American Skiing announces financial restructuring
NEWRY, Maine (AP) – American Skiing Co.’s biggest investor has agreed to pump an additional $30 million into the debt-ridden resort operator as part of a financial restructuring package announced Monday.
The agreement was negotiated with Oak Hill Capital Partners, a Texas-based investment group that 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.”
The 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.
The plan also includes a previously announced staff reorganization and reductions.
Oak Hill’s financing package includes a lease guarantee of up to $14 million on one of American Skiing’s assets, 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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