Oaktree, Avenue buy US golf resort for $198m

The firms will acquire the bankrupt Sea Island resort in a restructuring that will wipe away $340m of the company's debt.

Distressed investment specialists Oaktree Capital Management and Avenue Capital will acquire most of the assets of Sea Island, a famed US coastal golf resort that has filed for voluntary Chapter 11 bankruptcy protection.

As part of the filing, creditors agreed to the restructuring plan which would see Sea Island sell to Oaktree and Avenue “substantially all of its assets [and leave it] free of its approximately $600 million of existing secured debt”.

Sea Island: Private equity takes to the greens

Financial details were not disclosed, however the Wall Street Journal reported Oaktree and Avenue would pay $197.5 million for the assets, while lenders including Bank of America, the Bank of Scotland and Synovus Financial had relinquished $340 million in loans.

Located in Georgia, Sea Island was established in the 1920s and includes the Cloister Hotel, four golf courses and private residential developments. It launched a major expansion and renovation project at the height of the market in 2006 and 2007 in an effort to turn the resort into a luxury destination. The company warned last year that it would consider selling its assets to reduce its debt load.

Chairman and chief executive officer Bill Jones, whose family has run the resort for four generations, said the Chapter 11 filing was backed by the firm’s secured lenders and should be finalised by year-end. The sale of the assets to Los Angeles-based Oaktree and New York-based Avenue has to be approved by bankruptcy court, but is not expected to be challenged.

“We are very pleased to have reached an agreement with an investment group that has come to know Sea Island well and appreciate what made us special from the start,” said Jones, who will continue in his role alongside existing president and chief operating officer David Bansmer.

Oaktree, which invests in real estate through its private equity funds, has been actively increasing its exposure to the asset class and is also reportedly in talks to buy a controlling stake in struggling Irish housebuilder, McInerney Holdings, according to the Financial Times.