So there’s been plenty of talk lately about the Promontory development and what is going to happen with it’s future…..This statement was released from Pivitol Group, the developer of Promontory, on 3/28/08 to its members.
In January, Promontory announced that deteriorating market conditions impacted by the sub prime mortgage crisis led to a default in its obligations to its syndicated debt. Subsequent to a few months of negotiations, it reached an agreement in principle to sell Promontory as an operating business to an investment group headed by Credit Suisse. That investment group included all of the present lenders to Promontory and is comprised of more than 30 hedge funds and structured investment vehicles. Ultimately, that purchasing group could not agree among themselves on structural and financial issues necessary to complete the transaction by the end of February.
Subsequently, Promontory and its first lien lenders, again headed by Credit Suisse and its major participant Highland Capital, were able to agree this Thursday, March 27, on a structure for interim management and funding of Promontory operations allowing time for additional negotiation among all the parties.
That plan was to be implemented today, Friday, March 28, but was prevented from going into place by a group of Promontory’s second-lien lenders who filed a petition in Federal Bankruptcy Court this morning. Promontory management is hopeful that this involuntary bankruptcy filing will yield a swift outcome which will ensure continued operations and uninterrupted member services.
Promontory wishes to inform its stakeholders, including members, employees, vendors and the Park City community of ongoing developments and will continue to issue statements and post member updates in the Member’s section of its Web site.
Promontory remains optimistic that if the two groups of its lenders can come to terms among themselves, a negotiated settlement can still be finalized. Promontory’s on-site management team is not involved in the continuing negotiations among the parties and remains focused on its duties of continuing development and Club operations to provide continued quality member service, as well as protecting the interests of our employees and the community at large.
Francis Najafi, CEO of Promontory developer Pivotal Group stated, “Pivotal Group made every effort to negotiate a smooth transition and avoid bankruptcy in order to protect the interests of our Promontory members, our employees and the community. Pivotal Group remains committed to these principles and regrets that the inability of the lien holders to cooperate with each other in this transition resulted in this court action. This decision by the second lien holders to file a bankruptcy action was in contravention of pleas for continued negotiation. However, now that we are in the involuntary bankruptcy venue against our wishes, we will make every effort to utilize the venue to achieve our goal of protection of the interests of the members, employees and the community. Pivotal Group is willing and able to commit funds to the project and will petition the court to be allowed to provide financing which will fund operational continuity and, if permitted by the court, ongoing construction of club facilities to protect the Promontory vision and brand. This event at Promontory has no impact on Pivotal Group, its principals and its other projects and ventures.”
The long-term forecast for Promontory looks good as most of the members agree getting Pivitol out of the development will do wonders for the development (as Pivitol was beginning to rub the membership the wrong way). However, for the next six to nine months the market will more than likely be slow out there. The time to purchase might be as soon as we hear from insiders that the new owner is place and ready to move forward.