new DRI CFO announced with a checkered past

[TUGBrian]

https://www.bloomberg.com/news/arti...sorts-hires-cfo-fired-from-last-timeshare-job

appears he was fired by Hilton for cause...but the cause is not listed.

 

[harveyhaddixfan]

Ugh.

 

[nuwermj]

"Mikolaichik is replacing outgoing CFO Peter Crage, who is retiring, the statement from Diamond said."

But ... only 13 months ago we read:

"Diamond Resorts International, a global leader in the hospitality and vacation ownership industries, announces that Peter Crage will assume the role of Chief Financial Officer effective August 21, 2017."

Smells like some stinky fish inside this company.

 

[pedro47]

We will have to wait and see what happen and a new chapter starts.

 

[moonstone]

https://www.bloomberg.com/news/arti...sorts-hires-cfo-fired-from-last-timeshare-job

appears he was fired by Hilton for cause...but the cause is not listed.

From the Diamond Resorts owner Facebook page;
https://www.bloomberg.com/news/arti...tions-fires-cfo-for-behavior-against-policies
He doesn't sound like that great of a catch!

~Diane

 

[T-Dot-Traveller]

He doesn't sound like that great of a catch!

~Diane

He is counting the money - you can do that in a padded room - alone .

LOL

 

[amycurl]

Translation: That settlement for the sexual harassment allegation is covered by a NDA and isn't so large that we have to report it to the SEC.

 

[Xolodno]

Guessing he was brought in for "other talents". DRI was bought out by a Capital Company...to put that in perspective, they are the equivalent to the "corporate raiders" of the 80's who bought the company and sold everything piece-meal. With that said....

Or, today, realize they could make more money than by doing that via loans. So they buy the company, then loan the company money at rates...well to describe it in your everyday joe who lives lower mid-class... a payday loan with horrible interest, or a short term loan that's allowed by the state, that has an interest rate in the triple digits and is paid twice a month. With the money they make off of the loan, being far more than if they sold it off in pieces. Of course the company takes this loan because...the capital company owns it or owns enough to control it, despite the shareholders.

Most of the time, these companies taken over by capital companies do fail. But the capital company has already extracted their initial investment and then some plenty. If they still own it when it goes into insolvency...it's a bonus as a tax deduction. Every once in awhile, a few make it out...but fail later, such as Toys R Us. Why? Because they needed to upgrade their stores, systems, allow for tech...such as online purchasing, etc. But can't because they have no cash reserves to use as collateral for a loan to develop this, the capital company took it all away....and inventory is also a poor collateral, given most companies use systems that minimize inventory and given inventory can be sold off at a significant discount...well. The company faces the inevitable, failure.

Side Note; Kaybee Toys is starting to revive after being raided by a capital company, with Toys R Us out...suspect they will grow even more. How is this possible? A company that purchases defunct company names if they believe they can revive them. What does that tell you?

Last, a capital company buying shares into a company doesn't mean they will take over completely and do their "magic". They do often buy into companies they think that might have a weakness they can exploit should the right opportunity arise, just getting ready for both purchase and PR. But when they buy out the farm, you know what's coming. It won't happen tomorrow, next week, next year, etc. But it will eventually happen. Ask yourself, how many commercials have you seen for the cruise lines of the likes of Carnival and Royal Caribbean vs. Norwegian?

The company that bought DRI is already trying to extract much as they can from DRI, how do I know? Because its private now and no one knows jack about what's happening. And they are already trying to fleece the owners to the max.

I'll finish with this paraphrase from the CEO of Sunterra who took over from a capital company after the previous got knocked out by a guy named Ian. When selling Sunterra to Diamond "well, I made a nice profit."

On a personal note, it was the only time I saw roaches in the pool area of a resort in Las Vegas we used to frequent.

 

[nuwermj]

It's true that Apollo Global used a leveraged buyout to acquire Diamond Resorts, Inc. Apollo holds a $500 million note at 7.75% and a $600 million note at 10.75%. Another $800 million is held by third parties at 6%. The final $200 million was secured by Diamond's own assets. Before the buyout, Diamond's profits were about $350 million, with $100 million distributed to share holders. Now about $151 million is paid as interest on these notes.

As for insolvency and asset stripping, I don't believe that will happen. Apollo paid $2.1 or 2.2 billion for the company and is expecting to sell it for $3.8 or $4 billion. There is no way that Diamond's assets can be liquidated for $3.8 billion or more. Diamond's value and profitability is rooted in its proprietary exchange company, The Club. The value of The Club is lowered without the resort network (the Collections and affiliates) and the value of the resort network is lowered without The Club. They are classic complements in production.

As for "I made a nice profit" with the sale to Apollo, again I'm not convinced. Yes, Cloobeck, Palmer and the rest made a profit. But the pressure to sell -- against their wishes --, is, I believe, evidence of Palmer's failure as the company's leader. We now know that Cloobeck didn't want to sell and considered the company under valued due to Palmer's mismanagement. Apollo got an undervalued company (at 5.5 time EBITDA; Bluegreen went public at 9 times EBITDA). Although the plan to raise the company's value is not clear, we know it includes a new management team and a PR campaign. But more is needed. When (or if) the company's value rises, then Apollo will take it public or sell it to another developer -- in toto.

 

[youppi]

It's true that Apollo Global used a leveraged buyout to acquire Diamond Resorts, Inc. Apollo holds a $500 million note at 7.75% and a $600 million note at 10.75%. Another $800 million is held by third parties at 6%. The final $200 million was secured by Diamond's own assets. Before the buyout, Diamond's profits were about $350 million, with $100 million distributed to share holders. Now about $151 million is paid as interest on these notes.

As for insolvency and asset stripping, I don't believe that will happen. Apollo paid $2.1 or 2.2 billion for the company and is expecting to sell it for $3.8 or $4 billion. There is no way that Diamond's assets can be liquidated for $3.8 billion or more. Diamond's value and profitability is rooted in its proprietary exchange company, The Club. The value of The Club is lowered without the resort network (the Collections and affiliates) and the value of the resort network is lowered without The Club. They are classic complements in production.

As for "I made a nice profit" with the sale to Apollo, again I'm not convinced. Yes, Cloobeck, Palmer and the rest made a profit. But the pressure to sell -- against their wishes --, is, I believe, evidence of Palmer's failure as the company's leader. We now know that Cloobeck didn't want to sell and considered the company under valued due to Palmer's mismanagement. Apollo got an undervalued company (at 5.5 time EBITDA; Bluegreen went public at 9 times EBITDA). Although the plan to raise the company's value is not clear, we know it includes a new management team and a PR campaign. But more is needed. When (or if) the company's value rises, then Apollo will take it public or sell it to another developer -- in toto.

Embarc is completely separated from THE Club and almost sold out. I don't know if they are better with or without Embarc. In other word, if they sell Embarc, will they be affected negatively ?
Thanks

 

[nuwermj]

Embarc is completely separated from THE Club and almost sold out. I don't know if they are better with or without Embarc. In other word, if they sell Embarc, will they be affected negatively ?

Embarc is a source of revenue and profit. Although we don't know how much, Diamond expected only about $21 million a year; maybe 5% of the company's total profit. Other than loosing this revenue, I don't know any reasons why Diamond would be affected negatively if they divested Embarc. But I'm not sure Diamond would get much for such a sale. Intrawest, Inc. had a hard time finding a buyer (they had been looking for many years), and Diamond only paid $85 million for them. I doubt Embarc would sell for much more than that now. So, it's not clear there's much to gain from a divestiture.

On the other hand, I think Diamond's management might still hold hope for some significant growth in that Club. We know Diamond intended to integrate the Embarc Collection into The Club and sell Embarc as some kind of upscale collection. (Resorts can be added to the Embarc Collection -- maybe a few floors of the Modern Honolulu.) Although Diamond's original plan has been put on hold, my guess is that Diamond management thinks such a potential still exists.