Diamond Resorts International Inc. DRII, -1.44% in the midst of being acquired by Apollo Global Management LLC APO, -1.03% said Monday that it is postponing the release of its second-quarter earnings because it may need to restate some financial results going back as far as 2014.
Diamond Resorts stock fell 2.4% to $29.45 in midday trading in New York.
The move didn’t appear to have an impact on its pending $2.2 billion tie-up with Apollo. A representative for Apollo said in a press release that the company is “confident this will not impact the timing of our acquisition on the terms previously announced.”
Diamond Resorts said it may be required to write up the book value of its unsold vacation interests and record a reduction by a similar amount in the vacation interest cost of sales, which would increase earnings from the amounts originally reported for 2014. But that could result in higher vacation interest cost of sales in periods subsequent to 2014, reducing reported earnings.
The Las Vegas company said the issue with its financial statements springs from a modification in 2014 to its internal inventory management strategy. If a change in relative sales value methodology is determined to have occurred and the change results in a material adjustment, the company plans to file restated financial information, and its second-quarter earnings release, “as soon as practicable.” The company on Monday was slated to release its results for the June quarter. Diamond said any such change to correct its financial statements would be “noncash in nature.”
Apollo in late June announced it agreed to pay $30.25 a share for Diamond Resorts, a 26% premium over Diamond Resorts’ closing share price before The Wall Street Journal reported on news of a deal. The transaction, subject to regulatory approval, was expected to close sometime in the few months after it was announced.
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