Frequently Asked Questions (FAQ's)

November 19, 2003

Ventana Canyon Alliance, LLC.

Frequently Asked Questions (FAQs)

Ventana Canyon Alliance, LCC is hereafter referred to as the Alliance.

Ventana Canyon Golf & Racquet Club is hereafter referred to as the Club.

What is the Alliance buying? Alliance is buying the property and the facilities. This includes the Lodge, golf courses, tennis courts, driving range, pool and all associated buildings.
Why is the Alliance trying to buy the facilities? Alliance feels the best way to provide a 1^st class facility for the Club and insure the membership interests are the 1^st priority is for the members to own the facilities. In addition, Alliance feels buying the facilities is a very sound business investment.
Why does Alliance think they can succeed? We believe with the debt reduction and substantial reduction in overhead through better management, the property will operate in the black.
Is Alliance qualified to run the property? No! We do not want to run the property. Our intent is to hire a professional management group.
What is the appraisal of the property and the facilities? The property and the facilities have been appraised at $21.7 Million.
What is the purchase price? The price is $15.5 Million.
What Happens to the old debt? The old debt is Wyndhams responsibility. Whatever Wyndham works out with FINOVA is not Alliances or the Clubs concern. Alliance or the Club assumes no liability for the old debt.
What is the Return on Investment? The property operates in the black and should provide a very attractive ROI. This information will be available shortly in the form of the Memorandum of Offering.
What is the minimum investment? One share or $25,000.00
What is the maximum investment? 12 shares or $300,000.00
How much money is Alliance trying to raise? $17.5 Million
How do the funds break down? Alliance has a commitment for a $12 M loan. The remaining $5.5 M needs to come from the members and homeowners.
How will this money be used? In addition to the acquisition of the property and the facilities, the money will be used for working capital, facility improvements and capital equipment purchases.
Who can invest? Current members of the Club and homeowners belonging to the Ventana Canyon Community Association.
Will there be any special privileges at the Club for investors? NO!
What happens if I dont invest now? Nothing! You are not obligated to invest. But this may be the only time to invest. There are currently no plans to make another unit offering. If the Property operates as well as the analysis suggests it should, there will be no need for additional funds. However, if more capital is required in the future, Alliance may offer additional units for sale at the then current market value.
What happens to the Lodge? The Lodge could remain as a hotel. However, the Alliance believes a more desirable situation may be to convert the rooms into condominiums. The proceeds would be used to buy down the debt.
What happens to my Golf/Tennis/Social Membership? Nothing! There will be no change to your membership status.
What happens to the Clubs By-Laws? Nothing! The By-Laws remain intact and in force.
Can Alliance assess the membership? The assessment situation does not change. The By-Laws state very clearly when and how the membership may be assessed.
Can Alliance raise the dues? The dues situation does not change. The By-Laws state dues may be increased by no more than 10% per year.
What happens to my Golf/Tennis/Social Initiation Fee if I/we resign? Wyndham has made no provisions for buying back memberships. Alliance assumes no liability for buying back memberships from the Resigned Member List. There will be no change in the current policy as defined in the By-Laws.
What happens if Alliance does not buy the property? Wyndham wants to sell the property. Most likely, the property will be placed on the open market for purchase. However, due to the restrictive nature of the membership bylaws, the marketability of the property is questionable. If no buyer is found, there is the possibility of Wyndham defaulting, putting the property back in the hands of the lender. In the event of a successor owner filing bankruptcy, the courts may look upon the current membership By-Laws as too restrictive for a business to buy the property and make a reasonable profit. The end result could be less favorable By-Laws or a distress sale to a buyer with goals that are not aligned with ours. In any case, it could be a very long and expensive process for the Club and/or current owner before a buyer is found. In the meantime, the facilities could fall into disrepair. In addition, as the facilities deteriorate, home values could decline as well. If home values decline by 10% to 20%, investing in Alliance could be very cheap insurance. Assuming another buyer is found right away, will this buyer have the best interests of the membership as a top priority? While the By-Laws state the owner must keep the facilities in 1^st class condition, the definition of 1^st class is open for interpretation. Again, if the Club and/or owner dispute the interpretation of 1^st class, the issue could end up back in court with all the caveats mentioned above. The best situation is for the membership and homeowners to purchase the property through Alliance. That way the membership has control of its destiny.
Why not wait for bankruptcy? See number 23.
What happens if the Alliance cant raise the money? See number 23.
What happens to my investment if Alliance defaults? Your investment in Alliance is like buying a stock on the NYSE or NASDAQ with the same limited liability. However, because the Alliance is not a publicly traded company, the marketability is restricted. All investments involve risk and should be well thought out.
What is the liquidation strategy? The investment in Alliance is an investment in real estate. Consequently, it should be looked at as long term (5 to 10 years). Alliance has no plans to liquidate in the near term.
Are my units transferable? Yes! Any fees associated with the transfer shall be borne by the transferor/transferee.
How does someone buy a Club membership "tomorrow" or any time in the future? Memberships can be purchased as in the past either through the Club or via a transfer.
Is Alliance prepared to accept funds from Members/Residents who wish to invest in Alliance units now? Yes! If you would like to make a firm commitment of funds, the Alliance will hold the money in an escrow account until the sale is final and units are issued. If for some reason the purchase is not completed, all of your funds will be returned to you.
When does Alliance expect to close the transaction? The contract calls for a December 12 closing. However, the contract also provides opportunity prior to that date to call off the deal.
What function will the Clubs Board of Governors serve in the future? The Board of Governors will continue to operate in its current role, as it does now under the By-Laws of the Club.
Will the present staff at the Club be retained? The new management firm will be responsible for the process of interviewing and staffing the Club's needs.
Why has it taken so long for Alliance to reach the point where we can openly discuss the details of the acquisition plan? While we reached a tentative, basic understanding of Wyndham's plans and were assured of speedy transmittal of important data required for our earliest decision-making process, we were delayed in receipt of data and documents from Wyndham. Though we had acceptance from Wyndham and its financier, FINOVA, early in the summer, we did not receive a binding contract until mid August. It was only at that point that our due diligence study could begin. In the short time span of September and October, the professionals whom we charged with carrying out the investigation completed a monumental task. Hence, a little more than 2 months after we gained the "green light" to proceed with the vital, complex, investigative due diligence process, we stand before you to offer the opportunity for Members/Residents to invest in the destiny of this wonderful Club.
Why hasn't Alliance shared more information during the summer? Some members and residents have expressed frustration and feelings of "being kept in the dark" during the investigative process. All 5 members of the organizing committee were bound by a restrictive CONFIDENTIALITY AGREEMENT. For us to have prematurely discussed or shared the vast bulk of information discovered in our investigation would have placed each of us in jeopardy of being charged with breach of confidence.
What kind of professionals have you utilized in the investigation and due diligence process? We believe we assembled as fine a professional team as might have been found in any major city in the country. We have had expert work done by attorneys specializing in the fields of securities, real estate, and contract construction. We have utilized well-recognized professional appraisal experts. An architect and professional engineers as well as environmental experts served us, as we assayed all structures on the property and determined what, if any, environmental issues we faced. We had expert counsel from a fine accounting firm in analyzing historical financial data and creating vital pro forma models. At the center of our professional team are Mr. Don Semro and Mr. Tom Warne, well experienced in similar types of endeavors. The leadership of our organizing committee has leaned heavily from day-1 on the expert guidance of Club member Donald Pitt. Though the process has been costly, arduous and hectic at times, we believe that the finished product: an opportunity for the members and homeowners of Ventana Canyon to invest in and control the destiny of the Club and community we hold so dearly, is important and sound.
How would the Alliance handle the conflict between ROI and investment in facilities? The Alliance would take an active part in the Board of Governors and committees such as Greens, MGA, WGA, Tennis, VCCA, etc., to listen and understand the issues. Those issues that require funds would be brought before the Alliance for approval and budgeting. The difference from todays situation is the decision makers are members and/or homeowners.
How was the $4.0 Million appraisal for the Lodge arrived at? Some of the comparables used were the apartments near Loews that were converted to condominiums several years ago. Each Lodge room was valued at $80,000. There are 50 rooms giving a total of $4.0 Million.
Why can't the investors have a vote in the disposition of assests? This was taken under advisement. The decison will be forthcoming. See the Bulletin Board at www.ventanacanyonalliance.com.
Will the Alliance have open meetings? Yes!
Will the Alliance divulge the amount of contribution made by each Manager? No! An investment by any individual is highly confidential and should not be made public.
How are we doing selling Units? We currently have either checks or commitments for over 30 units!