Dallas Timeshare Firm Closes $128 Million Securitization

Dallas-based Silverleaf Resorts Inc., in an effort to pay down debts, has formed a special purpose finance subsidiary and succeeded in issuing about $128 million of notes in a private offering and sale through UBS Securities L.L.C. to that newly created company.

The developer and operator of getaway and destination timeshare resorts in the U.S. closed on a term securitization through its subsidiary, Silverleaf Finance V, L.P. (SF-V), a Delaware limited partnership. SF-V was formed for the purpose of issuing the timeshare loan-backed notes series 2006-A. The series 2006-A notes were issued between the company, as servicer of the timeshare loans and SF-V, as issuer, and Wells Fargo Bank, National Association, as trustee.

"This is the second one we've been able to do and it allows us to access capital markets and fixes our rate," Thomas J. Morris, senior vice president of capital markets for Silverleaf told CPN. "This type of finance is a critical type of financing for our business. It fixes our rates while allowing us to continue to execute our business strategy."

This transaction lowers the cost of this debt from 8.0 percent floating to 6.7 percent fixed, Morris said. He added that Silverleaf plans to pursue similar securitizations if the market is amenable "as an additional form of liquidity. There is an unlimited interest that particular marketplace," he said.

The series 2006-A notes are currently secured by approximately $125.3 million in timeshare loans sold to SF-V by the company and one of its other fully consolidated special purpose finance subsidiaries.

The cash proceeds from the sale of the timeshare loans to SF-V have been primarily used to pay down $93.2 million in consolidated indebtedness to senior lenders. Approximately $24.8 million of the proceeds received by SF-V from the sale of the series 2006-A notes is being set aside for 90 days to finance SF-V's purchase of up to $33 million in additional qualifying timeshare loans from the company.