George's Club. If all goes well the company hopes to close the deal this summer.

"It's just a matter of doing due diligence and then to go into a legal agreement,'' Great Vacations negotiator Bert Blicher said. "We have structured the business terms of what a deal would look like. Whether that changes or not depends on the due diligence process.'' He said he could not reveal the amount of the offer to Real Estate Development Co., the developer in charge of the St. George's Club whose principal is timeshare President Alistair Woolf. He reportedly paid about $5 million to take over the St. George's Club in 1994.

Mr. Blicher expects the study of the timeshare's operations in Bermuda to be completed by July. Then Great Vacations will meet with Government and timeshare members to discuss the deal.

The proposed St. George's purchase is part of the company's bid to become an international operation. It made its first foray outside mainland US this year with the development of a resort in the Bahamas. It is considering another in Hawaii.

The company is attempting to expand its US operations by considering more developments in South Florida, South Carolina, and Alexandria, its headquarters.

Great Vacations parent RBC International is in charge of development, sales and marketing of 12 timeshare resorts in the US. RBC has 250 employees and 45,000 timeshare owners. It has projected sales of $43 million this year.

The company's due diligence process includes checking the St. George's Club financial statements, and considering the expense of doing business in a high-cost place like Bermuda.

"We made lots of assumptions about costs of construction and marketing, and sales volumes,'' Mr. Blicher said. "We will take our assumptions and bring in the more local issues and see how they relate to our business.'' One of the company's major concerns is the operating losses racked up by the Club. The operations side of the timeshare is projected to lose over $820,000 this year, with accumulated deficits since 1991 adding up to a projected $2.9 million in the 1997 budget.

Club President Mr. Woolf told timeshare owners that in order to fix the "cash flow crisis'' they would have to pay an extra fee this year to meet the current total operating deficit. He also proposed that the members' annual maintenence fee would have to be hiked by up to 55 percent.

The hikes have caused controversy, one which erupted in the House of Assembly on Friday when PLP Shadow Minister of Tourism David Allen questioned the amount of notice timeshare members had been given about the increases.

Tourism Minister David Dodwell said in an interview he would be meeting with Mr. Woolf, and members' representative Richard Lawrence this week to discuss the issue. Club members are opposing the increases.

"I will listen to both sides to see if I can facilitate a resolution,'' he said. "My main concern is to protect the image and credibility of Bermuda, the protection of timeshare members' interests and the developer's interest.'' He said he would only get involved in the change of ownership when an application had been made to him.

Mr. Woolf said in an interview that his company Real Estate Development Co.

was responsible for development, sales and marketing of the St. George's Club.

As developer the company was not obligated to contribute to operation deficits, except in respect to unsold timeshare units, which are measured in weeks.

Members maintenence fees and other income are meant to cover the timeshare's operation budget. Still the developer voluntarily advanced about $1.1 million to the timeshare's operations to cover the cash flow needs in the past few years, Mr. Woolf said. The timeshare has 2,900 members and 750 unsold weeks representing a shortfall of 20 percent capacity, he said. The St. George's Club has 61 cottages and two new "luxury detached'' units, built as part of an expansion programme.

Mr. Woolf said Great Vacations Resorts had the expertise and money to continue the development of the St. George's timeshare.

"The sale will enable the Club to continue expansion by affiliation with a group that has the expertise and ability to construct and successfully market the remaining phases,'' he said.

Mr. Blicher of Great Vacations Resorts said the company's US presence and affiliation with a number of resorts gave it the muscle to fix the deficit problem. The company plans to cut costs and increase marketing so as to sell off the remaining timeshare units. That way there will be more members to share the operational expenses.

"To solve the problem probably the Club needs to be more efficient immediately,'' he said. "A company like that can be more efficient as we have more economies of scale. We are not just a one-project company. We can merge some of the expenses into our operations. The sales activity needs to pick up so there will be more people sharing the fixed expenses. Our size and expertise is what we bring to the table.'' Mr. Blicher said the timeshare business was experiencing a boom, growing at about 20 percent a year in the US. Hence the company's attempt to expand.

"It's a great business,'' he said. "It's very credible right now. If you're with a good development company who knows what they're doing it's a very solid business with a good product for the consumer...Timesharing has come into its own. It had credibility problems in the past that were caused by a lack of understanding of the product. In the beginning there were people in this business that needed to be weeded out who were not the most honourable people and they were hurting it for the good ones. Fortunately most of those have been taken out of the business because they couldn't find lenders to back them.'' RBC International was founded in 1983 as Russell E. Brown & Associates by its principal and chairman Russ Brown. His first development was at Hilton Head Island, South Carolina handling timeshare and condominium-hotel developments.

He then rescued a failing condominum development by pioneering fractional ownership, offering owners one-quarter shares in units. Forbes magazine then published a cover story about Mr. Brown's company. Mr. Brown credits the story with catapulting the company into national exposure and giving it the credibility to expand operations.