Is it possible to put a Poison Pill in a resale offer?

[Paging Tom Morrow]

Hey guys,

I was just reading how an NFL team pre-empted another team from matching an offer by dropping a "poison pill" into the contract offer. This has me thinking - is it possible for a person purchasing a DVC contract via resale to do the same thing.

Maybe an offer something along the lines of.....

$90 per point plus an additional $1 for each inch in height of the prospective buyer(s). If the buyer is not an individual, then the height will be deemed at 1,000,000 inches.

Just wondering what you legal eagles out there thought.....

 

[boatboatboat]

I doubt if your lawyer is better then DVC's.

 

[mydogdrew]

I'm not an attorney but DVC has the right to take the contract at the same terms as negotiated between the buyer and seller. Also, given the market demand for these contracts, I don't imagine there are many sellers who would accommodate your contractual request with no personal benefit in exchange. I think DVC would vigorously defend any challenge to their ROFR authority. Lets assume you do submit a contract in anticipation of DVC passing on ROFR as a result. What happens next? You call your broker in a few weeks and they tell you you lost it to DVC. Your only recourse would be to take action against DVC with a pretty soft claim. Hardly seems to make financial sense even if you are successful.

The bottom line is you are going to have to pay market value for the contract anyway so why not start there?

 

[RobDoc]

Good luck with that. The legal contract regarding ROFR allows DVC to purchase the contract for the same amount agreed to by the seller. My understanding is that in the cases where some intangible has been included in the offer (a car, other property, etc), DVC has simply demanded a cash appraisal for that item and made their decision based on the total cash price for the contract - thus not needing to meet any other provisions of the offer itself.

Not quite the same as NFL free-agency.

 

[The Roto Addict]

First off, I think OP's original example was a little crazy, but I think there is validity in the possibility of it occurring. I'd be interested in seeing the exact contract language that deals with Disney's ROFR rights. Could someone post them??

I don't imagine there are many sellers who would accommodate your contractual request with no personal benefit in exchange.

Mydogdrew - I think what Ken and Lisa were proposing was to bid what the seller wants and then throw in a poison pill that would only serve to prevent Disney from ROFRing the contract. I know I got ROFR'd recently after offerring $2 per point more than what the seller was asking. If they did that and can offer a poison pill, they are giving incentive to the buyer as well...

Good luck with that. The legal contract regarding ROFR allows DVC to purchase the contract for the same amount agreed to by the seller. My understanding is that in the cases where some intangible has been included in the offer (a car, other property, etc), DVC has simply demanded a cash appraisal for that item and made their decision based on the total cash price for the contract - thus not needing to meet any other provisions of the offer itself.

Not quite the same as NFL free-agency.

Doc - That sounds encouraging. I work as a fantasy-sports information provider. I routinely charge $200 - $300 for a season's worth of one-on-one advice for my clients. If I were to put a bid on a contract and include a one-season membership to my service, it would cost very little to me and would raise the ROFR price for Disney. Interesting, if nothing else.

I would love to see if anyone has included a poison pill and what Disney did with it.

- The Roto Addict

 

[Dean]

I'm probably the only person that has any experience with this situation and DVC and that is somewhat limited. I can tell you that I had a contract for direct even exchange for one timeshare (mine non DVC) for another (OKW 50 pts). The values were essentially the same and we were both happy with a swap. We sent it in and DVC asked for a cash valuation. They did not demand it and I can tell you my first thought was to push it and see what happened. But cooler thinking quickly took over and we priced both at a level that was appropriate but well above ROFR.

It is my opinion that in one pushed this situation and it was on the up and up, as in my case, DVC would have had to back down had it come to that. Remember what the rules say. There is no true requirement for the waiver or ROFR, only that you must give them 30 days notice prior to closing. If you had a willing person on the other end, I see no reason not to push it. The problem is the seller has no incentive in most cases to go along with this hassle, they get their money no matter what if you go to contract. And I doubt one could put in something like $20K plus a Johnny Bench Rookie Card and be successful. But you never know.

 

[mydogdrew]

No seller will agree to any of this unless there is actually something of value involved in which they would prefer cash anyway. If you are trading timeshares then the parties are actually entering into an arms length transaction. The OP is suggesting a contract structure with the sole purpose of interfering with ROFR. DVC will simply ignore the nonsense and buy the contract if they want it with no communication to the potential buyer. It would be up the buyer to prove they have been damaged which they can't.

 

[Paging Tom Morrow]

No seller will agree to any of this unless there is actually something of value involved in which they would prefer cash anyway. If you are trading timeshares then the parties are actually entering into an arms length transaction. The OP is suggesting a contract structure with the sole purpose of interfering with ROFR. DVC will simply ignore the nonsense and buy the contract if they want it with no communication to the potential buyer. It would be up the buyer to prove they have been damaged which they can't.

Drew - Yes, I was suggesting a contract structure with the intention of interfering with ROFR, but it would not be structured in such a way that there would be no incentive to the seller, in fact I think there would be more incentive for the seller than the standard offers.

Tell me, if you were selling which offer would you prefer...

$85 a point

or

$85 a point and a poison pill built in that can only secure you additional funds if Dinsey exercises ROFR.

Either way a seller is going to sell it, with the poison pill built in, there is a chance that they could get more.

 

[Cruelladeville]

When DD got a divorce, her contract had to be sold, so I took it over. I assumed that as a parent I would be free of ROFR. Disney asked me to put a cash value on what we had done for DD, or else they would take the contract. They were nice about it. We just put down that we had paid the dues and the payments on the contract for three years for her, and bought her a car, and then they passed on the contract. I felt that they were trying to make sure we got DD's contract, while still following the rules.

 

[Maistre Gracey]

I don't think that would fly.
What you are really saying is "I will sell this contract to Mr. Joe Shmo for $10,000, but if DVC buys it the price is $1 million."

That's a bit different than the other situations discussed in this thread.

MG

 

[mydogdrew]

Drew - Yes, I was suggesting a contract structure with the intention of interfering with ROFR, but it would not be structured in such a way that there would be no incentive to the seller, in fact I think there would be more incentive for the seller than the standard offers.

Tell me, if you were selling which offer would you prefer...

$85 a point

or

$85 a point and a poison pill built in that can only secure you additional funds if Dinsey exercises ROFR.

Either way a seller is going to sell it, with the poison pill built in, there is a chance that they could get more.

Sorry - I dont' buy it. You can't structure the deal so that DVC pays more than the buyer if they exercise ROFR. They get the deal you strike with the seller. The only thing you are going to accomplish is delaying the closing for the seller (DVC would likely take the maximun 30 days when they see someone playing games). The seller should realize that the only reason to go this route is to try to get a below market sale through ROFR - that's why they won't proceed. The seller wants market value and that's what you should be focused on paying. If you pay market, you'll pass ROFR.

 

[Paging Tom Morrow]

The seller should realize that the only reason to go this route is to try to get a below market sale through ROFR - that's why they won't proceed. The seller wants market value and that's what you should be focused on paying. If you pay market, you'll pass ROFR.

As someone who just had a bid ROFR'd, I think you are out of touch. The bid I placed was made prior to DVC raising their own prices. The average asking price was $80 - $83 per point. I offered $87 per point and got ROFR'd - for a contract that had no points in 2006 and over 75% of it's 2007 points already used. That was at least $4 per point above market value at the time.

 

[Maistre Gracey]

The bid I placed was made prior to DVC raising their own prices. The average asking price was $80 - $83 per point. I offered $87 per point and got ROFR'd - for a contract that had no points in 2006 and over 75% of it's 2007 points already used. That was at least $4 per point above market value at the time.

That's weird. Why would DVC want a contract that they are guaranteed to lose money on?

MG

 

[mydogdrew]

As someone who just had a bid ROFR'd, I think you are out of touch. The bid I placed was made prior to DVC raising their own prices. The average asking price was $80 - $83 per point. I offered $87 per point and got ROFR'd - for a contract that had no points in 2006 and over 75% of it's 2007 points already used. That was at least $4 per point above market value at the time.

Well - bid higher next time. I've made it through ROFR twice successfully so please don't lecture. Disney will not ROFR > market.

 

[Paging Tom Morrow]

MG - It was a smaller contract and my guess is that is has to do with the other benefits DVC owners receive plus the costs of administration of the program. We are waiting for another smaller contract to become available and we'll bid more aggressively. Heck, if we get our full compliments of points in 2007 it will wind up being cheaper for us to pay $96 per point on that contract than to pay $87 for the one that got ROFR'd.

 

[Blue&Gold]

TM---I may have missed this in the exchange, but why not just buy 50 @ $92 from Disney? I don't think they have contract minimums other than for incentives or financing... Are you from a state that can't deal directly with DVD?

 

[Doctor P]

Minimum buy in from Disney is 150 points if not already an owner.

 

[Paging Tom Morrow]

Well - bid higher next time. I've made it through ROFR twice successfully so please don't lecture. Disney will not ROFR > market.

The average price per point of BWV contracts that passed ROFR as listed on the ROFR thread: $83.75

My offer: $87

My contract had no 2006 points and most of 2007 already used.

I'm not lecturing you, just proving that I offered more than what market value was.

Heck - my offer was $2 per point more than what was being asked for!