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Resort Developer and Operator Ginn Cos. Unable to Refinance
 $675 million in Debt, Files Chapter 7
.
Will Liquidate Tesoro Development in Port St. Lucie and Quail West, near Naples, Florida

By Jerry W. Jackson, The Orlando Sentinel, Fla.McClatchy-Tribune Regional News

December 30, 2008 - --The credit crunch and slumping real-estate sales have forced struggling Central Florida-based resort developer and operator Ginn Cos. to file to liquidate assets in two of its Florida residential projects, the upscale Tesoro development in Port St. Lucie and Quail West, near Naples.

Ginn, based in Celebration, was unable to refinance its $675 million in debt owed to its lenders, led by Credit Suisse, and filed the voluntary Chapter 7 bankruptcy petitions last week in West Palm Beach as part of an agreement reached with its lenders.

The filing listed liabilities of more than $717 million, with more than $1 million of that unsecured.

In a Chapter 7 liquidation, assets are typically ordered by the court to be auctioned off and whatever can be recovered is divided among secured creditors, after expenses are paid. Existing property owners would not be directly affected, and the golf course operations are expected to continue. None of the unsecured debt is expected to be repaid.

As part of a restructuring agreement, Ginn also said it would relinquish its Laurelmor resort development in North Carolina in return for removal of liens on the property, and agreed to allow lenders to take partial control of Ginn sur Mer, a huge oceanfront resort under development on Grand Bahama Island, through a joint venture arrangement.

The four projects -- Tesoro, Quail West, Laurelmor and Ginn sur Mer -- served as collateral for the debt, and several of Ginn's related companies defaulted on the loans, a $525 million first lien and $150 million second lien, in June 2008.

The company said in a prepared statement that its big Reunion Resort development in Osceola County, and the Hammock Beach Resort, a beachfront development in Palm Beach where Ginn also has administrative offices, are not affected by the action.

"Those are our two largest, but it's important to note that all other Ginn interests are unaffected," said Ryan Julison, a company spokesman. In addition to the four properties involved in the Chapter 7 filings and related restructuring agreement, the company has 11 other projects throughout Florida and other states. One of the developments is Bella Collina, a luxury residential community on the shores of Lake Apopka in south Lake County, where plunging property values have prompted many of the lot owners to default on property payments and taxes.

Robert Gidel, chief executive officer of Ginn Development Co. LLC, said in a statement that the company had been in "extended negotiations" with its lenders both before and after the company's default, and the resulting master restructuring agreement "achieves the best possible result for each of the projects, under the circumstances."

A complete list of assets and creditors was not immediately available. For the Tesoro development in Port St. Lucie, the bankruptcy filing listed assets of $3.5 million.

Gidel said sales at the four communities used as collateral had been "severely affected by ongoing economic pressures, and the drastic downturn in the real-estate market" leading to the defaults. Gidel was traveling and could not be reached for additional comment. Company founder Edward R. "Bobby" Ginn III also was unavailable.

Drew M. Dillworth of Miami was appointed trustee in the Chapter 7 filings, which are expected to be consolidated under Bankruptcy Judge Erik P. Kimball. Miami bankruptcy attorney Paul Steven Singerman is representing Ginn's limited liability companies in the cases.

Jerry W. Jackson can be reached at jwjackson@orlandosentinel.com or 407-420-5721.

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Copyright (c) 2008, The Orlando Sentinel, Fla.

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