American Skiing sells Heavenly Ski Resort instead of Steamboat Ski Area

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Posted 7:38AM on Wednesday, March 27, 2002

DENVER - American Skiing Co. withdrew from a deal to sell the Steamboat Ski Area on Tuesday and agreed instead to sell Heavenly Ski Resort in Lake Tahoe, Calif., to Vail Resorts for $102 million. The developments were confirmed by representatives of Vail Resorts and Tim and Diane Mueller of the Okemo Mountain Resort in Ludlow, Vt., who head a group that had expected to buy the ski area in Steamboat Springs. The financially struggling American Skiing, based in Newry, Maine, said selling Heavenly instead of Steamboat would help it meet the debt reduction component in its restructuring plan. "While we initially identified Steamboat as the asset to be sold, it became clear after discussions with our key lenders that the objectives of the restructuring plan cold not be fully realized through this transaction," said chief executive B.J. Fair. Vail Resorts chairman and CEO Adam Aron wouldn't comment on the failed Steamboat deal. Tim Mueller learned about the change in plans when he traveled to New York to close the deal Tuesday. "They never had an inkling that the agreement was going to be breached," Okemo spokeswoman Pam Cruickshank said. Vail Resorts said the purchase of Heavenly, announced after the close of markets Tuesday, is expected to close in 30 to 90 days for cash consideration of $102 million. The price includes about $3 million in assumed debt. The sale price will be reduced by as much as $6 million depending on the closing date, Aron said. Heavenly operates 29 lifts, including six high-speed lifts and a new $25 million, eight-passenger gondola that operates year-round. The purchase price is about six times the resort's annual cash flow. "We are buying Heavenly at a significant discount," Aron said. Heavenly will become Vail's fifth resort, but its first outside Colorado. Vail also owns and operates Vail, Beaver Creek, Breckenridge and Keystone. The Muellers own Okemo and operate Mount Sunapee Resort in New Hampshire. Their Triple Peaks LLC offered to purchase Steamboat, the state's third-largest ski area, for about $90 million. Vail plans to spend $40 million for maintenance and new lifts and restaurants at Heavenly over the next five years. No new runs are planned. Adding Heavenly means Vail won't have to rely only on Colorado snowfall for revenue, Aron said. It will also let Vail tap into a new base of customers who could also be drawn to the Colorado resorts. Shares of Vail Resorts closed up 45 cents Tuesday at $21.40 on the New York Stock Exchange. American Skiing, which was delisted from the New York Stock Exchange earlier this month, has been struggling under a heavy debt load and has never turned an annual profit since going public in November 1997.