Cap Cana Announces Status of the Collateral of its 10% Senior Secured Notes Due 2016

JUANILLO, Dominican Republic, Oct. 24, 2011 /PRNewswire/ -- Cap Cana, S.A. ("Cap Cana" or "the Company") today announced the status of the collateral securing its 10% Senior Secured Notes due 2016 (the "2016 Notes").

The amount of Eligible Receivables that meet the eligibility criteria set forth by the Indenture of the 2016 Notes is approximately US$98.3 million as of June 30, 2011 and $93.4 million as of September 30, 2011. The Company's estimate of the Collateralization Ratio is equal to 1.02:1 as of June 30, 2011 and 0.97:1 as of September 30, 2011. The decline in the Collateralization Ratio during the first nine months of the year is primarily due to receivables falling into arrears as a result of adverse macroeconomic conditions.  

Construction of the real estate properties securing the 2016 Notes (the "New Notes Project") has significantly slowed down due to lack of funding. The Company had planned to finance the construction of the remaining components of the New Notes Project through a credit facility with a top-tier investment bank. However, the availability of adequate financing for real estate development companies such as Cap Cana has been dramatically constrained over recent months and the Company was unable to secure the specified financing. As a result of the factors described above, the decline in the Collateralization Ratio is expected to continue.

The Company has suffered a substantial slowdown in sales of its real estate properties during the first nine months of the year. Sales of real estate properties to individual buyers totaled US$13.0 million during the first nine months of 2011 compared to US$28.5 million during the same period in 2010. Sales of development sites to third party developers have comprised the majority of Cap Cana's sales since it re-focused its sales strategy in late 2008; however, year to the date, the Company has been unable to finalize any transactions involving the sale of large land parcels.

During the first nine months of the year, the Company has continued to cut its staffing levels and other operational expenses, restructured debt with its local and international lenders and has entered into payment-in-kind transactions involving real estate properties with numerous suppliers and contractors. In addition, Cap Cana undertook a debt cancellation program by entering into payment-in-kind transactions involving real estate properties whereby the Company was able to cancel approximately US$72 million in aggregate debt during the first nine months of the year.

The long-term effects of the 2008 financial crisis, and the subsequent world economic recession, have had a significant impact on Cap Cana's business and financial condition. The Company intends to continue developing the Resort. However, given the adverse real estate market and operating conditions under which the Company is currently operating, and the uncertainty in the foreseeable future, it cannot guarantee that its future cash flows will be sufficient to cover all of its financial obligations.

Please address any questions or comments related to this press release to Cap Cana's Investor Relations department, email address: [email protected], or by calling (809) 695-5501, ext. 3818 / 3412.

About Cap Cana

Cap Cana is a 30,000 acre master-planned luxury resort and real estate community located on the eastern tip of the Dominican Republic in the Caribbean. The community is fully operational with championship golf and yachting facilities, a world class hotel, pristine beaches, a variety of dining and retail establishments and numerous other amenities. Since breaking ground in 2002, Cap Cana has invested approximately $800 million in infrastructure and other improvements and has entered into contracts with aggregate value of approximately $1.5 billion for the sale of approximately 1,500 units of real estate properties. Throughout this period, Cap Cana has delivered over 700 real estate properties to buyers, including retail and developer hotel lots, condominiums and villas. For additional information, visit www.capcana.com.

This press release includes forward-looking statements that reflect Cap Cana's current views with respect to future events. These forward-looking statements are based upon estimates and assumptions made by Cap Cana that, although believed to be reasonable, are subject to certain known and unknown risks and uncertainties. All forward-looking statements contained in this press release are qualified in their entirety by these risks, uncertainties and other factors. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We disclaim any obligation or undertaking to update publicly or revise any forward-looking statement contained in this press release, whether as a result of new information, future events or otherwise. Future events or circumstances could cause actual results to differ materially from historical results or those anticipated.

For additional information contact:
Investor Relations Department
(809) 695-5501 ext. 3818 / 3412
[email protected]
www.capcana.com

SOURCE Cap Cana, S.A.