Last Wednesday, Helium Report spoke with Jim Tousignant (photo, right), CEO and founder of Ultimate Resort, to learn more about his expected acquisition of Tanner & Haley’s real estate assets for $98 million.

Today, J. Joe Ricketts, the billionaire founder of Ciel, made a 10% higher counter-offer which could de-rail Ultimate Resorts’ plan. We contacted Tousignant this afternoon and he had no comment yet on Ricketts’ bid, but he committed to speaking with Helium Report in more detail soon.

In our interview last week, Jim Tousignant expressed confidence that the transaction will take place. He sees the acquisition as a “materially positive impact for the [destination club] industry that allows Tanner & Haley members to continue to enjoy the club.”

The process for winning the bid to purchase Tanner & Haley’s real estate assets was apparently quite competitive. Tousignant estimated the 180-page bankruptcy court filing posted last Wednesday listed about 27 inquiries, 20 confirmed agreements, six formal bids, and two final candidates. According to Tousignant, Ultimate Resort was selected because his destination club offered the “best membership travel plan – a lot of value for little incremental cost.”

In Tousignant’s view, the committees were looking for an existing operator, which Ultimate Resort provided with 90-members and three years of history. He noted the $98 million offer was unanimously approved by both the debtors’ and unsecured creditors’ committees. Tousignant declined to disclose the source of the funds for the offer.

Conditions of the Transaction

We previously reported the deal was contingent on at least 400 Tanner & Haley members joining Ultimate Resort. Tousignant said his club was “inundated with members calling, emailing, and registering on [Ultimate Resort’s] website.”

The new members will pay no additional member deposit up-front and have “low annual dues,” says Tousignant, who pointed out the alternative was “three cents on the dollar.”

Tousignant expects 600-800 members will accept the new membership plan. Upon closing, Ultimate Resort will operate two clubs:

• Ultimate Resort: $2 million home value, 30 locations
• Ultimate Resort Elite: $3.5 million home value; equivalent to Distinctive Retreats, which accounted for about 500 of Tanner & Haley’s 874 members

A successful acquisition gives Ultimate Resort more than 60 additional homes at nearly half-price (~$1.6 million acquisition cost). The deal also saves the club the expense and time of recruiting hundreds of members and developing numerous properties over the course of several years. Indeed, the addition of 600+ members would place Ultimate Resort squarely into the #2 position of destination clubs by member size. Undoubtedly, J. Joe Ricketts reached the same conclusion in his decision to make a last-minute unsolicited offer.

Tousignant said the acquisition also includes some of the leases Tanner & Haley has in place in order to honor existing reservations during the holiday season. He expects the integration to occur over a six to nine month period.

Upcoming Price Increase

On January 1, 2007, Ultimate Resort will raise prices again; deposits will increase by $10,000-20,000 depending on the plan and annual dues will increase by $2,000-4,000. The club will continue to offer a deposit refund of 80% of the future value of the membership deposit.

We’ll follow up with Jim Tousignant again later this week to hear his thoughts on Ricketts’ offer. For more information about Ciel and Ultimate Resort, read our news archives.

Images courtesy Ultimate Resort.