to operate. In addition, you are legally obliged to pay your management fees, so you will have to pay in the long run. After a period of time if your fees go unpaid you will forfeit your membership interest. In addition, you would be charged interest until they are paid. Finally, it is not fair to the members who honour their obligations and make the payments to operate the resorts on a timely basis if other members/owners default on their obligations or do not pay on a timely basis.

Tony Pearce

Thursday, August 17, 2006

I found this company for getting your holiday currency and thought I would share it with you. They were so impressed with all the Sunterra members using the site they have now given me my own page hope you like it.
http://www.travelmoneyservices.co.uk/sunterra

They offer fantastic rates and deliver to you on your chosen date as long as you book at least 15 days in advance. I ordered our Euros for our trip to Ireland on the 26th of August and got €1.4501 Euros to the pound. It has gone down to €1.4401 now but if you can order 51+ days in advance they are offering €1.4601 Better than anyone else I have found and NO Commission.

It is it US dollars you need the 15+ days price is $1.8401 and the 51+ days price is $1.86.01

I hope this proves to be of use to you.

Thursday, July 27, 2006

Sunterra News Annoucement

Below is a summary of the latest Sunterra News Annoucement along with bit more information obtained from Anthony Guzzo at Sunterra. I have added a few comments of my own and hopefully these will appear in Italics.



"On July 25, 2006, Sunterra Corporation expanded its Board of Directors from six members to seven members and added John Ziegelman to the Board. John was the first activist shareholder challenging management to increase shareholder value and had previously asked for a Board seat to represent his views and interests. In light of the fact that there are now three separate shareholder groups demanding a "transaction" to increase shareholder value (which could be the sale of either European operations, the US operations or the entire Company), the Sunterra Board of Directors felt obliged to add a representative from that group to the Board of Directors so that they could see that the process that the Company was going through was appropriate and above board.

(Tony Comment) "This doesn't necessarily mean that the company or Sunterra Europe are more likely to be sold than before but it does make sure that the groups of shareholders who are pushing for a sale as the only way of increasing shareholder value can see that the company is in fact doing everything above board and is a much stronger company than they might think and very capable of increasing shareholder value by continuing to operate as one company, and that the restructuring that Sunterra has introduced and continues to introduce does make the company on both sides of the world both profitable and sound."

Also, on July 25, 2006, the Company has terminated the employment of Nick Benson for cause and asked him to resign as a member of the Board of Directors of the Company as a result of the ongoing investigation into certain allegations, including accounting improprieties, made by a former employee of the Company's Spanish operations. While Steve West had previously resigned his position as Chief Financial Officer, the Company announced that it plans to ask both Nick Benson and Steve West to return all bonuses and incentive/equity based compensation received from the Company since 2002.

(Tony Comment) "I don't think this necessarily means that Nick has done anything fraudulent but being the boss it is ultimately his responsibility so he has had to carry the can. The previously announced restatement of reported results and the investigation into the timing of the recording or accrued expenses are both indications that the Company reported incorrect numbers, either through deliberate actions or errors (there has been no statement either way on this). Clearly, as the President and CEO who certified the results, it doesn't matter whether the incorrect numbers were reported through deliberate actions or errors, Nick is being held accountable be the Board of Directors and Audit Committee. the actions taken by the Board to date indicate that while there has been no public comment on whether the incorrect numbers were fraudulent or not, Nick is being dismissed as he was responsible for those numbers and the determination as to why the numbers were incorrect will presumably be disclosed if and when that is determined."

With regard to the independent investigation, the Company announced that the fact-finding portion of it has been completed, but that management and the outside advisors need to reconcile their work to determine if there are any further issues with regard to tax compliance and the accrual/release of certain accrued expenses in the Company's European operations.

(Anthony Guzzo's explanation) "What this means is that the results as originally reported might not be correct for all the individual periods, due to the timing of recording certain reserves (accrued expenses). Those expenses may have been recorded in the wrong periods and while the overall profit and loss might be correct for a multiyear period, the results for the individual periods might be adjusted either to increase profits or reduce profits. The investigation has yielded evidence of such expenses being recorded in the wrong periods, but management and the outside advisors need to huddle up and verify what the proper periods for recorded such expenses were."

The Company continues to work diligently to complete this reconciliation as soon as practicable, so that it can review the results with Grant Thornton to perform the required restatements of the Company's historical financial statements.

Lastly, the Company reiterated that it is in the process of engaging an investment banking firm to assess strategic alternatives for the Company and is close to finalizing the engagement.

(Tony Comment) "Sunterra are obliged to do this as there are now 3 separate groups of shareholders (all investment funds) pushing for this. I am quite sure that there must be a good number of shareholders who are also members and it is unfortunate that they don't have the same right to make statements and demands as they are not in a collective and therefore don't own the required percentage of shares to make comments. I am sure that as members our view on things is different to that of investment groups who are just out to make money without regard to the company, the employees and definitely not the members!

It may be that the outside investment company does suggest that the way forward is to sell the company as a whole or to sell Sunterra Europe and Sunterra US separately. Sunterra Corporation are not obliged to take that advice although I assume they would be under a lot of pressure to do so. It may equally be the case that the investment company recommends that the company isn't sold and that it is a solid business and should be kept together, we will have to wait and see.


Tony Pearce
tony@sunterra-members.co.uk

Wednesday, May 24, 2006

New Rules for Access to the top of Mount Teide

This month, new rules have come into force for gaining access to the peak and crater at the top of Teneife's Mount Teide. Amongst other changes, it's now possible to obtain a permit without having to go in person to the National Park offices, as had been the case in the past, making it more convenient for visitors.

It is now possible to obtain a permit by fax to (+34) 922 244788 or email to teide@oapn.mma.es. Permits must be obtained at least seven days before the date you wish to ascend (one month if requested by ordinary post).

These permits are for the 700 meter Sendero Telesforo Bravo (footpath), which connects La Rambleta (3.555 m.) with the highest point of Spain and of all the Atlantic archipelagos, to the top of the 3,718 meter volcano.

Only 50 people are permitted to be on this footpath at one time, owing to the extreme fragility of the area and to guarantee security for visitors.

In 2005, the National Park administration issued 11,001 access permits covering 36,804 persons, a figure that was significantly lower than the previous year (43,198 people), given that conditions made the ascent impractical for several months. At the beginning of 2005, the footpath was closed because of heavy snow and accumulated ice. Extreme high winds at that altitude can add to the difficulty, so don't be too disappointed if the weather doesn't play the game. Nevertheless, it's worth trying and great to be able to say you've been!

Wednesday, May 03, 2006

Sunterra Annoucement

I am writing to let you know that Sunterra have today announced that they are making some significant changes to their European Operations, the summary of these changes are.

The size of the European business will be reduced and unnecessary and duplicative costs will be eliminated or reduced

New member marketing programs will be curtailed, management streamlined and infrastructure reduced

However, the high service levels to which Sunterra's existing European members have become accustomed will be unaffected.

The Company's resort management operation will continue substantially unchanged, as will its member services operation, including travel services.

The reasons for these changes are mainly the current market conditions experienced by all Timeshare companies in Europe where it has been becoming more and more expensive to recruit new members to the point where it is no longer viable to maintain the traditional methods of recruiting new members. Areas of the business that will be affected are mainly in Management, Sales and Marketing.

There will be no more freebies for prospective members once the pipeline which must be at least into the next six months has gone through, which hopefully should mean we won't be seeing all those reps traipsing people through the resorts as they have in the past.

Areas like the Travel Club, Reservations, Customer Services, Resorts and Refurbishment programs won't be affected by this downsizing of the business. So as members we shouldn't see any negative changes as nothing that affects the members is being touched.

What Sunterra are going to do is concentrate on running the resorts and being the management company, both areas of the business that they are historically good at and are profitable so there is no reason why they shouldn't do well during this quieter time.

Sadly an early casualty of the downsizing in management has meant that Dave Harris has parted company with Sunterra Europe as Managing Director. Both John Davey and I wish Dave all the luck for the future and thank him for his support on the Club Sunterra Board over the last couple of years. There are no immediate plans to replace Dave, so for the next couple of months Nick Benson will be looking after Sunterra Europe, as well as continuing in his role as CEO of Sunterra Corporation. Nick will also be presiding over the AGM being held at Southampton Football Club on the 28th of June.

I have copied below the announcement from Sunterra re the downsizing of the Sunterra Europe.

As a result of recent market conditions, as well as overall performance of its European segment, the Company has decided to make some significant changes to its European operations. The size of the European business will be reduced and unnecessary and duplicative costs will be eliminated or reduced. New member marketing programs will be curtailed, management streamlined and infrastructure reduced; however, the high service levels to which Sunterra's existing European members have become accustomed will be unaffected. The Company's resort management operation will continue substantially unchanged, as will its member services operation, including travel services.

These changes, which are expected to be fully implemented by August 2006, are expected to result in a substantial reduction in European vacation interest revenues while associated ASM costs as a percentage of vacation interval sales will be lower. The continuing club and property management businesses are expected to continue to contribute at historic levels to the profitability of the European business. The Company expects to incur a pretax charge preliminarily estimated to be approximately $12 million to $17 million in connection with these proposed changes, which are subject to certain statutory employee consultation requirements prior to their implementation.

Mr. Benson said, "We have taken these decisive steps with Sunterra Europe in the context of extremely challenging market conditions. While we would have preferred to see our revenues restored to previous levels through various marketing initiatives, this option is too costly to pursue at this time. The initiatives we are pursuing are intended to enable us to run a profitable business that generates a worthwhile return, while clearly emphasizing the commitment of Sunterra to its owners and to the continued development of our European club products and benefits. Our European members can be assured that we remain fully committed to providing them with outstanding vacation experiences."

Finally just letting you know that we are off on holiday again on Saturday for a week to visit the new Sunterra resort in Malta. Well you need a break to get over moving house don't you!

Tony Pearce
tony@sunterra-members.co.uk
Home 01204 791663
Mob 07973 342068
Skype tonypearce1950

Thursday, April 20, 2006

Second highest “kamikaze” chute in the world

When Europe’s largest water park opens in December 2006, Tenerife will have the second highest “kamikaze” chute in the world and, experts predict an upsurge in tourism as tourists flock to the south of the island to experience the thrills and wonders of Siam Park.

Located just outside the vibrant resort of Playa de las Americas, this 50 million Euro development promises to wow visitors whatever their age. Built to reflect the magic of the old Kingdom of Siam the park will feature the ornate architecture of the Far East and an abundance of some of the most exotic flora on the planet.

Like its sister theme attraction – Loro Parque – in the north of the island, Siam Park will showcase some of the wonders of the animal kingdom. Big hunting cats, sea lions, crocodiles, aquariums, aviaries and all manner of exotic fauna will be housed in and around the park’s 180,000 square metres.

There will also be a white sand beach with artificial waves to attract the surfers as well as an adrenaline junkie’s dream – the second highest “kamikaze” chute in the world. Wild thrills also include tornado rides and a number of white knuckle installations to keep the extreme adventure seekers happy. There will also be some more sedate river rides for those who just want to sit back, relax and take in all the amazing animals and vegetation.

All this and more seems set to make Tenerife’s south a popular choice for tourists and according to one source at the government office tasked with promoting tourism in the Canaries: “It won’t just be foreigners who enjoy this themed attraction. According to our surveys, local people will be prepared to travel from all over the archipelago in order to enjoy this ground breaking experience”.

Thursday, March 23, 2006

Members Forums Tips

As a lot of members have joined since I last sent out some tips on using the forums I thought I would send out a few more tips along with some old ones.

Firstly when you log in to the forums you will see under where it says Sunterra Member Forums there is a blue bar, the left hand link is User CP if you click on this you are in the User Control panel page.

The first link is "Edit Signature" here you can write what ever you like to sign any messages you send out, it could be as simple as "regards your name " or you could include your email address or a few witty words if you like. When you have typed your choice you can either Save your signature or just preview it which is probably a good idea to make sure it appears as you want it to.

The second link is "Edit Profile" the top option is edit email and password but if you click on that you will see that you can't actually change your email address or password on that page, It used to be an option but it only changed your details for the forums not the website so you would need to log in twice. If you want to change your username, email address, password or your contact details you should go to the profile page http://www.sunterra-members.co.uk/members/profile.php

The items you might want to edit on the forums profile page is under where it says edit email address and password there is a box for "Optional Information" here you can add your date of birth so members can see when your birthday is in the forum calendar, you would also get a happy birthday email from the forum on your birthday every year. If you have ICQ, MSN, YAHOO or SKYPE you can add your user id's here and the icons would then appear in your messages so members have more ways of contacting you. That is about it for the edit profile page so when you have made your changes click on save changes at the bottom of the page.

The next link is "Edit Options" the first two options I would encourage you to leave un-ticked, The next box down is Messaging & Notification, the top two boxes you should leave ticked but the next option down is email notification, this is if you want to be notified by email when a thread you have posted receives a reply, obviously this is a really good idea if you are trying to sell points or are asking a question but is also useful for all of us as it lets you know when someone has replied to your messages. If you want to change this to receive notification emails click on the box and choose "Instant Email Notification"

The next three boxes should all remain ticked. The next category on this page is "Thread display options" all of these options are ok and you don't need to change any of them. The next category down is "Time & Date Options" You do need to change this!

When you log in to the forums you may have noticed that messages you send are appearing as if you had sent them in the middle of the night? This is due to the default time zone being Canadian time, we can't correct this for all as we have members from all over the world and the default doesn't seem to want to change universally. All you need to do is click on the box where it says (GMT -7) Mountain time and then when the list opens up choose the one about half way down the list that says (GMT) Western time, London, Lisbon, Casablanca. This will ensure that all your messages and everyone else's messages appear with the correct send times. The bottom option you can leave as it is and just click on Save Changes.

The next link is "Edit Avatar" if you open this up you will see that I have already added hundreds of avatars for you to choose from. (An avatar is a small picture that appears in any messages you send) You can choose any of the ones I have provided, or you can do as I an a lot of other members have done and upload your own avatar or small picture!

To add your own avatar you need to have on your computer a small image no bigger than 100 X 100 pixels, go to the bottom of the avatar page you and you will see a link that says browse, if you click on this it will allow you to navigate to the folder where you have the image stored just click to select that image and then click on Save Changes at the bottom of the page. The image you have chosen should then appear at the top of the page so you can make sure it is right.

If you don't have a small image and don't know how to shrink a picture you want to use, email it to me telling me you want to use it as your avatar and I will sort it out for you

The only other link you might want to edit is "Edit Profile Picture" this works in exactly the same way as described for the custom avatar just click on the browse button and navigate to the picture you want to use as above.

Finally, back to the blue bar where we found the User CP link have you noticed what we have a calendar where you can enter your holiday dates, great if you are interested in meeting other members on holiday, also you can see who has a birthday coming up!

Another great tip is to make use of the search option on the blue bar, here you can type in a word or words and search all the forums for any matches. For example if you wanted to know about Sunset Bay you type Sunset in the search box and click search, you would then have a list of all the messages from all the forums that contain the word sunset in them.

I think that is probably enough for one day,

Hope this helps

Tony Pearce

Your 100 GBP discount cruise voucher

Your 100 GBP discount cruise voucher

Tunnock's sponsors new departure lounge at Glasgow airport - Evening Times

Tunnock's sponsors new departure lounge at Glasgow airport - Evening Times

Friday, March 17, 2006

Timeshare business charged with fraud

National police officers stationed in south Tenerife have announced that 13 people have been arrested and charged with timeshare fraud.

The accused individuals range in age from 25 to 55-years-old and of various nationalities.

According to the police statement, the investigation got underway over a year ago after police received numerous complaints from people who had bought timeshare ‘weeks’ and had been defrauded out of considerable sums of money.

The buy/sell scam was a professional operation that had a network of companies and frustrating paperwork that left "owners" confused and muddled.

Apparently, buyers are approached in their home countries, principally the United Kingdom, France and Belgium, and, once sold on the concept are asked to put down a large sum of money by way of a deposit and administration fees. Once the money is in the timeshare company’s account no further action is taken.

In addition, police claim that the company, with offices in an undisclosed location in the south of the Island, also offered its clients, as a thank you, a free holiday here in Tenerife, will all costs, including airfares and accommodation taken care of. Once again, clients failed to receive such benefits.

Due to the fact that the crime has far reaching consequences throughout Europe, the Spanish National Police worked in collaboration with Interpol in order to bring the culprits to justice.

The company changed its name on many occasions, moved premises and generally made every attempt to confound police. During the time they were operational, it is suspected that hundreds of people were defrauded, although the exact total amount of money is difficult to ascertain. The company allegedly transferred cash from Tenerife banks in the form of rapid transfers, to accounts they had set up for the purpose in well known offshore tax havens.

The group is in custody awaiting a court appearance.

Thursday, March 16, 2006

Sunterra News and AGM News

Santa Barbara Golf and Chess Club

A super sized chess board has been installed at Santa Barbara Golf and Ocean Club to attract the more cerebral guests staying at the resort in Tenerife.

Raffle at Kenmore

Housekeepers at Kenmore recently ran a raffle for children's charity Rachel House. Raffling unused items left behind by Sunterra members raised £60 for the charity which provides specialist respite, terminal care and bereavement support for families with a child / young person who is not expected to live into adulthood. Well done to the team.

Bright future at WSBC

White Sands Beach Club can look forward to a bright future after a new lighting system was fitted in reception. A few other minor adjustments in the foyer of our resort on the island of Menorca will ensure guests enjoy a sparkling reception every time.

2006 AGM

This year's AGM is to be held on the 28th of June at Southampton Football Club. This is the first time since 1999 that the AGM has been held in the South of Country so hopefully this will attract members who haven't been able to get there previously due to the locations.

Resort Committee Vacancies

There are vacancies for resort committee members at Santa Barbara (Frank Seaman the existing committee member is offering himself for re-election) and Cromer Country Club (New Position) this year, if you would be interested you need to be a fully paid member of Club Sunterra, you must have either stayed at the resort twice or you
must have previously been a fixed or floating time member.

The details of this vacancy and how to apply for it is available on the Sunterra Website by following this link
Committee Member Details

Member Director Vacancy

There is also a vacancy for Member Director this year as John Davey has come to the end of his first term, John is offering himself up for re-election but again Sunterra are advertising the post on their website and you can read details of this position and what it entails by following this link
Member Director Details

Tony Pearce
tony@sunterra-members.co.uk

Warnings Scam Resale Companies Calling Members!

As you know I have issued warnings about scam resale companies phoning our members and am pleased to say that as well as including a warning on their home page, Sunterra have now introduced a method for you to report these calls when you get them.

If you log in to the Sunterra Website and go to the Help & Contact link and click on Contact Us there is now an option for "Reporting Suspect Traders". If you receive any of these scam phone calls or are unsure then please do report them to Sunterra using this form so that they are more aware of the problem.

Remember there are NO COMPANIES out there that can sell your points for you! All they are after is several hundred pounds from you up front, after which you will hear nothing and receive nothing from them. Up to which point when they actually get hold of your money, they will promise you the earth and can be incredibly believable and sound really kosher but take it from me they are just trying to steal your money so get what information you can write it down and report it to Sunterra.

Finally everyone should take the time to read the warning from me in the Points Forum on the website.

Tony Pearce
tony@sunterra-members.co.uk