ASC threatened with foreclosure

Lenders have notified company they want to move on real estate loans

— American Skiing Co. officials acknowledged this week they face the possibility of foreclosure on the remaining unsold quartershares in the Steamboat Grand Hotel, as well as on other undeveloped parcels of land here.

In a document filed with the Securities and Exchange Commission on May 20, ASC Chief Executive Officer B.J. Fair and Chief Financial Officer Mark Miller said attorneys for Fleet National Bank and other lenders have notified them that they will accelerate collection of principal and interest totaling $63.4 million. Textron Financial has served similar notice on ASC.

ASC is in default on both loans. Fair and Miller said talks are under way to try to reach a mutually acceptable revision to the terms of the real estate loans. But attorneys for Fleet have indicated they will simultaneously pursue the remedies available to them, including foreclosure.

The Fleet Bank loans are secured by undeveloped real estate in Steamboat, Killington, Vt., and Park City, Utah. ASC has divested itself of significant real estate in Steamboat over the past two years. However, it still controls two hotel sites that are currently used as parking lots one adjacent to the gondola building (1 acre) and a second known as the "Knoll" parking area (5.81 acres). The biggest piece of unsold development land is the Tennis Meadows, where ASC once proposed a second base village and a people-mover gondola. That parcel includes an 11-acre parking lot plus 47 acres of grassy meadow that once was a hay field.

The Steamboat Grand is encumbered by a separate note held by Textron Financial Corp. This week's filing with the SEC indicates Textron has tentatively approved revisions to its lending agreement.

Miller and Fair wrote they believe those changes would allow their company to cure its default status while having enough short-term cash flow to operate Grand Summit Resort Properties. GSRP is ASC's hotel development subsidiary.

Although Textron has indicated agreement, other lenders that are party to the Textron loan have not come on board.

Should Textron proceed into foreclosure, all of the remaining unsold quartershares at Steamboat (as well as at the Canyons near Park City) are ledged the loans. In addition, the commercial units at the Grand Summit Hotels at the Canyons, Steamboat and Attitash New Hampshire were used to secure the loans.

Fair and Miller say they don't believe either of the default situations would lead to defaults under ASC's senior resort loan with Fleet National Bank (and other lenders).

Calls to ASC officials on Friday were not returned.

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