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Sea Pines Associates, Inc.

McNair Law Firm, P.A.

ATTORNEYS AND COUNSELORS AT LAW

www.mcnair.net

    JOHN W. CURRIE

jcurrie@mcnair.net

    POST OFFICE BOX 11390

    BANK OF AMERICA TOWER

    COLUMBIA, SOUTH CAROLINA 29211

    1301 GERVAIS STREET

    TELEPHONE (803) 799-9800

    COLUMBIA, SOUTH CAROLINA 29201

    FACSIMILE (803) 933-1443

October 1, 2004

VIA FAX NO. (202) 942-9635

Jeffrey A. Shady, Esq.

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, DC 20549

    RE:

    Sea Pines Associates, Inc.

    Schedule 14A

    Filed: August 16, 2004

    File No. 000-17517

Dear Mr. Shady:

     Thank you for taking the time to meet with us by phone Friday afternoon,
September 17, 2004 to discuss the Schedule 14A filed by Sea Pines Associates,
Inc. on August 16, 2004 (the “Filing”). During the phone call we discussed a
number of facts which indicate the unique situation involving Sea Pines
Associates, Inc. (“Sea Pines”) and which confirm the basis for the analysis as
to why The Riverstone Group LLC (“Riverstone”) is not an affiliate of Sea
Pines.

     Sea Pines and Riverstone have entered into a merger agreement pursuant to
which all common shareholders of Sea Pines other than Riverstone and
shareholders who exercise dissenter’s rights would receive $8.50 per common
share. As is evident from the Filing, Sea Pines will be soliciting proxies
with respect to a shareholders meeting for the proposed merger. The
transaction will require an 80% favorable vote of all outstanding common stock
of Sea Pines. As a result of the transaction, the number of record holders of
a class of Sea Pines’ equity securities subject to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the “Act”) will be reduced to
below 300 (from approximately 550 record holders currently). Thus, this
transaction would be a Rule 13e-3 transaction if Riverstone is an affiliate of
Sea Pines.

     Because Riverstone owns approximately 26.61% of the stock of Sea Pines,
the SEC staff requested an explanation of why Riverstone should not be
considered to be an affiliate of Sea Pines. We recognize that the staff in
most cases would view 26.61% as a significant ownership position. However, the
facts discussed below show that Sea Pines’ unique situation rebuts any
presumption that Riverstone is an affiliate of Sea Pines as a result of its
stock ownership.

     We heard clearly your strong reservation against concluding that a
shareholder holding the percentage of voting stock in an issuer held by
Riverstone would not be an affiliate of the issuer for Rule 13e-3 purposes. We
are assembling the information necessary for the Schedule

ANDERSON  •  BLUFFTON
• CHARLESTON • CHARLOTTE • COLUMBIA • GEORGETOWN
• GREENVILLE • HILTON HEAD ISLAND • MYRTLE BEACH • RALEIGH

    McNair Law Firm, P.A.

    ATTORNEYS AND COUNSELORS AT LAW

Jeffrey A. Shady, Esq.

October 1, 2004

Page 2

13E-3 and the accompanying modifications to the proxy statement, but in so
doing we have become increasingly concerned that simply acceding to your
position will result in disclosure that inaccurately suggests that Riverstone
exercised control over Sea Pines in its decision to consider and undertake the
proposed merger, or controlled, other than through true arms’ length
negotiation, its terms. That simply was not the case, and we believe that it
is inappropriate to make filings with the SEC or give Sea Pines’ shareholders
information that suggests that it was.

Sea Pines Background Information

     Sea Pines is unusual for a publicly held company in that it seems to mix
the characteristics of a business corporation and a homeowners’ association.

     Sea Pines owns and operates resort assets located on Sea Pines Plantation,
a 5,300-acre master planned resort community on Hilton Head Island, South
Carolina. Sea Pines was formed in 1987 by a group of residents of Sea Pines
Plantation to buy the resort’s amenities out of the bankruptcy of the resort’s
prior owner, The Sea Pines Company. The founders were concerned about the
deterioration of the resort amenities and the negative impact that this was
having and was going to continue to have on their property values and
lifestyles. The Sea Pines founders went door-to-door and raised the capital in
an intrastate offering. In the offering process, it was made clear that Sea
Pines wouldn’t necessarily seek to maximize profits, but would take into
account the community and property owners.

The Sea Pines Amenities

     The wholly owned subsidiaries of Sea Pines include (i) a full service
resort, which owns and operates the Inn at Harbor Town, three golf courses,
tennis and various other recreational facilities, home and villa rental
management operations, conference facilities and food and beverages services,
(ii) a company through which Sea Pines provides real estate brokerage services
for buyers and sellers of real estate on Hilton Head Island and in its
neighboring communities; (iii) a company which owns certain acreage which could
be used for outdoor recreational purposes; and (iv) an entity which holds
certain Sea Pines debentures and is the issuer of trust preferred securities.

     While there is a significant use of the Sea Pines facilities by
vacationers, conference attendees and other visitors, a substantial part of the
revenue of Sea Pines comes from use of the Sea Pines amenities by residents of
the Sea Pines community. The amenities offered by Sea Pines are one of the
attractive aspects of owning a home in the Sea Pines resort community and are a
major part of the lifestyle of the community.

    McNair Law Firm, P.A.

    ATTORNEYS AND COUNSELORS AT LAW

Jeffrey A. Shady, Esq.

October 1, 2004

Page 3

The Sea Pines Board

     The Sea Pines board of directors (the “Board”) is “staggered” in that
shareholders elect approximately one-third of the Board members each year and
Board members serve three-year terms. Although Sea Pines’ governing documents
do not prohibit non-Sea Pines Plantation property owners from serving on the
Board, to Sea Pines’ knowledge, all current and former Board members owned
property in Sea Pines Plantation at the time of their election to the Board.
Current and former Board members are personally known by many shareholders.

     The Board determines the management and policies of Sea Pines. All major
shareholders of Sea Pines other than Riverstone are represented on the Board.
Riverstone is the only major shareholder who is not on the Sea Pines Board.
Riverstone has never been represented on the Board, nor has it ever sought
Board representation.

     The current Board and executive officers of Sea Pines collectively own
approximately 19.61% of the voting stock of Sea Pines. Former Board members
and their spouses own collectively approximately 3.5% of the voting stock of
Sea Pines.

     The stock of Sea Pines trades on a very infrequent basis. To the knowledge
of Sea Pines, most of the stock is held by owners of property in the Sea Pines
community.

     As a result, Sea Pines has characteristics of a homeowners’ association as
well as a for-profit company.

The Proposed Merger

     The proposed merger transaction and the process that resulted in the
proposed merger transaction are described in the Filing.

     In 2003, Sea Pines’ already high debt burden was increased by $5.9 million
as a result of a lawsuit. Riverstone had nothing to do with this lawsuit or
the debt that Sea Pines incurred as a result of the lawsuit.

     That debt and other debt of Sea Pines is due in 2005. The Board engaged a
consultant to assist it in assessing the options for repayment of the debt. As
is explained in the Filing, these deliberations ultimately led to a decision to
explore the possibility of a sale of the company.

     Riverstone was not a part of the deliberations that led to the decision by
the company to explore its sale options and was not consulted about the
decision to seek a sale transaction or the desirability of a sale transaction
in relation to other options available to Sea Pines.

    McNair Law Firm, P.A.

    ATTORNEYS AND COUNSELORS AT LAW

Jeffrey A. Shady, Esq.

October 1, 2004

Page 4

     After the Board decided to explore the sale option, the Board decided to
approach Riverstone to determine if Riverstone had an interest in purchasing
the company. The Board appointed a special committee and hired legal and
financial advisers. The negotiations relating to the proposed transaction,
which are described in the Filing, were entirely at arm’s length and continued
over several months. The merger agreement was executed on July 27, 2004.

     Sea Pines retains the right to consider unsolicited transactions. If
another bid was received, Sea Pines could pursue it and the termination payment
in the merger agreement would only be payable if another transaction actually
was consummated within a year after the termination of the Riverstone merger
agreement.

     Sea Pines’ articles of incorporation require the affirmative vote of the
holders of at least 80% percent of Sea Pines outstanding common stock to
authorize Sea Pines to sell, lease, exchange or otherwise dispose of all or
substantially all of its property and assets; to liquidate, or to merge, or
consolidate, with any other corporation or to exchange its shares with the
shares of any other corporation. As a result, approximately 73% of the stock
not owned by Riverstone, approximately 63% of the stock not owned by
Riverstone, current Board members or executive officers and approximately 60.2%
of the stock not owned by Riverstone, current Board members or executive
officers or former Board members or their spouses must be voted in favor of the
merger in order for the merger to take place. Thus, in any way of looking at
this issue, a majority of the “minority” is required for approval of the
proposed transaction or any other similar business combination involving Sea
Pines.

     A favorable vote on the merger is not assured. No voting agreements were
entered into in connection with the merger. No officers, directors or
shareholders other than Riverstone have committed to vote in favor of the
transaction.

Riverstone is Not an Affiliate of Sea Pines

     The issue presented is whether Riverstone should be considered an
affiliate of Sea Pines.

     Rule 13e-3(a)(i) under the Act defines an “affiliate” of an issuer as a
person that directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with the issuer.

     Rule 12b-2 under the Act defines the term control (and the terms
“controlling,” “controlled by” and “under common control with”) to mean the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a person, whether through the ownership of
voting securities, by contract or otherwise.

    McNair Law Firm, P.A.

    ATTORNEYS AND COUNSELORS AT LAW

Jeffrey A. Shady, Esq.

October 1, 2004

Page 5

     Thus, control in this sense can result from ownership of voting
securities, by contract or otherwise. We will first discuss the facts that
indicate that Riverstone is not an affiliate “by contract or otherwise.”

Riverstone is Not Part of a Management Control Group

     Riverstone is not represented on the Board of Sea Pines and has never had,
or sought, Board representation. Day-to-day management of Sea Pines is under
the control of the Board of Sea Pines and the executive officers of Sea Pines.
The Board and management of Sea Pines do not consult with Riverstone as to
these matters. The policies of Sea Pines are established by the Board of Sea
Pines, and Riverstone has never sought to influence such policies.

Riverstone Does Not Control Sea Pines by Contract

     Except for the ownership of Sea Pines common stock and the merger
agreement, there is no relationship between Riverstone and Sea
Pines.1 Neither
Riverstone nor Sea Pines has provided services or loans to the other, and
except for the exchange offer described below, there have been no transactions
between them.

Riverstone Does Not Control Sea Pines as a Result of its Stock Ownership

Riverstone’s Stock Position

     Riverstone owns approximately 26.61% of the common stock of Sea Pines.
The stock of Sea Pines was originally issued in units consisting of common and
preferred (Sea Pines preferred stock is non-voting). Riverstone held both
common and preferred until February 2000, at which time Sea Pines completed an
exchange offer of additional common for preferred. The exchange was offered to
all holders of Sea Pines preferred stock to improve Sea Pines’ liquidity by
reducing its fixed dividend obligations. As a result of that exchange,
Riverstone’s common ownership increased from just under 20% to the existing
level. Sea Pines has adopted a shareholder rights plan under which bargain
stock purchase rights would be distributed to, and become exercisable by, all
holders of Sea Pines common stock other than Riverstone if Riverstone were to
acquire beneficial ownership of any additional Sea Pines common stock other
than in connection with this proposed merger.

    1

    The merger agreement contains customary representations and covenants. The
terms of the merger agreement itself would not be considered to put Riverstone
in a controlling position in relation to Sea Pines. See Radol v. Thomas, 556
F. Supp. 586, 592 (S.D. Ohio 1983), aff’d 772 F.2d 244 (6th Cir. 1985).

    McNair Law Firm, P.A.

    ATTORNEYS AND COUNSELORS AT LAW

Jeffrey A. Shady, Esq.

October 1, 2004

Page 6

     In addition, Sea Pines’ shareholder rights plan allows the Board to
designate a person or entity as an “Adverse Person” and thereby cause the
rights to be distributed.2 Accordingly, if Riverstone ever determined to seek
to use its voting power in a way which the Board opposed, the Board could
designate Riverstone as an Adverse Person and cause potentially significant
dilution of Riverstone’s ownership interest. Thus, the shareholder rights plan
not only effectively prevents additional purchases of Sea Pines common stock by
Riverstone, it also allows the Board to dilute Riverstone if Riverstone ever
sought corporate action which was not supported by the Board.

Riverstone’s Powers as a Shareholder

     As a result of its ownership, Riverstone can block a merger or other major
corporate transaction (because of the 80% vote requirement). This power does
not constitute Riverstone as an affiliate of Sea Pines for the reasons outlined
below.

     Riverstone’s stock position does not give it the power to elect or remove
directors. Sea Pines does not have cumulative voting so Riverstone is not in a
position to cause the election of any directors. Removal of a Sea Pines
director requires an 80% vote of the common shareholders. In the unlikely
event of Riverstone’s attempting to call a special meeting, Sea Pines would
contest the power of Riverstone to call such a meeting. Furthermore, under
South Carolina law, a merger or similar major corporate transaction must be
approved by the Board before it is submitted to shareholders. Thus, major
transactions such as these cannot be presented solely by Riverstone.

    2

    Under the rights plan, a person or entity shall
be an “Adverse Person” if
all of the following shall occur: (1) the Board shall designate a specific
limitation of the percentage of common shares then outstanding that a specified
person or entity may beneficially own, which percentage (the “Ownership
Limitation”) may be less than, equal to, or more than the percentage of then
outstanding common stock owned by such person or entity, but shall in no event
be less than 10% of the common stock then outstanding; and (2) at least a
majority of the Board who are not officers of Sea Pines and who are not
representatives, nominees, Affiliates or Associates of such person or entity,
after reasonable inquiry and i