Aug 11 (Reuters) - Sea Island Co, operator of the storied Sea Island Resort located on two islands off southern Georgia, filed for bankruptcy protection to sell its assets to Oaktree Capital Management [OAKCP.UL] and Avenue Capital Group for $197.5 million.
The sale is free of its about $600 million of existing secured debt and enjoys the support of all of its secured lenders, Sea Island said in a statement.
The sale of assets is subject to a court-supervised auction process, it said.
The company expects to complete the Chapter 11 process by the year end.
In papers filed with a Georgia bankruptcy court on Tuesday, Sea Island listed six affiliates. It listed both assets and debt in the $500 million to $1 billion range.
Sea Island, which spent hundreds of millions of dollars on renovation and residential real estate development, ran into trouble after it failed to sell the residential properties in and around its resort communities because of the financial crisis.
“As a result, the debtors (Sea Island) were left without sufficient liquidity to fund their operations or to repay the indebtedness they had borrowed to finance their development and expansion plan,” David Bansmer, the company’s chief operating officer, said in court papers.
The company’s Chief Executive Bill Jones and Bansmer will retain their positions as part of the restructuring agreement.
In 2007, Sea Island borrowed more than $300 million from Columbus, Georgia-based bank Synovus Financial Corp (SNV.N) for the redevelopment project.
Following repeated defaults, Synovus classified Sea Island as a non-performing asset.
Sea Island, which employs about 1,400 people, also sought bankruptcy court approval for a debtor-in-possession loan of $5 million to continue operations during bankruptcy.
The resort’s history can be traced back to 1911 when industrialist Howard Coffin bought 20,000 acres on Sapelo Island for development. In 1926, Coffin bought land on St. Simon’s Island and The Cloister Hotel began operations in 1928 with 46 rooms.
Sea Island’s financial advisors are FTI Consulting and Goldman Sachs & Co.
The case is In re: Sea Island Co, U.S. Bankruptcy Court, Southern District of Georgia (Brunswick), No: 10-21034. (Reporting by Santosh Nadgir in Bangalore; Editing by Gopakumar Warrier)