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PORTLAND – Les Otten no longer owns stock in American Skiing Co., the struggling company he founded and built into the nation’s largest ski resort operator.
Otten, the company’s former president and chief executive officer, owned stock worth about $270 million when the company went public in November 1997.
He defaulted on a loan with ING Capital last summer and turned over more than 15.5 million shares pledged as collateral, according to documents filed with the Securities and Exchange Commission this week.
“Les [Otten] was one of the wealthiest individuals in America,” said Brad McCurtain of Maine Securities, a Portland investment firm. “All that money just evaporated.”
Otten bought Sunday River in Bethel in the 1980s before embarking on a massive buying spree during the next decade. Otten bought up Sugarloaf in Maine, three resorts in Vermont, another in New Hampshire and resorts in Colorado, Utah and on the California-Nevada border.
Despite Otten’s grand plans, the company’s debts mounted in the face of poor skiing weather. Visitors stayed at home, ticket sales slumped and sales of slopeside condominiums stagnated.
Otten brought in an investment firm to keep operating. That firm, Oak Hill Capital Partners, now controls the company.
Otten resigned as president and CEO a year ago after a merger fell apart.
The company has not turned an annual profit since it went public.
Its stock has plunged from an opening day price of $18 a share – the price Otten paid for the 833,333 shares he bought with the ING loan – to last week’s all-time low of 26 cents. It closed Wednesday at 29 cents.
The 15,593,863 shares Otten used as collateral now are worth slightly more than $4.5 million, about a third of what ING lent Otten as he tried to cement his majority control of American Skiing.
When the company went public, roughly half the stock was sold and Otten retained the rest. The purchase of the 833,333 shares allowed Otten to maintain clear majority voting rights.
As the company’s debts grew, it turned to Oak Hill for a $150 million bailout.
That money and subsequent cash infusions from Oak Hill gave the company preferred stock that can be converted to common stock. If Oak Hill converts the stock, it would own up to 64 percent of the company, said Erik Preusse, American Skiing’s investor relations manager.
Otten declined Wednesday to discuss details of the situation but said ING does not, in fact, own any of his shares.
Under terms of an agreement between ING and Otten signed last June, ING had the power to sell up to 833,333 shares of stock before Jan. 31. The filing also said ING and Otten agreed to hire an investment banker to try to sell the remaining shares and that as of Jan. 31, ING has been free to sell any of the stock.
According to the SEC filing, Otten retains the voting rights of the stock. But the filing also describes ING as beneficially owning all 15.5 million shares, with shared voting power and the sole power to sell the stock.
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