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CUSIP No. 25272T104
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13D
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Page
2
of 9
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1
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Names of reporting persons
Byron Diamond Investments, LLC
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2
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Check the appropriate box if a
member of a group
(a)
x
(b)
¨
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3
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SEC use only
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4
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Source of funds
OO
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5
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Check box if disclosure of legal
proceedings is required pursuant to Items 2(d) or 2(e)
¨
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6
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Citizenship or place of
organization
Delaware
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Number of
shares
beneficially
owned by
each
reporting
person
with
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7
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Sole voting power
1,748,259 (1)
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8
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Shared voting power
662,307 (2)
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9
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Sole dispositive power
1,748,259 (1)
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10
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Shared dispositive power
662,307 (2)
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11
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Aggregate amount beneficially owned by each reporting person
2,410,566 (1)(2)
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12
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Check box if the aggregate amount
in Row (11) excludes certain shares
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13
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Percent of class represented by
amount in Row (11)
3.20% (3)
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14
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Type of reporting
person
OO
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(1)
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Includes (i) 1,229,735 shares of common stock held by Byron Diamond Investments, LLC and (ii) an aggregate of 518,524 shares of common stock held by Praesumo Partners,
LLC and Trivergance Diamond Sub, LLC. Pursuant to the terms of nominee agreements, Byron Diamond Investments, LLC has the right to control, and has the sole pecuniary interest in, such shares held by Praesumo Partners, LLC and Trivergance Diamond
Sub, LLC, which represent a portion of the total number of shares held by such entities.
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(2)
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Consists of 604,724 shares of common stock issuable upon exercise of a fully-exercisable call option from DRP Holdco, LLC and 57,583 shares of common stock issuable
upon exercise of a fully-exercisable call option from Silver Rock Financial LLC and other entities affiliated therewith, each such call option is held by 1818 Partners, LLC. Pursuant to the terms of a nominee agreement, Byron Diamond Investments,
LLC has the right to direct actions with respect to such shares, which represent a portion of the total number of shares underlying such call options.
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(3)
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Based on 75,447,688 outstanding shares of common stock of the Issuer.
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CUSIP No. 25272T104
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13D
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Page
3
of 9
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Item 1.
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Security and Issuer
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This
statement relates to the common stock, par value $0.01 per share (the Common Stock), of Diamond Resorts International, Inc. (the Issuer). The address of the principal executive offices of the Issuer is 10600 West Charleston
Boulevard, Las Vegas, Nevada 89135.
Item 2.
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Identity and Background
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This statement is being filed by Byron Diamond Investments, LLC, a Delaware limited liability company (the Reporting Person).
Marc Byron is the sole manager of the Reporting Person and is a United States citizen.
The principal
business address of the Reporting Person and Mr. Byron is 2200 Fletcher Ave, 4
th
Floor, Fort Lee, NJ 07024.
Pursuant to the terms of nominee agreements, the
Reporting Person has the right to direct actions with respect to shares of Common Stock held by Trivergance Diamond Sub, LLC (TDS) and Praesumo Partners, LLC (Praesumo), and shares of Common Stock underlying call options held
by 1818 Partners, LLC (1818 Partners).
The Reporting Person is primarily engaged in the business of holding
securities of the Issuer. Mr. Byrons principal occupation or employment is serving as Chief Executive Officer of Trivergance LLC, a consulting and advisory firm focusing on identifying deals, structuring transactions, sourcing and
securing capital and enhancing value.
Neither the Reporting Person nor Mr. Byron has, during the past five years,
(i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
The Reporting Person is deemed to be a member of a group, as such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), and Rule 13d-5 promulgated thereunder, as a result of being party to the Stockholders Agreement (as defined herein), as more fully described in Items 4 and 5 hereof.
Item 3.
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Source and Amount of Funds or Other Consideration.
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On July 24, 2013, the Issuer closed the initial public offering (the IPO) of an aggregate of 17,825,000 shares of Common Stock at the IPO price of $14.00 per share. In the IPO, the
Issuer sold 16,100,000 shares of Common Stock, and Cloobeck Diamond Parent, LLC (CDP), in its capacity as a selling stockholder, sold 1,725,000 shares of common stock.
Pursuant to an Exchange Agreement, dated as of July 17, 2013 (the Exchange Agreement), by and among the Issuer, Diamond
Resorts Parent, LLC (Diamond LLC) and the members of Diamond LLC party thereto, in connection with, and immediately prior to the closing of, the IPO, (i) the holders of Class A common units of Diamond LLC contributed all of
their Class A common units of Diamond LLC to the Issuer in return for an aggregate of 53,697,402 shares of Common Stock, and (ii) the holders of Class B common units of Diamond LLC contributed all of their Class B common units of Diamond
LLC to the Issuer in return for an aggregate of 360,465 shares of Common Stock (collectively, the Exchange). Immediately following the consummation of the Exchange, Diamond LLC was merged with and into the Issuer, with the Issuer
remaining as the surviving entity.
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CUSIP No. 25272T104
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13D
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Page
4
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Immediately prior to the Exchange, the Reporting Person held 31.783 Class A common units of Diamond
LLC. Upon consummation of the Exchange, the Reporting Person received 1,229,735 shares of Common Stock in exchange for such Class A common units.
Immediately prior to the Exchange, Praesumo held 19.464 Class A common units of Diamond LLC. Upon consummation of the Exchange, Praesumo received 753,092 shares of Common Stock in exchange for such
Class A common units.
Immediately prior to the Exchange, TDS held 12.682 Class A common units of Diamond LLC. Upon
consummation of the Exchange, TDS received 490,687 shares of Common Stock in exchange for such Class A common units.
In
connection with the closing of the IPO, existing call options held by 1818 Partners representing the right to purchase Class A common units in Diamond LLC were converted, pursuant to the terms of such call options, into call options to purchase
(i) 4,535,426 shares of Common Stock from DRP Holdco, LLC (the DRPH Call Option) and (ii) 431,875 shares of Common Stock from Silver Rock Financial LLC and other entities affiliated therewith (the Silver Rock Call
Option and, together with the DRPH Call Option, the Call Options).
The summaries contained herein of the
Exchange Agreement, the DRPH Call Option and the Silver Rock Call Option do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are filed as Exhibits 1, 2 and 3, respectively, to this
Schedule 13D and are incorporated herein by reference.
Item 4.
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Purpose of Transaction.
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The disclosure set forth in Item 3 of this Schedule 13D is incorporated herein by reference.
In connection with the closing of the IPO, the Reporting Person has entered into a Stockholders Agreement, dated as of
July 17, 2013 (the Stockholders Agreement), with other individuals and entities who are now stockholders of the Issuer. The Stockholders Agreement covers an aggregate of 40,119,261 shares of Common Stock, representing approximately
53.2% of the outstanding Common Stock. In addition, CDP and DRP Holdco, LLC (DRPH), which beneficially own an aggregate of approximately 22.0% and 15.0%, respectively, of the Common Stock, and are parties to the Stockholders Agreement,
entered into a Director Designation Agreement, dated as of July 17, 2013 (the Director Designation Agreement), with the Issuer.
Pursuant to the Director Designation Agreement, (i) CDP has the right to designate up to two of the Issuers directors, for so long as CDP and its affiliates, collectively, own at least ten
percent (10%) of the issued and outstanding shares of Common Stock, and (ii) DRPH has the right to designate up to two of the Issuers directors, for so long as DRPH and its affiliates, collectively, own at least ten percent
(10%) of the issued and outstanding shares of Common Stock, provided that, in each case, if the board of directors of the Issuer (the Board) determines in good faith, after consultation with outside legal counsel, that the
nomination of any such designee would constitute a breach of its fiduciary duties to the Issuers stockholders, CDP or DRPH, as applicable, must designate another individual (who will also be subject to the same determination by the Board).
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CUSIP No. 25272T104
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13D
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Pursuant to the Stockholders Agreement, each of the parties thereto has agreed to cause the shares of
Common Stock held by such party to be voted, at any meeting of stockholders of the Issuer called for such purpose, for the individuals nominated by the Board for election to the Board (including those nominees selected by CDP and DRPH pursuant to
the Director Designation Agreement). Each of the parties to the Stockholders Agreement has agreed to appoint Stephen J. Cloobeck and David F. Palmer as their proxies and attorneys-in-fact to vote their shares of Common Stock in the event that they
fail to vote in accordance with the provisions of the Stockholders Agreement. In addition, in the event that any party to the Stockholders Agreement transfers any shares of Common Stock to an affiliate, another party to the Stockholders Agreement or
an affiliate of another party to the Stockholders Agreement, the transferee will be required to sign a joinder to the Stockholders Agreement.
As a result of the Stockholders Agreement, the parties thereto are deemed to constitute a group, for purposes of the Exchange Act, that holds more than 50% of the Common Stock, and the Issuer
will therefore qualify as a controlled company under the corporate governance rules of the New York Stock Exchange.
In connection with the closing of the IPO, (i) certain parties to the Stockholders Agreement purchased shares of Common Stock in the
IPO pursuant to the directed share program established by the underwriters for the IPO, (ii) each member of the Board who is not an officer or employee of the Issuer, or the Chairman or Vice Chairman of the Board (each such individual, a
Non-Officer Director) was granted shares of restricted common stock for service on the Board, pursuant to the Issuers 2013 Incentive Compensation Plan, and (iii) each Non-Officer Director received shares of fully vested Common
Stock in lieu of the cash retainer to which such Non-Officer Director was otherwise entitled, pursuant to the Non-Officer Director Share Accumulation Program adopted as part of the Issuers 2013 Incentive Compensation Plan. Pursuant to the
Non-Officer Director Share Accumulation Program, each Non-Officer Director is entitled to elect to utilize all or a portion of his annual retainer fee to acquire shares of Common Stock.
The transactions contemplated by the Stockholders Agreement and the Director Designation Agreement may result in certain actions
specified in Items 4(a) through (j) of Schedule 13D, including changes in the Board. Furthermore, as a stockholder of the Issuer, on an ongoing basis, the Reporting Person will review the Issuers operating, management, business affairs,
capital needs and general industry and economic conditions, and, based on such review, the Reporting Person may, from time to time, determine to increase or decrease its ownership of Common Stock, vote to approve an extraordinary corporate
transaction with regard to the Issuer or engage in any of the events set forth in Items 4(a) through (j) of Schedule 13D. Except as otherwise provided herein, the Reporting Person currently has no intention of engaging in any of the events set
forth in Items 4(a) through (j) of Schedule 13D.
The summaries contained herein of the Stockholders Agreement and the
Director Designation Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are included as Exhibits 4 and 5, respectively, to this Schedule 13D and are incorporated herein
by reference.
Item 5.
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Interest in Securities of the Issuer.
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(a) The Reporting Person may be deemed to beneficially own 2,410,566 shares of Common Stock, representing approximately 3.20% of the Issuers outstanding Common Stock (based on 75,447,688 shares of
Common Stock outstanding).
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CUSIP No. 25272T104
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13D
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Page
6
of 9
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(b) The Reporting Person has sole voting power and sole dispositive power with regard to
(i) 1,229,735 shares of Common Stock held by it and (ii) an aggregate of 518,524 shares of common stock held by Praesumo and TDS. Pursuant to the terms of nominee agreements, the Reporting Person has the right to direct actions with
respect to such shares held by Praesumo and TDS. The Reporting Person has shared voting power and shared dispositive power with regard to 662,307 shares of Common Stock underlying the Call Options held by 1818 Partners. Pursuant to the terms of a
nominee agreement, the Reporting Person has the right to direct actions with respect to such shares.
The share ownership
reported for the Reporting Person does not include any shares of Common Stock owned by the other parties to the Stockholders Agreement, except to the extent disclosed in this Schedule 13D. The Reporting Person is deemed to be a member of a
group for purposes of the Exchange Act with the other parties to the Stockholders Agreement. The Reporting Person disclaims beneficial ownership of any shares of Common Stock owned by the other parties to the Stockholders Agreement,
except to the extent disclosed in this Schedule 13D.
(c) No transactions in the Common Stock have been effected by the
Reporting Person within the past 60 days, except as disclosed under Item 3 of this Schedule 13D, all of which disclosures are incorporated herein by reference.
(d) With respect to the 604,724 shares of Common Stock underlying the DRPH Call Option held by 1818 Partners, DRPH currently has the power to direct the receipt of dividends from such shares of Common
Stock. With respect to the 57,583 shares of Common Stock underlying the Silver Rock Call Option, Silver Rock Financial LLC and other entities affiliated therewith have the power to direct the receipt of dividends from such shares of Common Stock.
Upon exercise of the Call Options by 1818 Partners, Praesumo will share the power to direct the receipt of dividends from, or the proceeds from the sale of, the underlying shares of Common Stock with Cloobeck Companies, LLC and Chautauqua
Management, LLC, the other managing members of 1818 Partners.
(e) Not applicable.
Item 6.
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Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer
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The responses set forth in Items 3 and 4 of this Schedule 13D are hereby incorporated by reference.
Each of the Issuers officers, directors and principal stockholders (including the Reporting Person) has executed a Lock-Up
Agreement (each, a Lock-Up Agreement and, collectively, the Lock-Up Agreements). Each of the Lock-Up Agreements provides that the party thereto will not offer, sell, contract to sell, pledge or otherwise dispose of, directly
or indirectly, any shares of Common Stock or securities convertible into or exchangeable or exercisable for any shares of Common Stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that
transfers, in whole or in part, any of the economic consequences of ownership of Common Stock, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement,
without, in each case, the prior written consent of Credit Suisse Securities (USA) LLC, for a period of 180 days after July 18, 2013 (which 180-day period is subject to extension under certain specified conditions).
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CUSIP No. 25272T104
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13D
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Page
7
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The Reporting Person is party to that certain Second Amended and Restated Registration Rights Agreement,
dated as of July 21, 2011 (the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Issuer has agreed to provide to DRPH, stockholders related to Wellington Management Company, LLP and stockholders
related to Silver Rock Financial LLC (collectively, the Demand Rights Investors) certain demand registration rights that entitle the Demand Rights Investors (subject to certain minimum thresholds for ownership of Common Stock,
limitations on the number of demand registrations that can be requested and customary cutbacks) to require that the Issuer register all or part of the shares of Common Stock held by the Demand Rights Investors. In addition, pursuant to the
Registration Rights Agreement, the Issuer has agreed to provide to the parties thereto, including the Reporting Person, certain piggyback registration rights with respect to the Common Stock, subject to customary cutbacks.
The Reporting Person is a party to that certain TDS Nominee Agreement, dated as of July 17, 2013 (the TDS Nominee
Agreement). Pursuant to the TDS Nominee Agreement, Trivergance Diamond Sub, LLC (TDS) has agreed to hold shares of Common Stock as nominee for certain beneficial owners, including the Reporting Person (the Beneficial
Owners). The Beneficial Owners have the right to direct actions with respect to such shares. In addition, pursuant to the TDS Nominee Agreement, the Beneficial Owners have been granted certain preemptive rights to purchase from TDS shares of
the Issuer that TDS is afforded the opportunity to purchase.
The Reporting Person is a party to that certain Praesumo Nominee
Agreement (BDI), dated July 17, 2013 (the Praesumo Nominee Agreement). Pursuant to the Praesumo Nominee Agreement, Praesumo Partners, LLC (Praesumo) has agreed to hold 168,752 shares of Common Stock and 662,307 shares of
Common Stock underlying call options held by 1818 Partners as nominee for the Reporting Person. The Reporting Person has the right to direct actions with respect to such shares. In addition, pursuant to the Praesumo Nominee Agreement, the Reporting
Person been granted certain preemptive rights to purchase from Praesumo or 1818 Partners, as applicable, shares of the Issuer that Praesumo or 1818 Partners is afforded the opportunity to purchase.
Descriptions and summaries of the Lock-Up Agreements, the Registration Rights Agreement, the TDS Nominee Agreement and the Praesumo
Nominee Agreement set forth above in this Item 6 do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are included as Exhibits 6, 7, 8 and 9 respectively, to this Schedule 13D
and are incorporated herein by reference.
Item 7.
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Material to be Filed as Exhibits.
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The following documents are filed as exhibits:
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1.
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Form of Exchange Agreement (incorporated by reference to Exhibit 10.42 to Amendment No. 1 to the Registration Statement on Form S-1 filed by the Issuer on
July 9, 2013)
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2.
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Call Option Agreement, effective as of July 21, 2011, by and among DRP Holdco, LLC, 1818 Partners, LLC and, solely for the purposes set forth in Sections 7, 8 and
9 thereof, Diamond Resorts Parent, LLC*
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3.
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Call Option Agreement, effective as of July 21, 2011, by and among Silver Rock Financial LLC, IN-FP1 LLC, BDIF LLC, CM-NP LLC, 1818 Partners, LLC and, solely for
the purposes set forth in Sections 7, 8 and 9 thereof, Diamond Resorts Parent, LLC*
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CUSIP No. 25272T104
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13D
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Page
8
of 9
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4.
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Form of Stockholders Agreement (incorporated by reference to Exhibit 10.45 to Amendment No. 1 to the Registration Statement on Form S-1 filed by the Issuer on
July 9, 2013)
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5.
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Director Designation Agreement (incorporated by reference to Exhibit 10.44 to Amendment No. 1 to the Registration Statement on Form S-1 filed by the Issuer on
July 9, 2013)
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6.
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Form of Lock-Up Agreement (incorporated by reference to Exhibit B to Exhibit 1.1 to Amendment No. 1 to the Registration Statement on Form S-1 filed by the Issuer
on July 9, 2013)
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7.
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Second Amended and Restated Registration Rights Agreement (incorporated by reference to Exhibit 10.6 to Diamond Resorts Corporations Current Report on Form 8-K
filed by the Issuer on July 26, 2011)
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8.
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TDS Nominee Agreement, dated July 17, 2013*
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9.
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Praesumo Nominee Agreement, dated July 17, 2013*
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10.
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Power of Attorney for Byron Diamond Investments, LLC (incorporated by reference to Exhibit A to the Form 3 filed by Byron Diamond Investments, LLC on July 18, 2013)
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CUSIP No. 25272T104
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13D
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Page
9
of 9
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: August 5, 2013
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BYRON DIAMOND INVESTMENTS, LLC
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/s/ Jared T. Finkelstein, as attorney-in-fact for Byron Diamond Investments, LLC
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Jared T. Finkelstein, attorney-in-fact for Byron Diamond Investments, LLC
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