It's official - Goldman Sachs is the new American Idol. The firm has taken over American public interest and its airwaves (both metaphorically and soon, if Canada is any example, literally... we jest - it is well known that Goldman has very little control over CanWest programming) - after serving as ground zero for the financial system bailout, after facilitating the fudging of EU entrants' books over the past decade, after going after iconic soccer clubs, and after actually rebranding marine wildlife, the firm is now implicated as the key lender, and, after pulling liquidity at the last moment, soon to be owner, of the Sawgrass Marriott Gold Resort & Spa, which has just filed for bankruptcy. The resort, which is home to the associated TPC Sawgrass golf course (which has not filed for chapter 11, at least not yet, and also happens to be the headquarters of the PGA Tour), is where Tiger Woods decided to apologize on February 19 for having sex with "those women." We are positive that the latest reality series to come out of Hollywood brain trust "Who wants to marry a Goldmanaire" is just months away.
The course is known for its iconic 17th hole. Architect
Peter Dye, a member of the World Golf Hall of Fame, placed the
green on an island in a small lake. It has since become a magnet
for pro and weekend golfers, who hit some 120,000 balls each
year into the surrounding water.
The course was ranked ninth on Golf Digest’s list of
America’s 100 Greatest Public Courses for 2009-2010.
RQB Resort is the owner of the hotel and cabana club. RQB
Development is the owner of the golf villas, the spa and related
“The current economic recession and associated disruption
in the debt and equity capital markets have been extremely
challenging for the debtors,” RQB said in court papers.
And here is the Goldman connection, which these days seems to be everywhere:
In July 2006, Goldman Sachs Commercial Mortgage Capital LP
helped finance the $220.5 million purchase of the 65-acre resort
in Ponte Vedra Beach by RBQ Resort and RBQ Development.
The new owners spent $30 million upgrading the resort,
according to court filings. Sales rose 10 percent in the first
full year. Then the economic decline reduced the number of
conferences, which account for 65 percent of sales. The resort’s
revenue for 2009 was $42.6 million down from $56.7 million the
previous year, according to court papers.
In the third quarter of 2008, the owners announced a plan
to cut costs by $4.5 million. Sales fell 25 percent in 2009,
“resulting in a lack of liquidity for the resort and the
inability of the debtors to pay,” the company said in court
Goldman, which is owed about $192.5 million as of Jan. 10,
hasn’t been paid since August. RBQ met Goldman last March and
told the bankers then that they might have “liquidity issues”
In June, the owners hired Perella Weinberg Partners LP to
broker a solution with Goldman. In October, Goldman told the
owners it wanted to foreclose.
Some more from the actual Chapter 11 filing (attached below) discussing the relationship between Sawgrass and lender Goldman, whereby it turns out the squid led the soon to be banrkrupt course along, only to screw it over in the 11th hour.
The Debtors have been open and transparent with Goldman Sachs since the Loan Agreement was executed. As part of a proactive approach, the Debtors entered into discussions with the Goldman Sachs to restructure the loan with a meeting in New York on March 16th 2009. The Debtors informed Goldman Sachs that with the economic outlook at the time and the trends in business bookings the Debtors would have liquidity issues by July/August 2009. The Debtors and Goldman Sachs discussed stabilizing the loan with an extension of the payout term by 3 to 4 years and a reduced interest rate to allow the loan to be serviced by the Resort’s operating cash flow. In reliance on Goldman Sachs’ apparent willingness to restructure the loan, the Debtors did not seek alternative financing. The Debtors were compliant with their loan obligations at the time ofthe first restructuring meeting with Goldman Sachs on March 16, 2009 and continued to be compliant until August 2009.
In order to facilitate these discussions, the Debtors asked Perella Weinberg Partners (“PWP”), a leading New York restructuring bank, to assist in the negotiations in late June. Over the course of almost three months of Goldman Sachs negotiation and over twenty turns of a very detailed four page agreement, the Debtors believed that PWP had reached agreement with Goldman Sachs on a restructuring with the exception of an intercreditor issue comprising $2 million of an unsecured swap claim. This term sheet involved no write down in the par value of Goldman Sachs’ outstanding debt, and provided Goldman Sachs with 30% of the equity of the Debtors.
In October, Goldman Sachs informed the Debtors that it instead intended to foreclose on the Resort. When asked in early November why the restructuring was no longer an alternative, Goldman Sachs stated that its management had changed its mind and preferred to own the Resort. At this meeting the Debtors asked Goldman Sachs for an additional four months to find an alternative capital solution, which Goldman Sachs was prepared to give only in the event the Debtor gave up their rights to file Chapter 11, among other restrictions. At the time, Goldman Sachs told the Debtors that the only other solution would be the introduction of equity in the form of cash to the transaction but that they did not believe that the Debtors were capable of raising additional equity.
Congratulations Goldman, you are now the proud owner of yet another sporting trophy, which ironically was in the same boat as you, needing liquidity, and yet you decided to screw it over. Please remember this next time you come begging at the taxpayer trough. We hope golf players in the South are a little more accommodative and do not mind playing at the course, which will soon need to dig a deep moat around its circumference to protect it from the morts, who will likely not be at all happy that Goldman is the now in charge. Below is an artist's rendering of the type of creatures that will be introduced in the moat.