The path to a financial comeback for the mega Cliffs Communities turned out not to be in Jacksonville, FL or Bluffton, SC, as anticipated, but rather inside the gates of The Cliffs itself. Steven and Penny Carlile, two residents of The Cliffs, offered terms that the golf communities’ board of directors and management have accepted “unanimously,” according to a letter sent earlier today to members of ClubCo, the group that previously loaned Cliffs founder Jim Anthony $64 million to finish and enhance the developments’ legendary roster of amenities. When Anthony defaulted on the loan, ClubCo wound up with the amenities but could not pay for the expensive continuing upkeep of the amenities and was itself heading toward bankruptcy.
Before the board accepted the Carliles’ bid, experienced developers Stokes Land Development (Jacksonville-based), the Reed Group (Bluffton) and a reported two other organizations had vied for The Cliffs, its seven
According to today’s letter, the board considered the Carliles’ “financial stability” a key factor in the choice. One line, however, in the Board’s note to members caught our eye: “…the ClubCo Board and Indenture Trustee have reached a mutual agreement with the Carlile Group that provides a period during the first phase of reorganization that allows for additional offers to be submitted.”
We have never made a multi-million bid for anything, but it strikes us as odd that any group seriously interested in buying The Cliffs would essentially invite some other group to make a better offer and snatch the prize from them later. Perhaps the Cliffs’ board and the Carliles, whose business life appears centered on religious principles and neighborliness, are setting the stage for experienced developers to make additional bids on more advantageous terms for their friends and neighbors. As the letter adds, “Our goal is to achieve the best possible plan in the interest of all Members and creditors.” They may have found the way. We think The Cliffs may still be in play.
