Friday, March 23, 2001
Steamboat Springs The merger between American Skiing Company and MeriStar Hotels and Resorts, three months in the making, has fallen apart at the last minute.
American Skiing, parent company of the Steamboat Ski and Resort Corp., was set to acquire MeriStar in a stock swap. MeriStar has contracts to manage name-brand hotels all over the United States.
Officials of both companies said they mutually agreed to withdraw from the merger, believing it was no longer in the best interests of their shareholders.
"Each company has reached the conclusion that pursuing operations on a stand-alone basis is more attractive to its shareholders than consummation of the merger," American Skiing Chairman Les Otten said in a prepared statement.
The merger was announced Dec. 11, 2000, and Otten said he was counting on MeriStar to bring new opportunities for growth in the real estate sector of his resort business. He was also counting on MeriStar to export its experience in managing hotels to the Grand Summit hotels he operates at his ski resorts from New England to Colorado and California.
However, a spokesman for American Skiing said the declining condition of the American economy and the "capital markets" was making it difficult for the two companies to obtain the financing it needed to combine the two companies into one.
Shareholders, both private and institutional, were not showing much confidence in the the merger, a condition that was apparent from gradually declining stock prices for the two companies, Skip King said. Additionally, American Skiing's senior lenders and bondholders were not enthused with the merger under the prevailing economic climate.
The new company, Doral International, would have been saddled with about $557 million in debt.
Despite the news the merger had fallen apart, American Skiing's stock bounced upward to its highest value of 2001 and finished the week's trading at 1.50, up 37 percent. MeriStar closed flat at 1.8.
King said American Skiing still intends to meet both its short-term and long-term debt obligations and is confident it can continue its progress toward reducing its debt load by $40 million in 2001. Much of that confidence is based on a strong ski season in New England. American Skiing headquarters in Newry, Maine, where a shareholders meeting was canceled today, was under 30 inches of wet snow that knocked out power.