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ASC stock down; Grand Summit still a go

While Heavenly Ski Resort’s Grand Summit Resort Hotel is scheduled for construction in spring 2001, American Skiing Company’s chairman Leslie Otten, has stated that $40 million of real estate debt must be reduced before any further construction can begin.

But, ASC Director of Communications Skip King is confident that ASC, which owns nine resorts nationwide, has a solid plan to make the necessary debt reduction in time for construction of Heavenly’s $100 million,199-unit, quarter-share hotel.

“We believe that the plan to reduce $40 million in real estate debt is realistic,” King said.



ASC has quarter-shares to sell at Grand Summits in Steamboat Springs, Colo., and at The Canyons in Utah. In addition, it has resort property at four of its six New England resorts, which it plans to sell, King said.

“I think (ASC) got into trouble when they tried to do too many projects at one time, and I think they have a plan that will work,” said Cheryl Sillings, a financial consultant at Brookstreet Securities Corp.




Last March ASC opened a 360-unit Grand Summit, quarter-share hotel at The Canyons and the 150-unit Sundial Lodge, also at The Canyons. As of Oct. 16, the Grand Summit at The Canyons had sold 52 percent its rooms. The 328-unit Steamboat Grand Summit had a soft opening last Oct. 2 and had the grand opening Dec. 2. The percentage of rooms sold could not be released, according to Kent Kirkpatrick, public relations coordinator for Steamboat.

King was unable to comment if sales of the quarter-share properties have met expected projections, but considered the plan to make the $40 million reduction conservative.

ASC is starting this season $458 million in debt. Last year the company lost $52.5 million, but King said that last year was a poor season for ski resorts across the nation. He also cited continual investment as a drain on ASC’s funds.

“While these units are being built, you are racking up bills,” King said. “But you don’t have any revenue to offset the bills.”

But City Councilman Bill Crawford is skeptical of ASC’s ability to deliver on Heavenly’s Grand Summit in the spring.

“In my opinion, based upon my three years of research and tracking this company, I would say 60/40 against (ASC) starting it on time,” Crawford said. He thinks that ASC, instead of building the Grand Summit at Heavenly, may choose to sell the development rights to a different developer.

City Manager David Childs, however, is confident that the project will begin on time.

“I have seen nothing that leads me to believe that (ASC) will not begin construction on the Grand Summit Resort next spring,” he said.

At least two other councilmembers agree that Heavenly will construct the Grand Summit in spring.

“In the last month when the stock market was going down ASC stock was going up,” said Councilwoman Judy Brown. “I don’t have any concerns. I expect them to go forward with their project. They have too much invested right now.”

Mayor Tom Davis said Heavenly is guaranteed a success with the Grand Summit because it has pre-sold almost 85 percent of the units.

“Since we have already seen a construction loan commitment, that is about as good of a guarantee as we are going to get that I know of,” Davis said.

During the last 52 weeks ASC’s stock has hit a high of $4 and a low of $1 and 5/8, according to ASC’s investor relations website. As of closing Tuesday, Dec. 5, the stock was trading at $2 and 3/4.

According to a Monday Dec. 4, report from Zacks Investment Research, which takes opinions from four stock brokers who track the stock, one considered ASC’s stock to be a strong buy, one a moderate buy and two suggested that those who own the stock should hold it. The report used investors from Bear Stearns, Credit Lyonnais Securities Inc., Goldman & Sax, and ING Baring Furman Selz LLC.

ASC’s stock, in the last five years, traded at a high of about $17 in 1998. It has since steadily decreased.


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