Steamboat Pilot & Today

Steamboat Springs — American Skiing Co. has been granted a reprieve by its senior creditors. But liens in place on the Steamboat Ski Area are hanging up the sale of the ski area to a group of investors led by Tim and Diane Mueller.

ASC announced the sale of the Steamboat Ski Area Feb. 1 to Triple Peaks Ltd.

Initially, both sides of the deal anticipated it might close by the middle of March. Now, ASC is saying it hopes to close the sale within 30 days. But before that can happen, creditors who have placed liens on the assets of the ski area have to be satisfied. That means ASC's banks have yet to approve the deal.

ASC spokesman Erik Preusse said Tuesday the liens encumber all of the assets of the Steamboat Ski Area as well as some real estate assets involved in the transaction. He declined to specify the amount of money involved in the liens or who the lien holders are.

"The lien holders have to be satisfied in order to release the liens and complete the sale," Preusse confirmed.

Tim Mueller said Tuesday he's optimistic about a faster timetable.

"I don't think it's going to take 30 days to close this deal," Mueller said. "Frankly, we think much sooner."

The timing of the Steamboat sale is critical to American Skiing Co., according to documents it filed with the Securities and Exchange Commission this week.

In its form 10-Q, announcing its fiscal 2002 earning report, ASC's officials acknowledged they must sell Steamboat, or another major ski area, and sell it soon, if they are to remain liquid and satisfy the terms of their senior credit facilities (loans).

"In the event that we are unable to complete the Steamboat sale or consummate a transaction of a similar size by the end of the third quarter of fiscal 2002, we presently anticipate that we will not be able to meet the financial covenants of the senior credit facility (loan) by the end of the third quarter," ASC officials reported to the SEC.

"(At that time) we would no longer be in compliance under those covenants and such failure will constitute an event of default there under."

Essentially, ASC's heavy debt load and outstanding interest would become due and payable at the end of the next quarter, in April.

The company's net debt is just less than $386 million.

Should the company find itself in default at the end of April, ASC officials say one option is to go back to their lenders and try to renegotiate the terms of their loan.

ASC was already out of compliance with the terms of its senior loan at the end of the second quarter, which concluded Jan. 27. However, company officials announced this week they had obtained a waiver from its lenders.

ASC's Chief Financial Officer Mark Miller reported his company lost $43.5 million during the second quarter, compared to a net loss of $10.4 million for the second quarter of 2001.

Chief Executive Officer B.J. Fair said a late start to the ski season in the West and mild winter weather in New England have undermined his company's efforts to control costs.

"Following the events of Sept. 11, our resort management teams did an exceptional job of promoting visitation and implementing aggressive cost-control measures," Fair said. "Nationwide, call volume and reservations continued to improve since the start of the season; however, a lack of snowfall and warm temperatures in the East have hampered a return to last year's levels."

Total revenues were $121.2 million in the second quarter compared with $156.3 million for the same period the previous year. Resort revenue dropped to $108.8 million compared to $125.5. Miller said some of that decline is attributable to the sale of the Sugarbush Ski Area in Vermont prior to the start of the season.