(Host) There’s more bad news for American Skiing, the resort company that owns two ski areas in Vermont. The company’s real estate subsidiary has defaulted on its loans and banks have begun the process of taking over the properties.
VPR’s John Dillon reports.
(Dillon) American Skiing has staggered under a huge debt load for years. It’s been forced to sell off two of its resorts and its stock price has plummeted from a high of $18 to around 18 cents a share. The company still owns the Killington and Mount Snow ski areas in Vermont.
But now American Skiing says that it’s in default on its real estate loans. The loans cover parcels of land that could be developed at resorts in Vermont, Colorado and Utah. The Mount Snow Grand Summit hotel is also collateral for one of the defaulted loans.
Phelps Hoyt follows the company as an analyst with KDP investment advisers in Montpelier. He says the loans are structured so that the parent company is well insulated from defaults by its real estate side:
(Hoyt) “For now, the parent company is not in default and it looks like it will avoid being drawn into bankruptcies if these things actually go through bankruptcy. … So the long term ramification is that they might lose control of the real estate, which might lessen the revenues that the company can generate by co-marketing real estate with skiing activity. Which is sort of the point of owning the real estate Â– to develop it to try to maximize visits to the ski resort.”
(Dillon) American Skiing told the Securities and Exchange Commission that the Fleet Bank National Bank and other lenders have demanded repayment of about $63 million. The company’s says it wants to renegotiate the loans. But it says the banks have also launched the legal process that could lead to foreclosure on the properties.
Eric Preusse is a spokesman for the resort company. He says the loan defaults shouldn’t affect the skiing side of the business:
(Preusse) “The resort operations in Vermont and the resort operations and Killington and Mount Snow are going to remain core, vital parts of American Skiing company’s ongoing operations. And we don’t anticipate these changes or actions the banks may or may not take on the real estate side should affect the operations of those resorts.”
(Dillon) Preusse says the real estate side of the business is financed separately from the resorts. But he says the troubled real estate loans include financing for a large project at the Killington ski area:
(Preusse) “There are key development parcels at Killington, Vermont that could be affected by this. And again, we’re working with lenders right now to negotiate modifications to the agreements. And we’re hopeful that a mutually acceptable revision to the terms can be reached prior to any negative action that the banks may pursue.”
(Dillon) The American Skiing spokesman would not say if there’s a deadline for the negotiations.
For Vermont Public Radio, I’m John Dillon.