Wyndham International chose to drop its bid for Sunterra Corp.’s Carambola Beach Resort after visiting the property and running the numbers.
Fred Stern, Wyndham International’s vice president for corporate communications, said that after company officials inspected the 150-room resort during a 30-day due diligence period that began in Aug. 17, the company decided to withdraw its offer of $12.5 million.
"We couldn’t do what we wanted to do with the property," Stern said. "We didn’t think that over time we would get the return we want."
Sunterra filed for bankruptcy May 31. In early August the Carambola resort laid off about 20 people. The company has been marketing the property since April.
Wyndham International, which owns the 300-room Wyndham Sugar Bay Beach Club and Resort on St. Thomas, submitted the highest bid.
But while Stern said Wyndham is interested in the St. Croix market, the 28-acre, 150-room Carambola Beach Resort didn’t fit into their plans.
"It’s not a particularly large property. The number of keys is always an issue," said Stern. "We think St. Croix is great. Frankly, we’d like to have a property there."
Sunterra purchased the Carambola property in 1997 from the Westin Corp. for $13 million. Since then, it has sold a number of time-share interests at the resort that have increased its balance-sheet value to $13.3 million. Company-wide cash-flow problems forced Sunterra to make cuts at the Carambola property, dropping its workforce to 140.
According to bankruptcy court documents, Sunterra owes more than $34,000 to local businesses, the majority of it to two contractors. The V.I. government claims the company owes $57,000 in property taxes, which Sunterra disputes.
