ASC selling Steamboat
Amid a lackluster winter in the west, Heavenly Ski Resort’s parent company announced Wednesday it will sell its Steamboat resort in Colorado and cut jobs under a restructuring plan designed to reduce its debt load and operating costs.
Under American Skiing Company’s restructuring, 70 full-time jobs will be eliminated from its base of 1,600 and another 160 full-time jobs will be converted to seasonal jobs companywide in an attempt to save $5 million a year. At peak season, the company employs more than 11,000 people.
“We’re glad to see fiscal 2001 return to more normal winter conditions. Skier visits show one of the best seasons with a strong increase in visits. However, as most of you are aware, we had weaker-than-expected results in the West. Heavenly had less snowfall than normal and more inconsistent snow compared to other Tahoe resorts for much of the winter,” ASC Chief Financial Officer Mark Miller told investors.
“The weakening of economic conditions in northern California also impacted results at Heavenly,” Miller added, listing The Canyons outside Park City, Utah, and Steamboat as resorts sharing a particularly weak midseason.
The 70 eliminated positions are rolled into the normal attrition that occurs once the ski season ends, Chief Executive Officer B.J. Fair indicated. No further restructuring phases would be added, he assured.
“Most of the reorganizational plans have already taken place. Of all the changes that will occur, at Heavenly they have already occurred,” he said after the investors conference. “We took a look at each individual resort and tried to make adjustments accordingly.”
Some of these decisions – like the sale of all Steamboat assets by the end of this year – were difficult, Fair admitted. The ski resort was billed as a consistent, top performer, but it fell short in making the criteria for the company’s long-term goals.
The new CEO, who was launched into the ski resort’s financial difficulties with former chairman Les Otten’s resignation two months ago, once lived in Littleton, Colo., and has retained ties to the state.
The Colorado resort is the only property the company plans to sell at this time, Fair emphasized, despite questions over why Heavenly or The Canyons, were excluded from the chopping block.
According to analysts, Steamboat Ski and Resort Company may sell for $100 million. ASC bought this resort and Heavenly for $288.3 million in 1997.
“We looked to where we have key growth. No resort was excluded through the process. We do believe we’ll have a very good number of buyers for Steamboat,” Fair said.
The decision to sell Steamboat underscores the company’s resolve to maximize resources and create shareholder value, he mentioned.
Investors grilled ASC management Wednesday morning on everything from how to achieve the liquidity of capital to long-term financial planning.
ASC plans to add more resort amenities like restaurants at its existing ski areas to draw more revenue from them.
The Newry, Maine-based company, which went public in November 1997, has accrued high debt. Its stock has fallen from $18 a share to close at $1.17 Wednesday on the New York Stock Exchange.
In announcing the restructuring, American Skiing expects third-quarter earnings to fall below projections, company management added.
The final results on the quarter that ends April 30 will be announced in a few weeks.
The company has also absorbed a $6.5 million loss in that period in severance costs and expenses accrued from the terminated merger with MeriStar Hotels & Resorts and the turnover of development rights for Heavenly’s Grand Summit quartershare hotel to Marriott International.
And in the 2001 fourth quarter, ASC anticipates about $1.1 million in restructuring charges.
Total revenues for the third quarter are expected to amount to $179 million, compared with $223 million in the same period in 2000.
Still, ASC remains optimistic about the company’s future, while coming out of a season in which skier visits rose from 5 million to 5.3 million.
“We’re enthusiastic about the future of American Skiing Company. We’ve had to make difficult decisions that can put the company back on the path for growth,” Fair said.
Along with Steamboat, The Canyons and Heavenly, American Skiing’s other holdings include Sugarloaf and Sunday River in Maine; Attitash Bear Peak in New Hampshire; and Killington, Mount Snow and Sugarbush in Vermont.
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