The banks that now own and are trying to dispose of the bankrupt Reynolds Plantation in rural Georgia have rejected recent offers, including from Reynolds residents, according to a January 24 email sent by a resident group and reported by Palm Coast based Toby Tobin at GoToby.com.  Toby also details the current status of a number of Florida golf communities and also updates his readers on the situation at The Cliffs Communities by reprinting our own story on the Carolina golf communities.  Thank you Toby.

        According to the email, “Reynolds Plantation is temporarily off the market. Given that there were no offers acceptable to the banks, the deal is being reconstituted to now include the entire Ritz Carlton hotel property in the new offering.  It is also our understanding that the seller [the bank] is only willing to sell all of the assets as one packaged deal and is not willing, at this point in time, to carve out and sell separately any of the assets including just the amenities.”

        The insistence by the banks that the Ritz be part of any package probably puts acquisition of the Reynolds Plantation’s golf clubs -- six in total and a seventh under construction -- beyond the reach of the residents who earlier rejected an offer from founders and Reynolds developers Mercer and Jamie Reynolds to purchase the amenities for $44 million.  By some estimates, the market value of the golf clubs was under $20 million.

        The first big step in the financial stabilization of The Cliffs Communities has been taken, with members of ClubCo, the group that loaned founder Jim Anthony $64 million to enhance and finish the golf communities’ impressive roster of amenities, voting to approve bridge financing that will benefit whichever of two bidders winds up owning The Cliffs amenities and unimproved real estate.  The temporary financing keeps The Cliffs golf clubs and other amenities open beyond this week.

        A Bluffton, SC, based development group led by John Reed and another developer, the Stokes Land Group out of Jacksonville, FL, are each vying to own The Cliffs unsold land and vaunted amenities.  After choosing one of the developers to take over the amenities, ClubCo, which inherited the amenities after Anthony could not make a second payment on the big loan, will declare bankruptcy, clearing the way for a local court to bless or amend a plan to turn the communities over to one of the two suitors.  Complicating the situation for the court is a lawsuit Anthony filed against Urbana, a development company to which Anthony previously sold undeveloped lots in an attempt to inject some desperately needed cash into his falling empire.  Stokes has indicated in the outline of their plan that they will work with Urbana.

         The Stokes group, under the name Arendale Holdings, has stepped in to assist other golf communities facing financial issues. For example, the group “provided substantially all of the capital” for the Currahee Club, an upscale community on Lake Hartwell in Georgia, where it is “now planning its turnaround,” according to a letter to Cliffs’ members from the Cliffs Member Advisory Group.  The letter cites another club in Colorado in which Stokes is involved.

        John Reed and his organization have developed upscale communities in Bluffton, just off Hilton Head Island that include Colleton River, Berkeley Hall and Belfair.  It is likely that Reed will counter with a revised offer.

        Votes from members at The Cliffs Communities holding the note on a $64 million loan to founder Jim Anthony are due today on the decision that could throw their mega-community's amenities a lifeline.  Noteholders were advised at a Wednesday meeting led by those negotiating with developer John Reed that in order for the Cliffs golf clubs to stay open beyond this week, the noteholders will be required to “subordinate” their claim to repayment of the large loan so that Reed can provide bridge financing to the clubs.  The requested bridge financing is for $2 million.  By “subordinating” the loan, the noteholders would be in line for repayment only after Reed is repaid (in the event negotiations for the purchase of The Cliffs break down).  The noteholders each contributed $100,000 and more to the bulk loan to Anthony.  With the developer's recent default, the noteholders essentially own the amenities but do not have the funds to operate them.

        Another suitor, the Stokes Land Group out of Jacksonville, FL, made an 11^th hour revision of an earlier offer, but it was tendered too late to be

        “I would be shocked,” our Cliffs member contact told us, “if the noteholders did not agree to [the] subordination.”

       If the noteholders do agree to the subordination, the process of a Reed or Stokes purchase of remaining real estate and the seven golf clubs would likely proceed as follows:

        ClubCo, the entity that holds the “senior” debt on The Cliffs’ amenities as a result of the big loan, will declare bankruptcy, clearing the way for Reed or Stokes to fund the clubs’ operations through Debtor in Possession financing; noteholders also will be asked to subordinate their claims to this

        Members of the Cliffs clubs will be asked to “renew” their memberships with a special transfer fee (estimated at $8,000) that our member contact characterized as covering “past sins of the Cliffs management,” as well as to help the new owners with temporary financing. Once the club is out of bankruptcy, the new owner will assume management of both the real estate and amenities operations; it is conceivable that Reed and Stokes could forge some last-minute partnership arrangement to avoid a self-defeating bidding process. (Note: This last possibility is an assumption on the author’s part, not interpreted directly from any reports.)

        “Overall, I am very optimistic about the future,” our Cliffs member told us. “I think we will end up with new, stronger, smarter management.” Whoever that turns out to be, he said, “has shown a much stronger ability to manage for business cycles than Anthony [did].”