Corso denies all allegations

PHILIPSBURG--The Board of Directors of the Tenants Association Pelican Resort Club (TAPRC) has warned the Pelican Resort Owners Group (PROG) and its membership that its ownership of the resort and timeshare interest are at risk due to a number of irregularities and a debt that exceeds US $20 million.

The TAPRC board announced that its independent investigation of Royal Resorts Caribbean's dealing with Pelican had uncovered breaches of contractual obligations, violations of good faith and "notions of fair dealing" required to be shown by a manager (Royal) to its principal (Pelican).

Pelican, the TAPRC board said, is burdened by excessive long-term debt related to the financing for the resort, which was arranged by Royal Resorts on terms beneficial to "Royal's alter ego lender" Quantum Investment Trust (QIT), and "extremely detrimental to timeshare owners."

"Royal has never, in the 13 years that it has managed Pelican Resort, completed a year of operations with a balanced budget and has borrowed extensively to cover operating expenses, rather than operating the Resort in a fiscally responsible manner. Losses over this period have exceeded $20 million," the TAPRC board reported.

"Royal and QIT have made repeated threats to foreclose on the resort, most recently stating at our quarterly board meeting on July 27 that they had met with seven St. Maarten lawyers on the previous day to discuss foreclosing on the Resort.

Faced with the financial situation as it existed at the start of this fiscal year, the current TAPRC board took action to avoid losing the Resort to Royal and/or QIT," the board added.

In response, Royal Resorts Caribbean CEO Richard Corso said his organisation had been taken "completely by surprise with their e-mail, and categorically refutes all allegations."

"We are greatly saddened that the board decided to act in this unprovoked and unwarranted manner. We are in constant communication with the board in relation to the myriad of decisions and consultations that a resort with the complexity of the Pelican requires," Corso said.

"We know from the comments of the Pelican owners that the vast majority of the owners support and appreciate the service and attention to detail that Royal Resorts Management has provided for 13 years. It is obvious that the personal agenda of certain individuals of the current TAPRC board has been, and continues to be, to the detriment of the resort and the membership as a whole."

"We know Pelican owners to be thoughtful, concerned and fair people and we believe that they will not be influenced by harsh rhetoric and propaganda style tactics and that they will draw reasonable conclusions based upon all the facts. Royal Resorts Management has always and will continue to fight to protect Pelican timeshare rights. Pelican owners will soon receive detailed information on what has transpired," Corso concluded.

The TAPRC board said that in response to the precarious financial condition of Pelican and the clear threats of foreclosure that had already been made on several occasions the board had retained experienced lawyers, accountants and timeshare industry veterans, and had performed a comprehensive overview of the legal and business circumstances surrounding the resort.

"Our advisors examined the existing contracts between Royal and Pelican, spoke extensively with members of this board as well as previous boards, and assisted in preparing a series of communications with Royal with the objective of restoring the financial integrity of the resort, assuring prudent financial operations prospectively and eliminating the rampant pattern of self-dealing by Royal that has existed for at least the past 10 years," the TAPRC board said.

It continued: "Throughout this process, Royal has consistently attempted to obstruct the Board's efforts. For example: refusing to provide the resort's general ledger and books of accounts to the board, disregarding management contract requirements providing the board with approval over the resort's budget and the application of Resort revenues, and refusing board directives as to the payment of certain expenses."

The TAPRC board said it had gathered extensive information concerning Royal's actions with respect to the resort and welcomed the opportunity to provide details to any timeshare owner who would like this information. The board believes that a series of webinars and, if desired by owners, in-person meetings in several cities in which owners tend to be concentrated are appropriate, and will arrange these based on owner expressions of interest.

"This Board has consistently conveyed the message that it hopes to restructure the existing relationships with Royal in a manner that assures good faith and fair dealing and the viability of the Resort. Although actions over the past several months have made this increasingly unlikely, the board has not given up on that option," the TAPRC board said.

"Nevertheless, Royal's consistent course of conduct dictates that the board also take prompt steps to communicate details of Royal's wrongdoing to interested stakeholders, including government officials in St. Maarten, various Attorneys General within the U.S. and professional organisations with which Royal is affiliated. Moreover, the board is focused on causes of action against Royal and its principals, not only in St. Maarten but in the United States as well," it added.