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Sea Island Co Officials on Hot Seat
Thursday, 16 September 2010
September 16-- The following article from the Florida Times-Union provides insight into the bankruptcy of the Sea Island Company and it's holdings.
By Teresa Stepzinski

BRUNSWICK - David Bansmer, president of the Sea Island Co., got grilled along with the company's financial advisers Wednesday by creditors worried they will be shortchanged in the company's bankruptcy.

Sea Island retirees worried about their pensions, former executives owed thousands in deferred compensation and people who paid hefty deposits for membership in the company's exclusive Sea Island Club and Ocean Forest demanded answers during a bankruptcy court meeting detailing the company finances and bankruptcy plan.

Matt Mills, assistant U.S. bankruptcy trustee, conducted the meeting in which creditors questioned Bansmer, consultant James Guglielmo, who had served as the company's interim chief financial officer, and Sarah Borders, one of Sea Island's lawyers.

During the meeting, company officials revealed the company put up its historic artifacts including an ivory statue of a slave that was carved by a Union soldier, documents, photographs and artwork as collateral for its millions of dollars in bank loans.

Sea Island has about $13 million in its bank accounts, while its stocks and interest total about $12 million. It has about $211 million in personal property including vehicles and boats.

On the other side of the ledger, about $10.3 million in beach club condominiums remain unsold, according to company records.

The company has about $150 million in membership deposits from club members. Borders said the plan calls for the company's buyer to honor all the membership deposits.

Refunds would be available to people who return their memberships if the plan is approved.

Jake Johnson, one of the original club members, was unconvinced.

"I don't think they are being honored," Johnson said.

Dennie McCrary, a former company president owed about $27 million, said the company is ignoring the former employees who are owed thousands in deferred compensation.

"You've got people who've been retired 10 years and they got cut out," McCrary said.

Borders said the company's pension plan will be terminated.

The pension plan has been frozen for a couple of years and has been underfunded, Borders said.

The federal agency that insures company pensions has confirmed to the Times-Union that the plan been underfunded.

Massive sale planned

Sea Island has agreed to sell its golf courses, hotels, spa, beach club and other resort properties for about $197.5 million in cash to a joint venture of funds managed by Oaktree Capital Management LP of Los Angeles and Avenue Capital Group of New York, which specialize in distressed properties.

U.S. Bankruptcy Court Judge John Dalis last Thursday refused to allow a late $199 million cash bid from Starwood Capital Group and Anschutz Entertainment Group at this point in the process.

If it or other would-be buyers want Sea Island, they must wait until an Oct. 11 auction.

The Starwood-Anschutz bid was made after Sea Island filed for Chapter 11 bankruptcy protection on Aug. 10.

Millions in debt

Sea Island owes at least $500 million to Synovus Financial Group, Bank of America and Bank of Scotland.

Unsecured creditors including McCrary say they are owed millions by the company. McCrary tops the list of 30 largest unsecured creditors.

Also on the list is David Everett, who is owed $3.6 million. He was in charge when the company got so deeply in debt.

It was during his tenure that the company payroll jumped from $35 million to $85 million and the number of employees more than doubled to 2,500.

Among others claiming employment obligations are Matt Hodgdon, former chief financial officer, who is owed $3.5 million.

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