Documents filed with the Securities and Exchange Commission on Tuesday revealed that American Skiing Company will pay Triple Peaks LLC $5.14 million to settle a lawsuit over the abandoned sale of the Steamboat Ski Area.
The settlement calls for two payments with $3 million due immediately and another $2.14 million due on or before April 10, 2005. The two payments combined represent 5.6 percent of the original sale price of $91.4 million. The agreement to sell the ski area fell apart March 26, 2002, when ASC officials and their creditors decided it was in the company's best interest to sell Heavenly Resort, Calif., to Vail Resorts for $102 million, rather than to consummate the Steamboat deal.
"I think it's a reasonable settlement for both sides," Tim Mueller said Tuesday. "We thought we had the upper hand, but there are no slam dunks in the court system."
Mueller is the managing member of Triple Peaks.
The amount of the settlement would bump to $6 million if ASC sells all of its assets to a third party before April 1, 2006. And Mueller must be offered a 30-day negotiation period before ASC could attempt to sell the Steamboat Ski Area to a third party any time in the next three years.
Mueller said it's not out of the question to think that he might successfully negotiate a second deal with ASC. Dave Hirasawa, manager of investor relations for ASC, called that clause in the settlement agreement "highly theoretical." He pointed out that all it requires his company to do is offer a negotiation period and does not bind it in any other way.
Hirasawa reiterated that ASC has $5 million in place to cover the bulk of the settlement.
"That amount has accrued to the balance sheet," Hirasawa said. "The only additional impact that will be felt here is the $140,000 (representing the difference between $5 million and $5.14 million).
ASC officials said Monday that the amount of the settlement will not be charged only to the Steamboat Ski Area's balance sheet, but to the overall company. American Skiing Company owns seven ski areas in addition to Steamboat. They include The Canyons, Utah; Killington, Vt.; Pico Mountain, Vt.; Mount Snow, Vt.; Attitash Bear Peak, N.H.; and Sugarloaf/USA and Sunday River, both in Maine.
Joel Glover, attorney for Triple Peaks with Rothgerber, Johnson and Lyons in Denver declined to discuss the terms of the settlement.
The sale contract called for ASC to pay a $500,000 penalty in the event that the contract was breached. ASC expressed a willingness to pay the penalty, but Glover argued on behalf of his clients that only Triple Peaks had the right to invoke the penalty by breaching the contract.
ASC had petitioned the Colorado Supreme Court to hear the suit and was waiting to hear the outcome of that request when the settlement was reached.
The original Steamboat deal was to have closed by the end of 2001, but a difficult financing climate in the months immediately after the terrorist attack of Sept. 11, 2001, prolonged the closing until late March 2002.
American Skiing CEO B.J. Fair said at the time that the reversal of plans came down to the fact that the company's banking partners preferred the Heavenly deal to the Steamboat deal.
The plan was to use proceeds of the sale to reorganize ASC's significant debt. Because the banks held liens on ASC's assets, their approval was necessary before any ski area sale could be consummated, Fair said.
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