DATE: July 28, 1993 TO: All Property Owners - Valley of Lakes & Eagle Rock Resort FROM: Frank M. Cedrone - Managing General Partner, C.B.G. Limited SUBJECT: Current Status Report Approximately 2 1/2 months ago, I forwarded to all property owners, a Status Report. - This communication will serve to update that report - RE-FINANCING AND RE-ORGANIZATION The pledge of a Loan Guarantee from a foreign bank, in the form of a Standby Forward Takeout Commitment, has been documented in writing and samples of all the enabling documents have been furnished to our attorneys and the prospective Lender. The tedious process of document preparation, was made more difficult and time consuming for several reasons: a. - The banks, insurers and re-insurers involved, together with their respective law firms, had to read, review and/or revise the documents, as required to meet their criteria, then re-transmit to all participants for approval. b. - Time zone differentials between countries virtually precluded immediate responses, For example, when our work day commences on the East Coast of the U.S., it is mid-afternoon in Europe. When our work day commences on the West Coast of the U.S., it is already quitting time in Europe (5:00 P.M.) c. - Translation and proper wording of the legal documents was required, so as to have the same meaning and legal effect in the languages of the various participating countries. - All of the above have now been completed - 2 - CURRENT STATUS - 1. The actual purchase of the initial guarantee instrument is expected to be consummated during the next week, 2. Immediately thereafter, we will meet to prepare contracts between all of the participants, i.e. Between the Guarantor Bank and C.B.G, Limited Between the Guarantor Bank and Actual Lender Between the Lender and C.B.G. Limited Between C.B.G. Limited and First Eastern Bank Between C.B.G. Limited and Unsecured Creditors 3. C.B.G. Limited has already entered into an agreement with First Eastern Bank on the dollar amount required to satisfy all obligations due the bank by C.B.G. Limited and all affiliated companies. This payment must be accomplished prior to September 3, 1993. If for any reason, preparation of paperwork causes delays, an Irrevocable Guarantee will be put in place to assure payment upon completion and execution of the required documents, This would also cause cancellation of any foreclosure proceedings. We do not expect the recent announcement of PNC's pending acquisition of First Eastern Bank to have any impact on our plans. RE-ORGANIZATION AND RESUMPTION OF DEYELOPMENT AND FULL SCALE OPERATIONS The work scheduled to commence within the first 30 days after emergence from Chapter 11 proceedings, has now been expanded, based on the exposed need and the agreements C.B.G. has made with cooperating suppliers and contractors, with the approval of our Guarantor: a. - Resumption of utility line installations will now include the following improvements to plant and equipment: (1) Installation of 60,000 gallons water storage tanks in the Huron Section to replace the existing 10,000 gallon tank. A 500% increase in water storage capacity, This will eliminate intermittent shortages and/or low pressure problems. (2) The new and deeper well that has already been drilled in the Huron Section will be put into service, dramatically increasing delivery volume and recovery rate capacity. 3 (3) Two (2) new sewage pumping stations with vastly larger capacity will replace the pumping station located at the Lake Susquehanna Bath House and eliminate the holding tank in Section "E". These pumping stations have already been designed, built and are stored in our supplier's warehouse, ready for installation. This will allow for connection of Sections "E" and "EA" to the treatment plant and allow for full resumption of homebuilding activities in these areas. b. - Repairs to all existing roads, followed by full scale road work as utility lines are completed, will now include a widening of certain existing roads and shoulders, together with improvements to drainage paths and culverts. c. - Clearing of all trees, brush and debris from the entire lakebed of the new Lake Algonquin area (already permitted under our Soil, Sedimentation and Erosion Control Permit) followed by commencement of the dam construction once that final permit is issued. Simultaneous with the commencement of the above work, C.B.G. will award a contract for design of marinas, which are planned to be built on each of the three (3) lakes - Choctaw, Susquehanna and Algonquin. This will allow all property owners (lakefront and non-lakefront owners) accessibility and availability of boating privileges. SPECIAL PROMOTIONS AND MARKETING Planned Special Promotional Events are planned to commence within 60 days after Re-organization and a full scale return to marketing, including all major media advertising will commence within 90 days. This time schedule will allow time for completion of all new required registrations. PROPERTY OWNER ASSISIANCE During the past and current economic crisis, C.B.G. was not the only casualty. A number of our property owners suffered business reverses, loss of position and income, etc. Still others have experienced a necessity to relocate to different areas of the country. C.B.G. Limited intends to present proposals to all such property owners that are intended to give them assistance, relief and preservation of equity. These proposals have been discussed with our Loan Guarantor and will receive their full support. To update the above paragraph, the following information is given: a.- C.B.G. has successfully intervened on behalf of more than forty (40) property owners, responding to their individual requests. We have halted legal proceedings threatening their ownership, absorbed legal costs, wiped out imposed penalties and interest, arranged payment schedules, etc. We have prevented actual foreclosure proceedings by First Eastern Bank in three (3) cases. 4 b.- Upon re-organization, C.B.G. will offer total re-financing without penalties, to property owners who are currently in default but wish to retain their properties. c.- Upon re-organization, C.B.G. will list for sale those properties currently in default, wherein property owners do not wish to or are unable to retain their properties. Lot sales during the first 90 days after reorganization will be strictly limited to those resales of property owner lots. They will not be "distress sales". d.- in those cases wherein immediate relief is requested or required, C.B.G. will accept a "Deed Back" without foreclosure proceedings. There will be no negative impact on the property owner's credit rating. In addition, C.B.G. will extend a Credit Certificate for the full amount of any equity the property owner may have had in the property prior to Deed Back, which could be applied at any time in the future towards a new purchase. Additional solutions to extend relief are also under consideration. PROPERTY OWNER SUPPORT OF C.B.G.'S EFFORTS While the overwhelming majority of property owners have expressed strong support for C.B.G. both in writing and via personal visits or telephone calls, there still exists a small handful of highly active detractors. Their actions have contributed to rumors, malicious mischief, acts of vandalism and even outright criminal conduct. It is extremely important that you make an intelligent evaluation of where your best interests lie. Are they best served by C.B.G. Limited in a unified overall comprehensive development of this property and your lifestyle? Or would your interests be better served by a bank takeover, auction type sales of fragmented parcels of the property to separate individuals and/or companies, while the remainder would be left to a disorganized group of individual property owners to finance, manage and maintain? This happened once before. Property values declined 90%. Maintenance and security virtually disappeared. Years of decline and decay destroyed the quality of life and owners abandoned their properties. Ask those who went through that experience. C.B.G. Limited alone reversed all that and built the beautiful lifestyle that most of you love and enjoy. C.B.G. Limited, with your support, promises to bring even greater benefits to all concerned, We need your support. To update the above Information, you should be aware of the following: Numerous property owners have responded to C.B.G.'s call for cooperation and assistance. Several hundred letters of support and dozens of phone calls poured into our office, making it impossible to respond to each, despite our best efforts. A considerable number personally visited and met with me. All expressed admiration for the herculean efforts being expended by C.B.G. with its greatly reduced staff and limited funds. 5 However, a number of property owners remain delinquent in their payment of fees for maintenance and utilities. If anything could impact negatively on C.B.G.'s efforts at this crucial time, it would be a lack of cash flow to maintain operations. Therefore, I urge all property owners to immediately pay these past due fees and avoid an interruption in services which could lead to intervention by the bank or the courts. It is regretful that civil proceedings had to be instituted against the most flagrantly defiant delinquents. More than 200 judgments were awarded in favor of C,B.G. Limited, Oneida Water Company and Valley Utilities Company, Inc., adding substantially to costs for legal and filing fees, that must now be paid by delinquents. Do not let this happen to you. Everyone must pay their fair share. A successful re-organization of C.B.G. will lead to unparalleled benefits for everyone. Imagine if you will - * Completion of Lake Algonquin * Marinas on all lakes * Completion of the Palmer designed Golf Course and Clubhouse * Completion of two additional golf courses * Completion of shopping center, professional office complex, service station and car wash - all on Route 924 * Completion of a hotel/convention center * Completion of additional swimming pools, tennis courts (outdoor and indoor) with clubhouse facilities * Completion of townhous@s, condominiums and garden apartments These are just the highlights of our future plans. Please help us to achieve them. Sincerely, /s/ Frank M. Cedrone Managing General Partner FMC/va
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