Mackinac Partners

News & Insights

Mackinac Partners Announces Sale of Pacific Monarch Resorts

May 23, 2012

Mackinac Partners is pleased to announce the sale of Pacific Monarch Resorts (“PMR”), a privately owned developer and operator of luxury vacation ownership properties in the US and Mexico. Diamond Resorts International (“Diamond Resorts”), a global leader in the hospitality and vacation ownership industry, purchased a substantial portion of PMR’s assets including inventory at nine resorts located in California, Nevada, Utah, and San Jose del Cabo, Mexico as well as agreements to manage certain of the resorts.

The financial crisis of 2008 had a drastic impact on PMR’s business, causing the Company to violate numerous financial covenants with its primary lender. PMR required financial and strategic direction and, in February 2009, hired Mackinac Partners. Jim Weissenborn, Mackinac Partners’ Managing Partner, was appointed as the Chief Restructuring Officer for PMR.

Mackinac Partners was instrumental in structuring the Company’s forbearance agreement and assumed control of the Company’s construction, finance, and portfolio management operations. As part of the restructuring effort, Mackinac also filled other key interim management positions. Keith Maib and Nishant Machado acted as PMR’s Chief Financial Officer and Chief Operating Officer, respectively. Mackinac’s efforts resulted in streamlined operations, improved efficiency and profitability, and approximately $30 million in cost savings. Mackinac was also successful in stabilizing the Company’s $275 million loan portfolio, thereby restoring value to the Company’s largest asset. This portfolio was eventually sold back to the Company’s primary senior secured lender, Resort Finance America (“RFA”), through a credit bid.

Through a long and diligent process, the Company and Mackinac collectively determined that the PMR’s best course of action was to consider a sale of all remaining assets. The Company engaged Houlihan Lokey as investment bankers and an extensive marketing process ensued. The culmination of the 22 month process was a stalking horse bid by Diamond Resorts on substantially all of PMR’s assets and the aforementioned credit bid from RFA on the mortgages receivable portfolio. On October 24, 2011, PMR and its subsidiaries (including several in Mexico) filed for Chapter 11 bankruptcy protection, simultaneously executing asset purchase agreements with Diamond Resorts and RFA.

After completing the required auction process and resolving complex and intricate structural and transactional issues in Mexico and the US, PMR successfully sold substantially all of its remaining assets to Diamond Resorts on May 22, 2012.

Integral to the PMR negotiations were the law firms of Stutman, Treister & Glatt and Baker McKenzie.

Mackinac Partners’ Managing Partner and PMR’s CRO, Jim Weissenborn, said, “This was a great outcome for all parties involved. Diamond is acquiring a fantastic owner base and a solid sales and marketing platform built by the PMR team. In addition, Diamond is retaining a majority of PMR’s employees.”