Sea Island Co., operator of the famed Georgia coastal resort since the 1920s, will file for bankruptcy protection today and announce a deal to sell most of its assets, according to the company’s top executive.
The buyers are investment firms Oaktree Capital Management, of Los Angeles, and Avenue Capital Group, of New York, Sea Island Chairman Bill Jones III said in an e-mail late Tuesday to residents of the resort’s gated community.
Jones sent the e-mail shortly after The Wall Street Journal first published news of the impending sale and bankruptcy filing on its website.
A partnership formed by funds run by Oaktree and Avenue will pay a bargain-basement price of $197.5 million if the deal is approved in the bankruptcy process, a person familiar with the deal told The Atlanta Journal-Constitution.
Sea Island Co. includes The Cloister at Sea Island and the Lodge at St. Simons, along with residential and golf properties. For most of its history the resort near Brunswick has been a favored vacation spot among affluent southerners, including many from metro Atlanta, along with occasional celebrities.
The sell-off and bankruptcy follow a disastrously ill-timed bid to take the resort into the luxury stratosphere.
The company rebuilt The Cloister and reopened it in 2006; rooms now start at $395 a night and suites go for as much as $5,000. It launched a new golf and horse community whose home sales -- on lots priced at $1 million or more -- were supposed to help finance the upscale expansion.
Executives hoped to appeal to a broader, wealthier clientele from around the world.
But the effort left Sea Island Co. with about $500 million in debt, and the recession torpedoed the high-end strategy.
Sea Island Co. said last winter that it was exploring a possible sale.
In his e-mail Tuesday evening, Jones, the scion of the family that has owned the resort since 1926, said he was “pleased to share with you that we have reached what we believe to be a favorable outcome . . .”
In describing the Oaktree-Avenue partnership, Jones said, “I want to assure you we have reached an agreement with a buyer who appreciates the value of Sea Island.”
Marc Lasry, principal in Avenue Capital, has a home at the resort.
Jones said the Chapter 11 filing will enable the sale to be “completed in an orderly manner.”
Jones also said the resort will remain open during the process.
“We will continue to operate our business as usual throughout this process,” he wrote.
Earlier Tuesday, Jones and Sea Island Co. President David Bansmer scheduled a meeting today with members of Sea Island’s gated residential community to update them on the effort to find a solution to the company’s woes.
Michael Geczi, a Chicago-based spokesman hired by the Sea Island Co., declined to comment Tuesday evening.
Woody Woodside, executive director of the Brunswick-Golden Isles Chamber of Commerce, said: “This comminity has supported this institutiton for generations, and with the issues they have had during these hard economic times, I hope with this closure we can move forward.”
Woodside said the Jones family “has contributed a lot of prosperity” to the area, adding he hopes the new owners “will continue those trends.”
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