American Skiing seeks closure on sale to avoid defaults

PORTLAND – American Skiing needs to close on the sale of its Steamboat resort by month’s end or face the prospect of a series of loan defaults that could lead to even bigger problems by the end of April.

In the latest earnings report in which the company lost $43.5 million, the Newry-based company said that much of its financial future is riding on concluding the sale of the resort in Colorado.

American Skiing said it doesn’t anticipate being able to make all of its required loan payments if it fails to complete the transaction by March 31.

And if the sale is delayed until the end of the company’s third fiscal quarter, at the end of April, it would set off a series of loan defaults that could send the company into federal bankruptcy court unless its creditors agree to give it more time to work things out.

American Skiing signed an agreement to sell the resort to a partnership called Triple Peaks about six weeks ago, but since has said the buyers have had trouble nailing down the financing.

“Clearly, we’d like to close on this as soon as possible,” American Skiing spokesman Eric Pruesse said Thursday.

American Skiing has been struggling under a heavy debt load and never has turned an annual profit since it went public in November 1997.

The company blamed the $43.5 million loss during the last quarter that composed the largest share of the winter season on a late start to the ski season and a drop in business at The Canyons, its Utah resort, because of the nearby Olympics.

Documents filed with the Securities and Exchange Commission indicate the company plans to use most of the proceeds from the sale of Steamboat to avoid loan defaults and pay off some of its debt.

For instance, the company owes $94.6 million on a revolving loan and $61.5 million on a term loan, with Fleet National Bank as the lead lender. If the sale of Steamboat isn’t wrapped up by the end of April, the company said it will not meet some of the loan requirements and will be in default, unless Fleet agrees to waive the requirements.

In a default, the lender can demand that the loan be paid off immediately, something American Skiing probably wouldn’t be able to do.

Even if the sale goes through, American Skiing faces problems with its loans. For instance, the company said the availability of money from the revolving portion of the Fleet loan will be exhausted before August, although in its quarterly earnings report the company said it hopes to renegotiate the terms of the loan “in conjunction with our sale of a significant asset.”

American Skiing also said it expects it will be unable to meet scheduled payments on a $71 million real estate loan and construction loans, including a $3.8 million note to the general contractor for its recently completed Steamboat hotel, “in the very near future.”

In addition to Steamboat, American Skiing owns Killington and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire; The Canyons in Utah and Heavenly along the California-Nevada line.