Ski firm credit rating lowered Sugarloaf owners try to cover debts

PORTLAND – Moody’s Investors Service Inc. downgraded its credit rating for debt-laden American Skiing Co., saying a reduction in skier visits after the Sept. 11 terrorist attacks is adding to the company’s troubled outlook.

Moody’s, which warned of a possible downgrade in October, downgraded ratings on $280 million of American Skiing’s debt, including notes and bank credit, to as low as “Ca,” the second-lowest grade before default.

Moody’s maintained a negative outlook for American Skiing, which is due to make a $25 million payment on March 31 to one of its lenders.

In a statement, Moody’s said its downgrade Tuesday took into account American Skiing’s need to sell real estate or other assets to meet financial obligations. It also downgraded Vail Skiing Co. the same day.

American Skiing’s stock fell 2 cents on Tuesday and another 2 cents on Wednesday to close at 53 cents on the New York Stock Exchange.

The sale of American Skiing’s resort in Steamboat, Colo., would help meet short-term debts. But the Vermont buyer has not closed on the sale after a letter of intent was announced in November.

The owner of Okemo Mountain Resort in Vermont said last month that the deal would “fly or fail” in two weeks. Okemo President Tim Mueller had no predictions on Wednesday. “We are proceeding,” he said.

American Skiing has never publicly identified Steamboat’s potential buyers and declined comment. It also declined comment on Moody’s decision. “We do not comment on what the rating agencies say,” spokesman Skip King said.

Even if the Steamboat sale goes through, American Skiing faces a tough time getting through the current year, said Brad McCurtain, president of Maine Securities, which specializes in tracking Maine-based companies.

“I think Moody’s is an optimist,” McCurtain said.

Last month, American Skiing reported that it lost $65.5 million in the first quarter of its fiscal year. That came on the heels of a $114.2 million loss during the company’s fourth quarter the previous fiscal year.

Because of the seasonal nature of the skiing business, the company typically loses money during those quarters. But the magnitude of the losses caught the attention of shareholders and analysts.

Moody’s said its negative ratings outlook “considers the possibility that the company will most likely default if it does not meet its real estate and non-real estate asset sale targets in the very near-term.”

If the Steamboat sale fails to materialize, American Skiing will likely have to refinance its capital structure to avoid default.

American Skiing owns Killington and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire; Steamboat in Colorado; The Canyons in Utah; and Heavenly on the California-Nevada border.