Steamboat Springs Les Otten, chairman and chief executive of troubled American Skiing Co., has resigned, the company reported today. The announcement came just days after a merger with MeriStar Hotels, on which Otten had pinned his company's hopes, fell through.
American Skiing's board of directors named chief operating officer William "B.J." Fair to replace Otten. American Skiing is the publicly held parent of the Steamboat Ski and Resort Corp.
Otten said in a prepared statement released today that he had been investigating plans outside of American Skiing since discussions of the MeriStar merger began last summer, and now he intends to pursue those options. He did not elaborate.
Otten's resignation came five days after American Skiing and MeriStar abandoned their plans to merge by the end of the month. Otten was to have become chairman of the new company, Doral International, and told Steamboat Today he had no intention of leaving the company. Otten made clear he had high hopes for the merger, which he said would have improved cash flow, a significant problem for American Skiing and its seasonal business.
Investors, however, didn't see the merger of MeriStar and debt-laden American Skiing the way Otten did. American Skiing's stock, which has languished at a single point for most of the winter, shot up as much as 70 percent when news that the merger was off, was released last week. The stock was trading at $1.69 on Tuesday, up from about $1 prior to the merger, a clear sign that investors had little confidence that the acquisition of MeriStar would bolster the company's future, and that earnings prospects were brighter without MeriStar.
American Skiing reported that it lost $10.4 million during the second quarter of 2001, but Otten said the outlook for the company was buoyed by the fact that those losses were almost $5 million less than during the corresponding period a year ago, and by the fact that the company generated record revenues during the second quarter.
In the wake of the merger falling apart, company officials continued to say they believe American Skiing is on track to reduce total company debt by $29 million at the end of the fiscal year from $416 million to $387 million.
Fair joined American Skiing in March 2000 as chief operating officer of the company's resort operations. Previously, he served as president of Universal Studios' Port Aventura theme park, where he was responsible for the development and operation of the park. Earlier, he worked for Disney and led financing and development efforts for Disney's California Adventure expansion in Anaheim, Calif.
Fair admitted the company faces short-term challenges, but said he believes substantial shareholder value can be created at American Skiing during the next few years.