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Shareholder vote to be called

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Silverleaf Resorts, Inc., developer of time-share resort properties, including 132 units at Holly Lake Ranch, has announced that the company's board of directors has approved a plan to merge the company into a unit of Cerberus Capital Management L.P. The plan will be submitted to shareholders of Silverleaf (NASDAQ: SVLF) in the near future.
Should Silverleaf shareholders approve the buyout as expected, Cerberus will purchase the common stock of Silverleaf at an offering price of $2.50 per share. The buyout offer represents a premium of 75% based on the closing trading price of $1.43 of Silverleaf common stock on February 3, 2011.
Robert E. Mead, Chairman of the Board of Directors and Chief Executive Officer of Silverleaf, has entered into a voting agreement with Cerberus pursuant to which he has agreed to vote shares owned beneficially by him and representing 24.5 percent of the outstanding shares in favor of the transaction.
Silverleaf, headquartered in Dallas, Texas operates 14 resorts in Colorado, Florida, Georgia, Illinois, Massachusetts, Missouri and Texas. In addition to the Holly Lake Ranch property, Silverleaf operates five other resorts in Texas including "The Villages" south of Tyler, "Seaside Resort" on Galveston Island, Hill Country Resort, Lake O' The Woods and Piney Shores Resort.
Year-to-date results for Silverleaf through 9-months of 2010 were reported as $6.6-million in net income, or diluted earnings per share or 0.17 cents, compared with net income of $3.4-million or diluted earning per share of 0.09 cents in the comparable 9-months of 2009. Sales for the first three quarters of 2010 were reported as $157.6-million compared with $194.2-million for the comparable period of 2009. The company reported 37,768,652 shares of common stock outstanding as of September 30, 2010.
Silverleaf and Holly Lake Ranch
Bob Mead, who was then associated with Freedom Financial, a predecessor company of Silverleaf, purchased the interests of Holly Lake Ranch's founding developers Bill McKinsey and Jack Wilson in 1981. The development appeal was for weekend retreats and retirement homes in the first two or three decades of the development.
Today, virtually all of the 3342 single family home sites at Holly Lake Ranch are in the hands of private owners and are occupied by more than 1800 homes. There is an estimated full-time population of 2,600-to-2,700.
Holly Lake Ranch Association, the governing body for the property, was formed originally in 1969. Property owners elect four representatives to the board of directors, commonly referred to as the B-board and Silverleaf appoints five members to the A-board. The combined boards determine policy for Holly Lake Ranch under the Association's by-laws and the settlement terms of a lawsuit brought by property owners against Mead and Freedom Financial/Silverleaf in 1991.
In a press release announcing the Cerberus/Silverleaf agreement, Timothy Price, Cerberus Managing Director said, "Cerberus is pleased to be investing in a company with an outstanding management team and proven track-record of success in the vacation ownership industry. The family of resorts under the Silverleaf banner has a long history of providing members with convenient, high-quality vacation experiences at affordable prices." Price continued, "We look forward to supporting the company's management team and dedicated employees as they work to ensure the company's members continue to enjoy great vacations for years to come."
Completion of the transaction is subject to customary closing conditions, including approval by the company's shareholders. Silverleaf intends to hold a special meeting of its shareholders for the purpose of approving the merger as soon as possible. Upon completion of the transaction, Silverleaf will become a private company, wholly-owned by Cerberus, and its common stock will no longer be traded on the NASDAQ.
Cerberus, headquartered in New York, has a portfolilo of investments in 12 highly-diversified industry sectors including financial services (17%), services (18%) and consumer (15%). Its holdings are primarily in the U.S. with some European and Far East enterprises. The company suggests a functional breakdown of management expertise with general management (36%), finance (24%) and business planning and development (12%).
Holdings include Blue Bird Bus (school busses), North American Bus (transit), 250 Burger King franchises in five states and 240 Albertson Food Stores in seven states.