OCR Text |
Show 3 i Sweetwater is still buying time ! by Christopher Smart Is Sweetwater going under, un-der, or has the 13-year-old timeshare company fought through the recession and turned the corner toward renewed prosperity? The Wall Street Journal reported on June 22 that Sweetwater's parent company, com-pany, Resort & Urban Time-shares, Time-shares, Inc. (RUTI) "may be unable to continue in existence." The quotation came from Arthur Anderson & Co., Resort and Urban's auditor. However, Robert A. Whitman, Whit-man, president and executive execu-tive officer of Sweetwater, said the Wall Street Journal printed old news. "They (The Wall Street Journal) had our first-quarter earnings earn-ings (for 1983) that show we have made a major turnaround. turn-around. They failed to report that." . Sweetwater, plagued by "cash flow" problems, merged with RUTI in 1982, although the companies actually ac-tually became financially involved just one month after RUTI issued $8.6 million mil-lion worth of public stock in September 1981. According to The Wall Street Journal, Resort & Urban lost $11.2 million in 1982 and has fallen behind on payments, or failed to comply com-ply with other terms of debts, totaling $35 million. The Journal also reported that Resort & Urban lost $809,000 for the first quarter of 1983. "We're ahead of target on our financial plan," Whitman Whit-man said in an interview with The Record from Sweetwater's Sweet-water's corporate headquarters head-quarters in Salt Lake City. In response to the auditors' report, he said that under Securities and Excnange Commission (SEC) regulations, regula-tions, auditors are "very restricted" in the language they can use regarding the financial status of corporations. corpora-tions. At the time the auditors' "opinion" was released, in Dec. 31, 1982, Sweetwater was not meeting debts. The auditors had no choice, Whitman said, but to offer the opinion, which he describes de-scribes as neither good nor bad. Whitman maintains that Arthur Anderson & Co. will give RUTI and Sweetwater Sweet-water a clean bill of health on the next opinion, due on Dec. 31, 1983. The Journal, however, reported re-ported that a bank-holding and financial services company, com-pany, Security Pacific Corp., has issued a default notice demanding an immediate payment of $2.4 million from Resort & Urban. The Journal went on to say that Ralph Weinshienk, chairman of Resort & Urban, stated that the action could cause a "domino effect" that could topple the entire company. Sweetwater's financial problems were more serious than were apparent when the companies merged, Weinshienk Wein-shienk was quoted as saying in The Wall Street Journal. Although accounting practices prac-tices for timesharing haven't been standardized, Wein-schienk Wein-schienk said that Sweetwater Sweet-water had "written up" the value of the company approximately ap-proximately $5 million. By the time the companies merged, RUTI had loaned Sweetwater $3.7 million, exhausting ex-hausting the parent company's com-pany's capital. In' another action against Sweetwater, The Salt Lake Tribune Tri-bune reported Wednesday, July 6 that E.F. Hutton Credit Corp. was suing the time-share time-share corporation. In the suit, E.F. Hutton claims that Sweetwater owed $420,000 plus interest on office furnishings fur-nishings leased on a five-year five-year agreement. Hutton is asking that the furnishings be repossessed and sold. Whitman maintains Sweetwater has "pretty much" settled with Security Pacific Corp. He admits the company is $18,000 in arrears on payments to Hutton Hut-ton on a principal of $200,000. He went on to say that the banks and other leasing companies are continuing to work with Sweetwater, noting that, "We have had $8.5 million in loans since December." Whitman said that banks have complained to him about press coverage. They wonder, he said, why the Wall Street Journal reported "old" news when they had (RUTI's) first-quarter first-quarter earnings. Whitman maintains that RUTI and Sweetwater have plugged the leaks and are moving toward renewed success. suc-cess. "During the first six months of 1982 we lost $7.5 million," he said. For the first half of this year we have only lost $680,000." The relative infancy of timesharing timeshar-ing as a financial phenomenon phenome-non is the cause of the cash flow problems problems that the company has moved to minimize, he said. Instead of waiting for timeshare condominium projects pro-jects to be completely "sold out" before funding becomes I available, lenders are now j willing to finance as sales i progress on an individual condominium basis, Whit-man Whit-man said. Additionally, J Sweetwater will stop acquir- j ing properties. ' Sweetwater has timeshare j condominium projects in 17 ; locations across seven states and has sold some 22,000 weeks of condominium use, jj according to Sweetwater brochures. Locally, Whitman said Sweetwater Park City is strong and "has never been impaired. Sales haven't j slowed in Park City, they 1 remain very brisk." According Accord-ing to Sweetwater, $35 million mil-lion in timeshares have sold ' to date here, totaling 4,600 timeshare weeks. "We took over an eyesore in the community and made it attractive," Whitman said . of the renovated building ' that once was the C'est Bon Hotel. Sweetwater expects , $45 million in sales at the ' Park City complex in the ' next three years. J - -" ' ' : |