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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 22, 2000
SUNTERRA CORPORATION
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(Exact name of registrant as specified in its charter)
MARYLAND 000-21193 95-4582157
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1781 PARK CENTER DRIVE
ORLANDO, FLORIDA 32835
"WWW.SUNTERRA.COM"
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(Address of Principal Executive Offices)
407-532-1000
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
See press release dated May 22, 2000 entitled " SUNTERRA CORPORATION
ANNOUNCES REDUCTIONS IN U.S. SALES & MARKETING ACTIVITIES" attached hereto as
Exhibit 99.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
EXHIBIT NO. DESCRIPTION PAGE NO.
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99 Press release dated May 22, 2000 3
entitled "SUNTERRA CORPORATION
ANNOUNCES REDUCTIONS IN U.S.
SALES & MARKETING ACTIVITIES"
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUNTERRA CORPORATION
(Registrant)
Date: May 22, 2000 By: /s/ RICHARD GOODMAN
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Richard Goodman
CFO
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EXHIBIT 99
FOR IMMEDIATE RELEASE Contact: Lin Morison
CEO
407-532-1000 or
Richard Goodman
CFO
407-532-1000
SUNTERRA CORPORATION ANNOUNCES REDUCTIONS IN U.S. SALES & MARKETING ACTIVITIES
ORLANDO, FLORIDA (MAY 22, 2000) - Sunterra Corporation (NYSE:OWN)
announced today major reductions in its U.S. sales and marketing activities as
part of its efforts to conserve cash while simultaneously continuing its sales
activities at its most profitable locations. The company does not anticipate
that these reductions will affect the management of its resorts under contracts
with homeowners associations, nor will they affect the company's European
business or the management of third party properties in Hawaii - all of which
are strong and profitable performers.
More specifically, the company has ceased all sales activities at its
resorts in: Miami and Fort Lauderdale, Florida; Hilton Head, South Carolina;
Lake Conroy, Texas; Steamboat Springs, Colorado; Santa Fe, New Mexico; San Luis
Obispo and San Diego, California; and St. Croix, U.S. Virgin Islands. In
addition, it is closing off-site sales centers in Puerto Rico, Virginia, Nevada
and the Pacific Northwest.
The company currently anticipates that sales and marketing activities
will continue at all other resorts. In certain locations, these activities will
focus entirely on "in house" business and eliminate all other tour sources. The
"in house" sales programs target potential purchasers of vacation ownership
interests who are staying at the resorts because they are either existing
owners, exchangers or renters.
The staffing reductions related to these changes are expected to result
in the termination of approximately 930 employees at the company's headquarters
and resorts and will also affect about 150 independent contractors who sell
vacation ownership interests on a commission basis.
Although the reduction in sales and marketing activities is anticipated
to reduce operating expenses, the reduction will not provide the company with
sufficient liquidity to ensure that it will be able to continue operations. The
company continues to pursue alternatives to maintain liquidity. However, if
these alternatives are not successful - and there is no assurance they will be -
then the company is unlikely to be able to continue operations.
Sunterra Corporation is the largest international owner and manager of
vacation ownership resorts, with 90 resort locations around the world and about
300,000 worldwide owners and members. In addition, Sunterra currently manages 17
third party
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condominiums and other resorts in Hawaii. The company's operations consist of
(i) marketing and selling vacation interests, (ii) developing, acquiring and
operating vacation ownership resorts, (iii) financing customers' purchases and
(iv) providing resort rental, management and maintenance services.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION. This
release contains forward-looking statements, including the company's expectation
of continuing sales and marketing activities at certain of it resorts, the
impact of the reduction in its sales and marketing activities and other
statements of expectations. Although management believes these statements are
based on reasonable assumptions, actual results may differ materially from those
expressed in any of our forward looking statements due to, among other things,
factors related to the current liquidity situation, actions the company may take
related to the current liquidity situation, the impact public disclosures may
have on sales, actions that our lenders may take as a result of our violations
of debt-related covenants and conditions, our ability to quickly obtain
sufficient additional funding and re-establish credit availability, the success
of our restructuring efforts, the timing and terms of future acquisitions and
disposals, the integration of acquired operating companies and resort properties
and other factors identified in the company's filings with the Securities and
Exchange Commission, including those set forth in parts I and II of the
company's Annual Report on Form 10-K for the year ended December 31, 1999 and in
Sunterra's Quarterly Reports on Form 10-Q and current reports on Form 8-K filed
during 1999 and 2000.
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