−Removed: The following represents important updates to the risk factors previously disclosed in Item 1A.
−Removed: of Part I of our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 Form 10-K”).
−Removed: The risk factors included in our 2022 Form 10-K are important to understanding our business, operation, results of operations, financial condition, prospects, and our statements generally in this Form 10-Q.
−Removed: Therefore, they should be read in conjunction with the unaudited condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2.
−Removed: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.
−Removed: In addition, the following risks and those risks described in our 2022 Form 10-K contain forward-looking statements, and they may not be the only risks facing the Company.
+Added: As of March 31, 2024, there have been no material changes from the risk factors previously disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023.
+Added: These risk factors may be important to understanding statements in the Form 10-Q and should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, "Financial Statements" and Part 1, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q.
+Added: The risks described in our Annual Report on Form 10-K for the year ended December 31, 2023, contain forward-looking statements, and they may not be the only risks facing the Company.
The future business, results of operations and financial condition of the Company can be affected by the risk factors described in such reports and by other factors currently unknown, that management presently believes not to be material, that management has made certain forward-looking projections, estimates or assumptions on, or that may rapidly evolve, develop or change.
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Because of these factors affecting our financial condition, key business operational metrics, and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
−Removed: Risks Relating to the Merger
−Removed: We are subject to various uncertainties and contractual restrictions, including the risk of litigation, while the merger with Bluegreen is pending, which may cause disruption and may make it more difficult to maintain relationships with employees, suppliers, vendors, customers or others.
−Removed: Uncertainty about the effect of the merger on relationships with our team members/employees, owners, club members, guests, suppliers, vendors, customers, strategic partners or others may have an adverse effect on us.
−Removed: Although we intend to take steps designed to reduce any adverse effects, these uncertainties may impair our and Bluegreen’s ability to attract, retain and motivate key personnel until the merger is completed and for a period of time thereafter, and could cause suppliers, vendors, customers, and others that deal with us to seek to change, not renew or discontinue existing business relationships with us.
−Removed: Employee retention and recruitment may be challenging before the completion of the merger, as employees and prospective employees may have uncertainty about their future roles with HGV after the merger.
−Removed: If, despite our retention and recruiting efforts, key employees depart or prospective key employees are unwilling to accept employment with us because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with us, our business could be adversely affected.
−Removed: The pursuit of the merger and the preparation for the integration may place a significant burden on management and internal resources.
−Removed: The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could adversely affect our financial results.
−Removed: In addition, the merger agreement restricts us and Bluegreen, without the other party’s consent, from making certain acquisitions and taking other specified actions until the merger closes or the merger agreement terminates.
−Removed: These restrictions may prevent us and Bluegreen from pursuing otherwise attractive business opportunities and making other changes to our respective businesses before completion of the merger or termination of the merger agreement.
−Removed: One of the conditions to the closing of the merger is the absence of any temporary restraining order, injunction, order or decree issued by a court of competent jurisdiction, other legal restraint or prohibition or any law enacted, enforced or deemed applicable by any governmental entity that prevents the consummation of the merger.
−Removed: Accordingly, while no litigation specific to the merger has been commenced, it is possible that such litigation may commence, and in any such litigation if any of the plaintiffs is successful in obtaining an injunction prohibiting the consummation of the merger, then such injunction may prevent the merger from being completed, or delay it from being completed within the expected time frame.
−Removed: Failure to complete the merger with Bluegreen could negatively impact our stock price and the future of our business and financial results.
−Removed: If the merger is not completed, our ongoing business may be adversely affected, and we may be subject to several risks, including the following:
−Removed: • we will have to pay certain costs relating to the merger, such as legal, accounting, financial advisor and other fees and expenses, without the benefit of completing the transaction;
−Removed: • our common stock price could decline to the extent that the current market price reflects a market assumption that the merger will be completed;
−Removed: • our senior management will have had expended significant amount of focus and effort on the merger instead of on pursuing other opportunities that could have been beneficial to us and our stockholders.
−Removed: If the merger is not completed, we cannot assure you that these risks will not materialize and will not materially adversely affect our business, financial results and stock price.
−Removed: Our ability to complete the merger with Bluegreen is subject to certain closing conditions and the receipt of consents and approvals from government entities, which may impose conditions that could adversely affect us or cause the merger to be abandoned.
−Removed: The merger agreement contains certain closing conditions, including, among others:
−Removed: • the accuracy of the representations and warranties of the other party contained in the merger agreement, subject to the qualifications described in more detail herein;
−Removed: • the other party having performed in all material respects all obligations required to be performed by it under the merger agreement;
−Removed: • the absence of a “material adverse effect” impacting the other party;
−Removed: • the absence of any judgment, order or decree issued by any court of competent jurisdiction that prevents the consummation of the merger;
−Removed: • the termination or expiration of any applicable waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
−Removed: We cannot assure you that the various closing conditions will be satisfied, or that any required conditions will not materially adversely affect us following the merger or will not result in the abandonment or delay of the merger.
−Removed: Any delay in completing the merger may reduce or eliminate the benefits that we expect to achieve.
−Removed: The merger is subject to a number of conditions beyond our control that may prevent, delay or otherwise materially adversely affect the completion of the merger.
−Removed: We cannot predict whether and when these conditions will be satisfied.
−Removed: Any delay in completing the merger could cause us not to realize some or all of the synergies that we expect to achieve if the merger is successfully completed within the expected time frame.
−Removed: We may not be able to integrate successfully and many of the anticipated benefits of combining us and Bluegreen may not be realized.
−Removed: We entered into the merger agreement with the expectation that the merger will result in various benefits, including, among other things, operating efficiencies and certain key strategic and marketing partnerships and alliances.
−Removed: Achieving the anticipated benefits of the merger is subject to a number of risks and uncertainties, including whether the businesses of HGV and Bluegreen can be integrated in an efficient and effective manner.
−Removed: It is possible that the integration process could take longer than anticipated and could result in the loss of valuable employees, the disruption of each company’s ongoing businesses, processes and systems or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect our ability to achieve the anticipated benefits of the merger.
−Removed: We also may not successfully fully realize the expected benefits related to various key strategic and marketing partnerships and alliances of Bluegreen or may otherwise be constrained by existing strategic and marketing partnerships.
−Removed: Further, our results of operations could also be adversely affected by any issues attributable to Bluegreen’s operations that arise or are based on events or actions that occur before the closing of the merger.
−Removed: We may have difficulty addressing possible differences in corporate cultures and management philosophies.
−Removed: The integration process is subject to a number of uncertainties, and no assurance can be given that the anticipated benefits will be realized or, if realized, the timing of their realization.
−Removed: Failure to achieve these and other anticipated benefits (including operating efficiencies) could result in increased costs or decreases in the amount of expected net income and could adversely affect our future business, financial condition, operating results and prospects.
−Removed: Our ability to integrate the Bluegreen business depends on our compliance with the Hilton license agreement, including the “Separate Operations” provisions and certain prohibitions on doing business with competitors.
−Removed: We are a party to a license agreement with Hilton under which we license substantially all of the trademarks, brand names and intellectual property used in our business.
−Removed: Under the terms of the Hilton license agreement, we must obtain Hilton’s approval to use the Hilton brand names and trademarks in connection with the conversion of the Bluegreen properties to branded properties using the Hilton marks, as well as for the branding of timeshare properties that we acquire or develop in the future.
−Removed: We have agreed with Hilton to operate the Bluegreen business as a “Separate Operation”, with the parties to agree to a “rebranding” or “conversion” schedule in the future.
−Removed: While we and Hilton have agreed to modify the Separate Operations requirements so as to allow us to achieve greater operating efficiency and synergy than currently provided for, any failure of the parties to do so will adversely impact such operating efficiency and synergy.
−Removed: In addition, any failure to obtain Hilton’s approval with respect to the conversion of the Bluegreen properties will significantly harm our ability to integrate the Bluegreen business and its properties.
−Removed: If we cannot come to an agreement with Hilton on how to brand and operate Bluegreen properties that do not currently or will not in the future meet the Hilton brand standards, then we will be required to continue to operate them as separate operations.
−Removed: In addition, the Hilton license agreement contains a number of prohibitions on us entering into certain agreements and arrangements with competitors of Hilton.
−Removed: If we assume or enter into such agreements or arrangements, we may breach the Hilton license agreement.
−Removed: The Hilton license agreement is critical to our business and the modification or amendment the Hilton license agreement or any exercise by Hilton of its termination or other rights under the Hilton license agreement could materially adversely impact our business.
−Removed: We will incur additional indebtedness to finance the merger, which could adversely affect our business, financial condition and results of operations, including by decreasing our business flexibility, as well as our ability to meet payment obligations under our indebtedness.
−Removed: In connection with the completion of the merger, we intend to significantly increase our level of indebtedness.
−Removed: Our increased level of debt, especially with a higher interest rate climate, together with certain covenants and restrictions that will be imposed on us in connection with incurring this indebtedness, will, among other things:
−Removed: (a) require us to dedicate a larger portion of our cash flow from operations to servicing and repayment of debt;
−Removed: (b) reduce funds available for strategic initiatives and opportunities, dividends, share repurchases, working capital and other general corporate needs;
−Removed: (c) limit our ability to incur certain kinds or amounts of additional indebtedness, which could restrict our flexibility to react to changes in our business, industry and economic conditions and increase borrowing costs;
−Removed: (d) create competitive disadvantages relative to other companies with lower debt levels and (e) increase our vulnerability to the impact of adverse economic and industry conditions.
−Removed: These covenants and restrictions may limit how our business is conducted.
−Removed: We may not be able to maintain compliance with these covenants and restrictions and, if we fail to do so, we may not be able to obtain waivers thereto and/or amend these covenants and restrictions.
−Removed: Our failure to comply with the covenants and restrictions could result in an event of default, which, if not cured or waived, could result in our being required to repay such indebtedness before its due date or to have to negotiate amendments to or waivers thereof, which may have unfavorable terms or result in the incurrence of additional fees and expenses.
−Removed: Our ability to make scheduled cash payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate significant operating cash flow in the future, which, to a significant extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors, including global conflicts or wars, on our business that are beyond our control.
−Removed: We may not be able to maintain a sufficient level of cash flow from operating activities to permit us to pay the principal, premium, if any, and interest on our indebtedness.
−Removed: In addition, our credit ratings directly impact the cost and availability of our borrowings and cost of capital.
−Removed: Our ratings will reflect each rating organization’s opinion of our financial strength, operating performance and ability to meet our debt obligations on a combined basis with Bluegreen.
−Removed: Any downgrades in our ratings could adversely affect ability to security future borrowings and the cost of such borrowings, which could impact our cash flows, financial condition, operating results and share and debt prices.
−Removed: We will incur substantial transaction costs in connection with the merger.
−Removed: We expect to incur a number of non-recurring expenses both before and after completing the merger, including fees for third party legal, investment banking and advisory services, the costs and expenses of filing, printing and mailing our merger proxy statement and all filing and other fees paid to the SEC in connection with the merger, obtaining necessary consents and approvals and combining the operations of the two companies.
−Removed: These fees and costs will be substantial.
−Removed: Additional unanticipated costs may be incurred in our integration of Bluegreen.
−Removed: Although it is expected that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integration of the two businesses, will offset the incremental transaction related costs over time, this net benefit may not be achieved in the near term, or at
−Removed: Further, if the merger is not completed, we would have to recognize these expenses without realizing the expected benefits of the merger.
−Removed: We and Bluegreen may be subject to complaints, litigation or reputational harm due to dissatisfaction with, or concerns related to, the merger from our current owners.
−Removed: Our current owners may be concerned about the actual or perceived impact of the merger on their vacation ownership interests (VOIs), including related to a reduced quality of resorts and product offerings due to the increased size of the business and addition of new owners, or increase or change in homeowners association or other fees.
−Removed: Bluegreen’s current owners may have similar concerns related to a decline in the quality of product offerings or increase in fees as a result of the merger and increase in size of the business.
−Removed: Complaints or litigation brought by existing owners following the completion of the merger could harm our reputation, discourage potential new owners and adversely impact our results of operations.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.