ASC gains reprieve on default
April 29, 2005
American Skiing Co. has been granted a reprieve by lenders who hold loans used to finance construction of its Grand Summit hotels.
ASC, the parent of Steam-boat Ski and Resort Corp., missed a March 31 deadline to reduce that debt from $16.9 million to no more than $14 million.
The company reported the expected default on the loan conditions to the Securities and Exchange Commission on March 16, but ASC spokesman David Hirasawa said it would seek a waiver from Textron Financial Corp., the agent for parties to the loan.
That waiver now has been granted, and ASC was not required to make a cash payment in exchange. However, the formal agreement makes it clear that the default waiver does not imply the lenders will grant future waivers.
The company’s agreement with its creditors calls for it to reduce the debt to $12 million by June 30 and $11 million by Sept. 30. The construction debt is due to be retired by June 30, 2006.
ASC is paying as much as 20 percent interest on portions of the $16.9 million.
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ASC is obligated to pay off a fraction of the construction loan principal every time it closes on a sale at the Steamboat Grand Resort Hotel. For each sale, ASC must put 70 percent to 80 percent of the net proceeds toward its debt.
Although ASC sold timeshares throughout the winter, the pace wasn’t sufficient to make the March 31 deadline. And ASC has made it clear that sales need to pick up to meet future deadlines.
In its report to the SEC, ASC officials wrote: “Although the company has recently experienced increases in sales activities at the Steamboat (Grand), without a significant sales increase in the next several weeks, the company does not anticipate that it will meet the March 31 requirement for reduction of the senior construction loan principal to $14 million. Similarly, sales volume will need to significantly increase through the next two months in order for the company to meet the $12 million maximum balance amount on June 30.”