Steamboat sale may bode well for The Canyons
By allowing the company to pay off its bank debt, American Skiing Company brass say the sale of Steamboat Ski and Resort Corporation in Steamboat Springs, Colo., means the Park City-based company is better poised to move forward with development plans at The Canyons and its six other resorts.
"It’s a little bittersweet, in that, even though it’s a great transaction for the company and it’s the right thing to do and we’ve created a tremendous amount of value, the personal and professional relationships that you develop & it’s always very, very difficult," said B.J. Fair, American Skiing Company president and chief executive officer, in an interview Thursday. "It’s the right thing to do for the company and it is about creating value for all of our shareholders."
After Steamboat saw more than 1 million skier visits in 2006, American Skiing Co. announced Tuesday its plans to sell the nation’s eighth most visited resort to an affiliate of Intrawest ULC for $265 million.
"There are buyers who are willing to pay premium prices for premium resorts," Fair said. "It’s a good price, but by the same token, it’s a fantastic asset."
The sale, which is expected to close next March, includes Steamboat resort and operations, Steamboat’s real estate assets, the commercial core of the Steamboat Grand Hotel and Condominiums and American Skiing Co.’s interest in the Walton Pond Apartments.
"We went out in July and basically said that we know that the market is looking for premium assets right now," Fair said. "If we did not get the type of valuation that we were expecting to see or thought that the market might bear right now, we were 100 percent committed to keeping and running Steamboat."
With "tremendous growth" expected to occur at The Canyons, Fair said, "right now, we think the right thing to do for the company is to hold onto The Canyons."
"Ultimately, they will be very comparable," Fair said about the two resorts.
The Canyons is now the only western resort owned by American Skiing Company, which operates resorts in Vermont, New Hampshire and Maine.
"It’s no secret that the company went through some financial challenges early on. But the last four, five years, that has not been the case," Fair said about the possibility of this week’s all-cash transaction silencing the company’s critics. "People try to relate to the ASC that they remember five or six years ago, and we’re a completely different company right now."
Proceeds from the sale could be used to pay off all existing senior debt and revolver balances under American Skiing Company’s senior credit facility and other indebtedness, according to resort officials.
"It’s very likely that at the other end of this we will probably bring on some new bank debt at a level that we want to," Fair said. "We no longer are dealing with any financial instruments that prevent us from doing anything."
Growing The Canyons has been a "top priority" since the resort opened in the late 1990s, evident this year by a $10 million investment in the Tombstone, Dreamcatcher and Red Pine areas at the resort, he insists.
"It is the largest (resort) in Utah," Fair said. "That’s to a certain extent a kept secret that we don’t want to be secret anymore."
With disputes among landowners at The Canyons likely stalling construction of a golf course at the resort, money from the sale of Steamboat might help stabilize American Skiing Company’s real estate arm.
"We’ve been saying all along that we have got tremendous operations at the remainder of our resorts and tremendous opportunities," Fair said. "Let’s keep our head down, work very hard, do the right thing and let’s start having the people say it for us, rather than us."
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The Park City lodging industry in recent weeks experienced an uptick in projected occupancy numbers during the dates of the Sundance Film Festival, but the figures remain depressed from a typical year during the largest special event on the city’s calendar.