Steamboat Springs American Skiing Co.'s $90 million deal to sell Steamboat Ski Area to a group headed by Tim and Diane Mueller of Okemo Mountain Resort in Vermont has fallen through.
Instead ASC will sell Heavenly Ski Resort in California to Vail Resorts Inc. for $102 million, Vail Resorts announced Tuesday.
"Apparently the Steamboat deal is off with Okemo, and it looks like they are not going to be selling it," said Pam Cruickshank, Okemo's spokeswoman. "Certainly this is not good news on our end."
At the time that the news broke Tim Mueller was in New York, set to begin the process of closing the Steamboat deal. He was on his way back to Vermont Tuesday afternoon.
"It's a real blow to Tim and Diane," Cruickshank said.
CEO B.J. Fair was on his way to Steamboat Tuesday afternoon to meet with Ski Corp. employees. In a release, Fair said the sale of Hevenly better positioned ASC to meet its debt obligations.
"While we initially identified Steamboat as the asset to be sold, it became clear after discussions with our key lenders that the objectives of the restructing plan could not be fully realized through this transaction," Fair said. "In the end, we determined that the Heavenl;y sale would better achieve our goals of debt reduction and the overall restructuring plan."
American Skiing, whose stock has fallen to 21 cents per share, was delisted earlier this month from the New York Stock Exchange. The company faces crippling debt and has said it is in danger of not meeting several outstanding loan payments without an infusion of cash from the sale of one of its properties.
Vail Resorts said it entered a contract Tuesday to acquire Heavenly. The transaction is expected to close in 30 to 90 days for cash consideration of $102 million (including approximately $3 million of assumed debt), less a cash adjustment at closing of as much as $6 million depending upon the exact closing date. Therefore, the total net consideration is expected to be between $96 and $99 million, some $5 to $8 million more than the Steamboat deal.
With an existing bed base in the South Lake Tahoe area of 20,000 and nearly 800 additional Marriott-branded fractional and quarter-share ownership keys scheduled to be completed by November 2002 in the heart of South Lake Tahoe, Heavenly offers opportunity for growth for Vail Resorts. In anticipation of this expanded bed base, Heavenly opened a new $25-million gondola into South Lake Tahoe within the past 12 months.
"Heavenly is considered to be among the top ski and snowboard resorts in the United States," said Adam M. Aron, chairman and chief executive officer of Vail Resorts. "It offers tremendous winter and summer growth opportunity with its proximity to major metropolitan areas and has the potential to become much more of a national destination resort."
Heavenly will become the fifth in Vail Resorts' portfolio of U.S. ski resorts. Vail Resorts owns and operates Vail, Beaver Creek, Breckenridge and Keystone.