(Host) One of Vermont’s oldest and most prestigious ski resorts could soon be sold off by its financially troubled parent company.
American International Group has owned the Stowe Mountain Resort for years. And the insurance company recently announced that everything but its core business is for sale.
VPR’s John Dillon reports:
(Dillon) AIG – the world’s largest insurance company – has sold billions of dollars in credit contracts that are at the center of the global economic meltdown.
The contracts – known as credit default swaps – are essentially insurance on debt. And so when the sub-prime mortgage market sank, AIG spiraled down as well.
At the end of September, the federal government stepped in and loaned AIG $85 billion. The government fired the top management and took a stake in the company.
Late last week, Edward Liddy, AIG’s new CEO, held a conference call with investors and said he’s overseeing a plan to sell off assets to raise cash. He said AIG will retain its core insurance business.
(Liddy) "We will divest ourselves of other businesses which will enable AIG to full repay the borrowings from the federal reserve and also to have an appropriate capital structure going forward.”
(Dillon) AIG’s troubles could reverberate in Vermont. AIG has owned the Stowe Mountain Resort for years.
Liddy did not mention the Vermont property in his conference call. But he said many of the company’s assets on four continents were for sale, including an aircraft leasing business, and a consumer finance division.
(Liddy) “We are going to retain our U.S. property casualty businesses. We are going to retain our foreign general insurance business and we’re going to maintain our continuing interest in our foreign life operations. Literally, everything that doesn’t fit under that definition, we are considering for sale.”
(Dillon) The Stowe resort is completing a $400 million development project that includes residential real estate and a large base lodge and hotel at Spruce Peak.
Michael Berry is president of the National Ski Areas Association based in Lakewood, Colorado.
He says the new development should make the resort attractive to buyers.
(Berry) “There’ll be some real interest. I think you’ll find that for an iconic resort like Stowe there’s going to be a lot of people interested. … And the new development has enhanced the value of the resort.”
(Dillon) Berry says the financial crisis means it’s a great time to buy a resort, although it may be not such a good time to sell one. And he said the sale of Stowe will close a chapter in ski history. CV Starr, an AIG founder, helped develop the resort in the 1940s. Former AIG President Hank Greenburg kept a home in Stowe and maintained ties to the area.
(Berry) “If in fact they’re going to sell it, it will end one of the longest-standing ownership relationships in the industry, if not the longest-standing ownership relationship. If you look at CV Starr, you look at AIG and you look at Hank – the whole all of Stowe has been under one ownership since its inception.”
(Dillon) Berry predicted some major players in the resort industry will step forward with offers.
For VPR News, I’m John Dillon.