Key West Citizen Yesterday: "Bankruptcy looms over Keys Builder"

Key West Citizen Disappears

Top Headline from Yesterday

No post on this blog has fanned hate email like my recent post about Cay Clubs. The responses to the blog, listed right below my comments were tame compared to some of the stuff I received via email.

So, in an effort to throw a little gasoline on the fires of "Haterz" of Rock Trueblood, I have to ask this question: What happened to the Citizen's above the fold and top of the fold headline from yesterday screaming . . .

Bankruptcy looms over Keys Builder

Cay Club develops financial problems

I would refer you all to this article by Robert Silk, except for one minor problem: the Key West Citizen's online story has vanished.

See for yourself. Check the lineup from yesterday's headlines.

We find:

Restaurateur collects donations for hurricane victimsPublished on Wednesday, August 22, 2007

Family fun day focuses on child safety awarenessPublished on Wednesday, August 22, 2007

Curfew will be enforcedPublished on Wednesday, August 22, 2007

'Keep off' signs go up on WisteriaPublished on Wednesday, August 22, 2007

. . . but there is no entry for yesterday's biggest and best story about Cay Clubs. And this was the top headline you would see as you walked past a paper vending box.

Again,

Bankruptcy looms over Keys Builder

Cay Clubs develops financial problems

Yesterday, online, the story was there.

Today, it disappeared.

As Colonel Klink from "Hogan's Heroes" would say, "Veeeeeeeeeeeeery Interesting!"

When I started this blog, one of my first posts was "Realtors Wag the Key West Citizen Dog".

In that short post I simply posited the idea we can not expect the Citizen to be too observant on Housing in the Keys as the majority of its revenue comes from Realtors.

Why I think yesterday's top story is missing from the online edition of the Key West Citizen

All it takes is a threat to yank advertising dollars. It's that simple. I saw this "cave in" attitude time and again at a Clear Channel radio station where I worked for a short spell.

Key West is such a small town that the paper is inextricably dependent on advertising revenue to make up for its tiny circulation. And no ad revenue is bigger than Real Estate.

I feel someone, somewhere, with ties to Real Estate interests made a big ass phone call to the Citizen and asked, cajoled, pushed or even threatened a Citizen bigwig with the loss of ad dollars if that Cay Clubs article wasn't erased online.

I just googled the headline. No luck. No one anywhere saved the headline and story to an online "memory hole" that I can find.

What was in the article?

Well, here's the flavor of the article in the first sentence by Robert Silk . . .

"The company that became synonymous with the frenzy of redevelopment that swept the Florida Keys in recent years is now scrambling to stay our of bankruptcy."

Here are some of the tidbits discussed by Silk about Cay Clubs:

• An SEC filing by Cay Clubs for its pending merger with Key Hospitality Acquisition Corp. shows a $1.2 million dollar loss for the first quarter of this year versus a $13.8 million profit, year over year, for the same quarter.
• The company owes lenders $91 million, $74 million of which is due in the next year.
• One lender has already notified Cay Clubs they are officially $9 million in default.
• Cay Clubs is in arrears by $10.5 million to about 140 owners of condos who opted for the "lease back" program (as documented in this blog which incited hate emails to yours truly).
• Cay Clubs spokesman Chris Brown says the company is still trying to negotiate with lenders.
• Cay Clubs is still trying to sell off portions of its holdings for cash.
• Of note . . . and something I was not aware of . . . Cay Clubs "owns" 150 single family homes . . . along with 6 resort hotels (the Citizen should have printed condotels), 900 boat slips, and restaurants and other businesses. (I am wondering if the single family homes are really condos the company was forced to take back?)
• More interestingly, the deal to buy and manage the Half-Shell Raw Bar, Turtle Krawls Restaurant, A&B Lobster House complex and other businesses on the waterfront has not happened. The owner of some of these restaurants, a Gene Smith, has refused to answer any Key West Citizen questions since March of this year.
• Cay Clubs bid to purchase the former Marathon Manors nursing home fell through in April and Cay Clubs walked away from the deposit.
• In May, Cay Clubs fired 80 workers in the Keys.

Last but not least, this language from the SEC filing:

"Without additional borrowing and/or the refinancing of existing short-term debt, Cay Clubs will have to change its current mode of operation and may potentially have to file for federal bankruptcy protection."

Now I don't know about you, but if the company is putting the above in fine print on an SEC document, I think it's the kind of language which should be blown up into at least a 20 point font and given to potential investors in their leaseback program. I feel this flare gun warning should be stapled as a top page on brochures and prospectuses to show just how forthcoming Cay Clubs is with the public.

As always . . . caveat emptor,

Rock in Key West

p.s. Robert Silk, you have a beer with your name on it at my club. Bring Rob O' Neal and the new business editor for the Citizen. You three are on my personal Honor Roll for trying to tell it like it is.