Tuesday, February 28, 2006
Steamboat Springs When the remaining ownership fractions in the Steamboat Grand Resort Hotel go up for auction March 18, Textron Financial Corp. will claim 85 percent of the gross proceeds.
Textron was the original construction lender on the resort hotel, which is owned by a subsidiary of American Ski--ing Co., parent of the Steamboat Ski and Resort Corp.
Officials of Grand Summit Resort Properties announced in December that they intended to auction the remaining inventory in the hotel. In all, 200 fractional units and 30 whole ownership condominiums will be auctioned.
The hotel opened in October 2000 after construction delays. It originally was marketed by offering buyers a one-quarter interest in each convertible condominium/hotel room unit. Later, the ownership intervals were shortened to one-eighth interest.
The decision to auction the Steamboat Grand followed successful auctions of similar Grand Summit properties in Attitash, N.H., and The Canyons, Utah.
Textron Financial holds a large note on the property stemming from the original construction loan for the Steamboat Grand. And the majority of the revenue generated by a trickle of sales at the Grand during the past few years has been dedicated to retiring the debt. Textron has funded marketing efforts intended to improve the pace of sales.
Documents filed with the Securities and Exchange Com--mission on Friday confirmed that Textron would claim the large majority of income from the auction proceedings.
The arrangement was made public in an SEC filing in which Textron waived any default resulting from Grand Summit's failure to meet a deadline for reduction of its principal debt with the lender. The terms of its agreement with Textron required Grand Summit to reduce its principle to $5 million as of March 31. Company officials can foresee that will not happen.
The "letter agreement" that formalizes the default waiver specifies that it also will "adjust the lender release price for unsold inventory sold solely at the auction to 85 percent of gross auction days sales price."
"There's always an amount earmarked for Textron in every sale," American Skiing spokesman David Hirasawa said. He could not confirm the percentage that went to Textron from sales outside the auction process. But he surmised the percentage was lower in those cases because a portion of each sale was dedicated to maintaining the ongoing marketing effort.
Textron also gave its permission for the absolute auction of 100 eighth-share fractional units.
Steamboat Ski & Resort Corp. President Chris Diamond told the Steamboat Today in December that the decision to auction the balance of the inventory at the Steamboat Grand was made with awareness that the inventory of condominiums for sale at the base of the ski area is relatively low this winter.