American Ski Co. gets more backing
Debt-ridden American Skiing Co., owner of Heavenly Ski Resort, received more financial backing Monday.
American Skiing’s biggest investor, Oak Hill Capital Partners, agreed to pump an additional $30 million into the ski company as part of a financial restructuring package.
Oak Hill Capital Partners, a Texas-based investment group, appoints a majority of American Skiing’s board of directors and can convert its investment into a majority of the company’s common stock.
”This represents a key milestone in the future of American Skiing Company,” said B.J. Fair, chief executive officer. ”With this package in place, we will address many of the significant financial and liquidity issues facing the company.”
Skip King, American Skiing vice president of communications, said the financial boost will be felt more at the corporate level than at any of the company’s nine resort properties.
“It puts American Skiing Co. on a more firm financial footing,” King said. “It allows the company to focus more on its business plan.”
King said one key component of the plan is to develop more sophisticated marketing efforts. The plan also includes company-wide staff reorganization and reductions that were carried out in May.
King said 70 full-time employees were laid off and 160 full-time employees now work seasonally. King couldn’t say how the reductions affected Heavenly.
The $30 million announcement came three days after American Skiing said it reached agreement with lenders on revising the terms of a $165 million financing package.
Fair said the debt restructuring, coupled with the planned sale of the company’s Steamboat resort in Colorado, will provide the financial flexibility and working capital needed to execute the company’s business plan.
Oak Hill’s financing package includes a lease guarantee of up to $14 million on Heavenly’s $20 million gondola. King said neither the gondola operator nor riders will be affected by the change.
Oak Hill’s financing package also includes purchase of 1 million new common shares at $1 each, purchase of $12.5 million in notes convertible into preferred stock and funding of $2.5 million under its loan agreement with the company’s real estate arm.
American Skiing noted that part of the new stock issuance to Oak Hill was carried out without stockholder approval normally required under New York Stock Exchange rules.
The company said it had determined that the delay needed to secure such approval would jeopardize its financial viability and its ability to complete its financial restructuring.
The New York Stock Exchange accepted the action based on an exception for cases of financial distress, American Skiing said.
Steven B. Gruber, managing partner of Oak Hill Capital Management, expressed continued support for American Skiing’s management and its strategic plan.
”The actions taken to resolve the financial issues facing the company will provide management with the opportunity to focus on executing the new business plan – unlocking the significant value in the company’s portfolio of world-class resorts and real estate assets,” said Gruber, who serves on American Skiing’s board.
American Skiing has not earned an annual profit since it went public in late 1997. Its founder, Leslie B. Otten, resigned earlier this year after a merger agreement with Meristar Hotels & Resorts was called off.
In addition to Steamboat, American Skiing’s properties include Sugarloaf USA and Sunday River in Maine; Attitash Bear Peak in New Hampshire; Killington, Mount Snow and Sugarbush in Vermont; The Canyons in Utah; and Heavenly along the California-Nevada line.
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