Tuesday, March 26, 2002
Steamboat Springs Tim and Diane Mueller's chance to purchase the Steamboat Ski Area disappeared Tuesday like a snowflake in July.
Tim Mueller was in New York to begin a three-day closing process when the deal evaporated. American Skiing Co. announced in late afternoon that it had reversed course. Instead of selling Steamboat for $91.4 million to get out from under a mountain of debt, its board of directors opted instead to accept Vail Resorts' offer of $102 million for Heavenly Ski Resort near Lake Tahoe.
The change in course means the Heavenly deal will serve as the final piece in ASC's plan to restructure the company's finances. ASC now intends to retain ownership of Steamboat.
American Skiing CEO B.J. Fair flew to Steamboat to deliver the news to ski area personnel. Fair said the company's banking partners preferred the Heavenly deal to Steamboat and that drove the decision. Because the banks hold liens on ASC's assets, their approval was necessary before any ski area sale could be consummated.
ASC will pay $500,000 to get out of the contract it signed with Triple Peaks LLC, the investment group led by the Muellers.
But that cash will do little to soften the blow for the Muellers and their investors, including about 10 Steamboat residents.
Pam Cruickshank, spokeswoman for the Muellers' Okemo Mountain Resort in Vermont, said the Muellers didn't see the derailment coming.
At 2:05 p.m., Cruickshank said the Muellers' purchase of Steamboat was being finalized at last. She said after the sale was wrapped up, hopefully on Thursday, the Muellers planned to travel to Steamboat for Easter weekend. They intended to remain here for two weeks.
Not 15 minutes later, Cruickshank had a different announcement the deal was dead.
"It's a real blow to Tim and Diane," Cruickshank said. "Certainly, it's not good news on our end."
Fair said ASC executives were focused on getting a deal done as expediently as possible, and there was no conscious effort to manipulate the timing of the Heavenly deal.
"The timing was indicative of our resolve to achieve our objectives," Fair said. "The key element really was getting the banks there."
After the banks approved the Heavenly sale, Fair said, it was presented to ASC's board of directors.
"While we initially identified Steamboat as the asset to be sold," Fair said, "it became clear after discussions with our key lenders that the objectives of the restructuring plan could not be fully realized through this transaction. In the end, we determined that the Heavenly sale would better achieve our goals for debt reduction and the overall restructuring plan."
ASC announced its intent to sell Steamboat in May 2001 and the signing of a letter of intent with Triple Peaks was revealed in October. But efforts to close the deal dragged on, and the inability to get the deal done by the first of the year caused ASC to incur additional fees from its primary lenders.
"I think what really happened was, back in the April-May (2001) timeframe, we had identified specific objectives of our restructuring. One of those objectives was we wanted to de-lever the company by the first of the year," Fair said. "After the events of Sept. 11 and the weakening economy, it made it very difficult to get deals of that size done. We ended up having delays in getting the deal done, which was going to cost us some fees with our lenders. It was obviously going to be a renegotiation with our banks. When (a Dec. 31 closing) failed to happen, we had to look for alternatives. One of the alternatives we had to look at was an unsolicited offer from Vail (for Heavenly)."
Cruickshank said Tim Mueller was traveling back to Vermont from New York Tuesday evening. Diane Mueller could not be reached at home early Tuesday evening.
Vail's purchase of Heavenly is expected to close within 30 to 90 days. The cash price of $102 million includes $3 million of assumed debt and may be adjusted at closing by up to $6 million.
Heavenly will become Vail Associate's fifth major ski resort, including Beaver Creek, Breckenridge and Keystone.
The South Lake Tahoe area has a bed base of 20,000. Heavenly opened a new $25 million gondola within the past 12 months.