Printer Friendly

travelbyus Ends Relationship with American Vacation Resorts.

WHITE ROCK, British Columbia, July 10 /PRNewswire/ --

On April 13, 2001, the United States District Court for the Northern District of Illinois entered an order granting a motion to approve the sale of certain assets of Med Resorts International, Inc. ("MRI") to American Vacation Resorts, Inc. ("AVR"), a corporation in which the Company and Mr. Malcolm Wright each held a 50% beneficial interest, subject to the issuance or reservation of shares representing 17.5% of the AVR's outstanding common stock under an equity incentive program for current or future management personnel of AVR. The assets of MRI consist principally of notes of MRI's vacation club members, three hotels and certain condominium units and time share intervals in hotel and resort properties. MRI was placed in receivership in August, 2000 in an action filed against it by the Federal Trade Commission and the Commonwealth of Virginia in the United States District Court for the Northern District of Illinois.

The Company subsequently purported to exercise an option to acquire the 50% of the common stock of AVR held by Mr. Wright. As previously disclosed in the Company's most recent quarterly report on Form 10-QSB, the Company had neither resolved all issues concerning the terms of the option exercise nor entered into definitive agreements for the transfer of Mr. Wright's interest in AVR. The parties subsequently concluded that, under the terms of the court's order, the transfer could not become effective for a 10-year period. In order to resolve this and other issues before the court (under the continuing jurisdiction over the MRI matter that it had retained), the Company elected to relinquish its interest in AVR in consideration of receiving a return of its $1.5 million capital contribution to AVR (subject to reduction for legal expenses of the parties incurred in connection with the court proceedings) equal to 50% of any new capital raised by AVR and on a subordinated basis from excess cash flow, if any. These payments are to commence following the time the Company obtains releases of the liens on the AVR assets securing obligations of the Company in the original principal amount of $5.1 million. The Company has also agreed to advance up to an additional $175,000 to AVR. Separately, the Company negotiated agreements with Mr. Wright, AVR and other corporations controlled by Mr. Wright under which the parties agreed to mutual releases and the Company received the right to the return of the $200,000 it had advanced to Mr. Wright and other consideration unrelated to AVR.

Under the terms of a stipulated order of the court, the Company will neither have any continuing ownership rights in AVR (and, therefore, AVR will not be a subsidiary of the Company) nor have any role in the management or operations of AVR, except that the Company will continue to provide travel fulfillment services to AVR on a non-exclusive basis and, until it obtains releases of the liens on AVR assets securing obligations in the original principal amount of $5.1 million, certain of the Company's guaranties of AVR's obligations will remain in place. The Company has committed to cause these liens to be released no later than September 30, 2001, and AVR will not guarantee or pledge its assets to support or secure any obligations of the Company. If the Company fails to satisfy this and other obligations under the terms of the order, then, among other consequences, its guaranties of AVR's obligations will not be released and the Company will relinquish its rights to repayment of its capital contribution to AVR. Although it has not identified any other possible vacation club acquisitions to replace AVR, to the extent one is identified that, in management's opinion, will enhance the Company's existing vacation services businesses, can be acquired and financed on favorable terms and can be acquired and operated without direct governmental supervision or restraints, management intends to seek to consummate such a transaction.

Except for the historical information contained herein, this press release contains statements that constitute forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that may cause or contribute to such differences include, among other things, technological developments, uncertainties of the Internet, changes in business conditions and the economy in general, changes in governmental regulations, unforeseen litigation and other risk factors identified in travelbyus public filings under "Risk Factors." travelbyus undertakes no obligation to update these forward-looking statements for revisions or changes after the date of this press release

COPYRIGHT 2001 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jul 10, 2001
Previous Article:PR Newswire Pittsburgh Daybook for Wednesday, July 11.
Next Rocks the Web With Music & Movies Launch.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters