Tuesday, September 4, 2001
Steamboat Springs The eight unfinished penthouse units at the Steamboat Grand Hotel could be ready for holiday occupancy in December.
American Skiing Co., which owns the hotel, announced Tuesday it has completed restructuring its debt. In the process it has freed the Steamboat Grand of liens dating back to the construction of the hotel.
The amendment to the loans from TFC Textron Financial extended the maturity date of the construction loan, allowing construction to begin immediately ASC Chief Financial Officer Mark Miller said. Removal of the liens also means American Skiing can begin closing sales of condominiums at the Steamboat Grand which have been under contract since May but couldn't be finalized because of the liens put in place by construction firms claiming they were owed money.
Miller said the unclosed real estate sales at the Steamboat Grand are substantial, but he did not offer specifics.
Tim Greene, American Skiing's vice president of real estate in Steamboat, said the work of completing the penthouses has not yet begun, and the identification of the contractor is pending. Greene said he's not free to say how many contracts for Steamboat Grand quartershares are waiting to close.
At the end of ski season, ASC officials said as many as half of the Steamboat Grand remained unsold. Condominiums at the Steamboat Grand are marketed on a quartershare basis, allowing owners to visit one week in four, or turn their time back into the hotel rental pool.
"We are looking forward to the rapidly approaching ski season with confidence," Miller said. "The restructuring resolves all of the outstanding construction and payment disputes associated with the Steamboat Grand Hotel and allows construction on the luxury penthouses to commence immediately, with completion expected prior to Christmas."
Miller's comment about the approach of ski season underscores the fact that a major portion of ASC's plan to rid itself of crippling debt is the ongoing effort to sell the Steamboat Ski Area, and perhaps the Steamboat Grand along with it. ASC officials have said they hope to identify a buyer for the ski area in September and close the sale before the end of the year.
Prospective buyers have been visiting Steamboat for more than three weeks, ASC officials say, but they have declined to identify the suitors.
The need to restructure and extend loans on the Steamboat Grand can be traced to the need to settle a lawsuit filed by the general contractor that built the hotel, CFC/PCL. Construction stretched out for more than two years, from July 1998 until the hotel opened in October 2000. And liens associated with the lawsuit were holding up real estate closings. All of the owners of quartershares at the hotel were named in the suit.
The suit centered around millions of dollars in expenses CFC/PCL says were caused by change orders that went well beyond its contract with Grand Summit Resort. More than 600 change orders were executed before the hotel was finally complete, according to the suit.
The suit claimed CFC/PCL was owed more than $11 million for labor, materials and services that went into the hotel construction. The original contract to build the hotel was for $70 million, according to documents filed by attorney Michael J. Cook of the Denver legal firm Sherman and Howard on behalf of his clients.
Other components of ASC's financial restructuring, which were not directly related to the Steamboat Grand, included a $30 million financing package from Oak Hill Capital Partners L.P., which owned a majority of ASC's stock before the latest deal was finalized. There are also amendments to the $165 million senior loan for ASC's resort division and amendments to the $73 million loan attributed to ASC's real estate development subsidiary.