Killington Article in Todays Rutland Herald

[WoodCore]

Here's a link to a pretty good article regarding the current state of things at Killington and the direction the new ownership and management are looking to move the resort.

http://rutlandherald.com/apps/pbcs.dll/article?AID=/20070618/NEWS04/706180376/1003

 

[threecy]

I think this does a good job in describing Powdr's thought process behind the whole "lifetime pass" issue...

Within days of taking over Killington, Powdr Corp. created a public relations nightmare for itself announcing that "lifetime" season passes would expire in two years. According to Nyberg, Killington issued 1,200 passes to stockholders and bondholders who invested in the ski area in its infancy. That fact did not come to Powdr's attention until it was about to close on the purchase, or, as Nyberg said, at the "11th hour and 59th minute.."

Nyberg said the revelation could have been a "deal breaker" because the passes in question threatened the financial structure of the deal, posing a threat to future season pass sales. That was especially problematic, he said, because the stockholder and bondholder passes could either be sold or transferred. He said some passes could be transferred or sold once while other passes could be transferred to individuals on a yearly basis with the bondholder or stockholder retaining ownership.

More to the point, he said, is that in Powdr's opinion the passes were valid only as long as the life of the company that owned Killington, not the life of the pass holder. Unfortunately, he said, people refer to them as lifetime passes.

"If you review the documents, it doesn't ever mention lifetime," Nyberg said.

When it was pointed out that American Skiing Co. continued to honor the stockholder and bondholder passes after it purchased S-K-I Ltd., the parent company of Killington in 1996, Nyberg said, unlike ASC, which purchased Killington Ltd., the company, "Powdr and SP Land … only purchased the assets, the property and the facilities, not the corporation."

Since Powdr purchased Killington and not the company itself or its liabilities, he said, Powdr is under no legal obligation to honor the passes. Nyberg said in a concession to pass holders, Powdr decided to extend the life of the passes for two more seasons, with the second year containing blackout dates. Of the 1,200 passes to bondholders and stockholders that were issued, he said, approximately 800 are still in use.

Dave Rathbun, Killington's director of marketing, said a couple of "lifetime" passes sold recently for $10,000 and $13,000.

"There's an active resell market for these passes each year," said Rathbun, who worked at Killington under ASC.

He said the company will continue to honor lifetime and honorary passes that were issued to 36 former employees and others over the years. He said that ASC made Powdr aware of these passes early in the due diligence process.

 

[ctenidae]

"That fact did not come to Powdr's attention until it was about to close on the purchase, or, as Nyberg said, at the "11th hour and 59th minute.."

I find that incredibly difficult to believe, considering the date of the P&S filed with the SEC, at least 2 months before the close.

 

[threecy]

Here's a possible scenario:

Just prior to the P&S, Peak either found out about the "lifetime" passes or found a copy of the literature regarding the lifetime passes.

Since the passes in question don't have any mention of "lifetime" in the documentation per the earlier Killington thread:

Killington Ltd.

SHERBURNE VERMONT

PASS

This certifies that SkiDork is the owner of record of Pass Number XXXX, entitling the holder to the free use of all ski lifts operated by Killington Ltd. at Killington Ski Are so long as the corporation shall operate in that area under an agreement with the State Of Vermont.

The Ownership of the pass may be transferred not more than once during the life of the pass. The transfer must be made upon the books of the corporation in person or by attorney, by surrender of this certificate properly endorsed.

Signed by Allen Wilson

SP/Powdr said "no dice." ASC, not wanting the deal to fall through, said "okay" and worded it as such in the P&S agreement that only the passes being honored by SP/Powdr (the ones mentioned in the article) were cited, knowing that any disclosure of this before a final sale could put big bumps in the road.

 

[ski_resort_observer]

Awesome article! Although the question of who owns what was not specifically mentioned I did feel that some insight was offered. It is still, IMHO, open to interpertation.

"While Powdr runs the ski resort and SP Land Co, a Texas-based development company, moves forward with the Act 250 permit process for the first stage of the ski village, Nyberg said each company owns a minority stake in each other's operations". My take on this is that if Powdr had no financial part of the deal this would be unnecessary.

What I got was that Powdr put up the money for the skiing/snowboarding operations part of the deal and SP Land put up the money for the real estate part. For season passes it sounds like Powdr is the owner that makes the decisions.

Like I said, reading between the lines here, definately debateble.