Silverleaf to issue new 10% notes for Grace Brothers-held 8% notes

By Jennifer Chiou

New York, May 14 - Silverleaf Resorts, Inc. announced that it has entered into a definitive agreement with Grace Brothers, Ltd. and one of its wholly owned subsidiaries to issue an equal amount of a new class of 10% senior subordinated notes due 2012 in exchange for $10 million of Silverleaf's $22.5 million of 8% senior subordinated notes due 2010 held by Grace Brothers.

The company added that Grace Brothers will also receive a cash payment for accrued interest on the old notes.

Under the agreement, Silverleaf will purchase from Grace Brothers an additional $3.5 million of 8% notes at par plus accrued interest.

Grace Brothers holds $14,011,000 of the outstanding 8% notes.

The new notes will have substantially similar terms to those of the old notes, except that the new notes will begin paying equal quarterly payments of principal and interest beginning on July 1, 2010 and continuing thereafter on a quarterly basis.

Silverleaf is a Dallas-based owner and operator of timeshare resorts.

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