Sea Island Co., the Georgia resort that aspired to be the “Pebble Beach of the East” before the financial crisis, said it reached an agreement to sell most of its assets to a group including Avenue Capital Group and Oaktree Capital Management LP.
The value of the transaction was not disclosed in a statement to Business Wire. Sea Island was nearing an agreement to be bought by Avenue Capital and Oaktree for about $200 million, people with knowledge of the matter told Bloomberg News earlier.
Sea Island also filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code, according to the statement. A meeting is scheduled for this morning to update Sea Island residents on the plan, said the people, who declined to be identified because the details weren’t yet final.
The resort, located on the southeast coast of Georgia just north of the Florida border, hired Goldman Sachs Group Inc. in February to find a buyer. Sea Island Chief Executive Officer Bill Jones III, whose family has owned the resort since the 1920s, undertook a renovation of Sea Island in the mid-2000s that included a $200 million makeover of the main hotel called The Cloister, which has 175 rooms and suites.
“It’s a gorgeous property, and I would imagine they see a good opportunity to reset the values and mark-to-market it and make it a worthwhile investment,” said Lewis Feldman, a real estate attorney and managing partner at Goodwin Procter LLP in Los Angeles, who isn’t involved in the Sea Island deal but has visited the resort.
Representatives for Sea Island, Avenue Capital, Oaktree and Goldman declined to comment before the statement was released. The Atlanta Business Chronicle reported yesterday that Avenue may be a frontrunner to buy Sea Island and partner with Oaktree.
Sea Island, which has debt with banks including Bank of America Corp. and Synovus Financial Corp., was the site of the Group of Eight Summit in 2004 that brought then-President George W. Bush and dignitaries including Afghanistan President Hamid Karzai to the resort.
Last November, Sea Island deeded a 3,000-acre development called Frederica to San Francisco-based Wells Fargo & Co. to avert foreclosure. In July, Sea Island agreed to sell about 20,000 acres of undeveloped land to a Texas investment firm called Stratford Land for an undisclosed price.
The resort began as a small hotel built in 1928 by automobile executive and engineer Howard Coffin. Today, Sea Island features villas with ocean views and a 65,000-square-foot spa that’s larger than an American football field. Sea Island’s website touts rates as low as $375 a night, down from $700 and up a few years ago before the recession weighed on luxury travel.
In October, the resort’s Seaside Course will host a new U.S. PGA Tour event called the McGladrey Classic sponsored by accounting firm RSM McGladrey Inc. Sea Island is home to PGA Tour players including Davis Love III, who will serve as the McGladrey Classic host, 2009 U.S. Open champion Lucas Glover, and 2007 Masters Tournament champion Zach Johnson.