Many shareholders have been waiting attentively for the financial results of Diamond Resorts International following the second quarter of the year, however their wait continues. Diamond has ensured that they will be filed before the Securities & Exchange Commissions deadline of tomorrow, 9th August 2016. The delay has been caused due to the discovery of the misevaluation of unsold timeshare units, this error seems to go back to 2014. There is speculation as to why this has not been uncovered sooner.
This is an untimely discovery for Diamond following the reporting of its take-over by Apollo Global later on this year. The lateness of the reporting should not affect the decision of the take-over, however there are other issues that have to be taken into consideration. The take-over has the condition that 50% of the shareholders have to submit their shares at the tender offer of $30.25 per share.
Normally when financial results are postponed, share value drops on the open market place, but in this case, as the takeover is in the balance, and there is a favourable price on the table for existing shareholders to submit their shares at the point of take-over, the share price has only fallen very slightly. This leads to the question as to why one of the X-Directors of Diamond, and a former vice chairman of the board, Lowell D. Kraff, would have sold up all of his shares 2 days before it was reported that the delay was inevitable on the financial reporting.
Kraff claims that he knew nothing and had no prior warning to the delay of the financial reporting for the second quarter, however sold all of his shares 2 days before the reports were meant to be published. This does seem to be a bit of an odd coincidence, especially bearing in mind that if he had waited until the offer of payment of shares by Apollo Global later on this year he would have stood to make a further $75,000 due to the difference in the price per share that he received, and what is written in Diamond-Apollo deal.
These thoughts have been shaken off by Diamonds’ spokesman, Mr Lubove, who seemingly didn’t know that Kraff had sold all of his shares on the open market until it was reported on. Kraffs’ reason for selling was due to financial necessity, to repay borrowings. Only time will tell if the deal is still on track or not, there was a tally of shares on the 13th July, at that point the top executives and directors of Diamond owned almost 23 million shares between the 15 of them. If this is the case, and the deal goes through without a hitch they stand to make around 620 million dollars between them.
Posted on: August 8, 2016
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 0203 519 3808 or email: info@TimeshareConsumerAssociation.org.uk