UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION
14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
SUNTERRA CORPORATION
(Name of Subject Company)
SUNTERRA CORPORATION
(Names of Person Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
86787D208
(CUSIP Number of Class of Securities)
FREDERICK C. BAUMAN
SUNTERRA CORPORATION
3865 W. CHEYENNE AVE.
NORTH LAS VEGAS, NEVADA 89032
TELEPHONE: (702) 804-8600
(Name, address and telephone number of person
authorized to receive notice and communications on behalf of the person(s)
filing statement)
WITH COPIES TO:
D. GILBERT FRIEDLANDER, ESQ.
MICHAEL A. SASLAW, ESQ.
WEIL, GOTSHAL & MANGES LLP
200 CRESCENT COURT
SUITE 300
DALLAS, TEXAS 75201
TELEPHONE: (214) 746-7700
[X] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer:
March 12, 2007
Dear Sunterra Team Members,
I am very pleased to inform you that Sunterra's Board of Directors has approved
an agreement pursuant to which Sunterra will be acquired by an affiliate of
Diamond Resorts. We expect the acquisition, which is subject to certain
conditions including the acceptance by 90% of Sunterra's shareholders, to close
in the 2nd quarter of this year.
I personally want to tell you how excited we are about this transaction and take
a moment to introduce you to Stephen J. Cloobeck, Diamond's Chairman and CEO.
Stephen, who will become Sunterra's Chairman and CEO when the acquisition is
completed, has over 25 years of extensive knowledge and experience in virtually
every phase of the successful development, management, marketing and sale of
vacation ownership properties. His Company, Diamond Resorts, has consistently
been a leader in the vacation ownership industry and its premier properties
include Polo Towers, Jockey Club and The Carriage House (all located in Las
Vegas), as well as Kona Reef in Hawaii. Diamond Resorts most recently
spearheaded the design of Marriott's Grand Chateau vacation ownership resort.
One of the primary reasons Diamond is interested in Sunterra is because of you.
Your talent, hard work and dedication have made the company a leader in the
vacation ownership industry. Under Stephen's direction, Sunterra will have a
continued focus and commitment to product innovation, customer service and
enhancing and exceeding customer expectations, all delivered with the highest of
ethical standards.
Stephen and I fully understand that each and every Sunterra employee will have
questions about how this announcement will affect them. Beginning today and over
the next several weeks I commit to you that all of your questions will be fully
addressed.
One of the first questions you will undoubtedly have is will the acquisition
affect your current compensation and benefits. Diamond is committed to improving
the quality of Sunterra's workplace, and Stephen plans to undertake a
comprehensive evaluation of employment practices and benefits programmes. This
will not impact your current compensation levels and contractual benefits.
Attached, please find a letter from Stephen and a press release that includes
more detail about this exciting acquisition. To stay informed and for more
information please visit EUR Homepage (http://eurhome), click on the
Announcement button. We will communicate with you again in the near future with
further updates and hope you share our enthusiasm for Sunterra's bright future.
Very truly yours,
James A. Weissenborn
Interim President and CEO
Sunterra Corporation
Important Notice to Investors: The tender offer for the outstanding common stock
of Sunterra Corporation has not yet commenced. This document is neither an offer
to purchase nor solicitation of an offer to sell securities. At the time the
offer is commenced an affiliate of Diamond Resorts LLC will file a tender offer
statement on Schedule TO with the U.S. Securities and Exchange Commission
("SEC"), and Sunterra will file a solicitation/recommendation statement on
Schedule 14D-9 with respect to the offer. The tender offer statement (including
an offer to purchase, a related letter of transmittal and other offer documents)
and the solicitation/recommendation statement will contain important information
that should be read carefully before any decision is made with respect to the
tender offer. Those materials will be made available to Sunterra's stockholders
at no expense to them. In addition, all of those materials (and all other offer
documents filed with the SEC) will be available at no charge on the SEC's web
site: www.sec.gov.
Forward-Looking Statements; Risk Factors
Statements contained in this document that disclose intentions, expectations or
predictions of the future are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act. Sunterra cautions that these
statements involve risks and uncertainties and other factors that may cause
results to differ materially from those anticipated at the time such statements
are made. For example, such statements include the expected benefits and costs
of the acquisition; management plans relating to the acquisition; the
anticipated timing of filings and approvals relating to the acquisition; the
expected timing of the completion of the acquisition; the ability to complete
the acquisition considering the various closing conditions; any statements of
expectation or belief; and any statements of assumptions underlying any of the
foregoing. Risks, uncertainties and other factors include, among others,
uncertainties as to the timing of the tender offer and merger, uncertainties as
to how many Sunterra stockholders will tender their stock, the risk that
competing offers will be made, the possibility that various closing conditions
for the transaction may not be met, and the possibility that expected benefits
may not materialize as expected. If the transaction does not close, Sunterra's
stock price may significantly decrease, and Sunterra business may materially
impact its business. Among other things, Sunterra could lose sales, Sunterra's
management could be distracted, Sunterra could suffer increased employee
attrition, and Sunterra could suffer further delays in complying with its
periodic reporting requirements. Other risks and uncertainties are described
from time to time in Sunterra's filings with the U.S. Securities and Exchange
Commission. Sunterra undertakes no obligation to update or revise publicly any
forward-looking statement, whether as a result of new information, future events
or otherwise, except as may be required by law.