killington cancelling lifetime passes

[madskier6]

The issue at hand, and why the new folks running the LIFTS here can do this, is basically that the original bonds issued decades ago by the Sherburne Corp (K's orginal, orginal parent corp) stated that the bonds would be honored for a free season pass as long as Sherburne corp exists and is running the lifts. In subsequent purchases, first the morphing of Sherburne to form SKI Ltd, and then under ASC's ownership, Sherburne corp essentailly was bought and therefore was essentially running the lifts.

Under the new agreement, the entity that was at one point Sherburne Corp is now owned by S&P Land, and the lifts and operations are being handled by Powdr, hence the lifts aren't being operated by what was once Sherburne, and therefore the stipulation of the bond of free skiing doesn't necessarily carry over (lots of extra info on this in multiple threads over at k-zone right now)

Your analysis is generally correct except that S&P Land does not own the entity that was at one point Sherburne Corp. S&P Land bought the assets that were previously owned by Sherburne Corp. not the stock of the entity that was at one point Sherburne Corp. If it was as you said, bond holders would have a stronger argument that S&P Land should honor the lifetime passes.

In addition, while I haven't read the acquisition agreements, the fact that Powdr is running the lifts shouldn't matter for this issue. I understand that S&P has hired Powdr to run the lifts for them (but I could be wrong). Therefore, S&P Land is still operating the lifts since they own all the mountain/skiing assets. They have just decided to subcontract that piece out to Powdr since Powdr has more experience operating a ski area. The operation of the lifts is still fundamentally for the benefit of S&P (and their real estate business).

 

[ctenidae]

I'm a loser in this - I bought 2 secondhand in 2003

I'll lose about 2K per.

I'm hoping I can at least claim this as a loss on my income taxes.

Any accountants out there how can confirm that notion?

I doubt you can claim them. If you bought stock or bonds that had an intrinsic value- that is, if the stock was in a going concern or if the bonds were paying the coupon and hadn't matured yet, then maybe, but I don't think that's the case- otherwise as a stockholder you'd have gotten a vote (and compensation) on the sale, or as a bondholder you'd be entitled to the face value plus any early payment penalty.

If instead (and I suspect this is the case) you bought a piece of paper that entitles you to nothing more than a lifetime pass, you're SOL.

 

[ctenidae]

Hold the Presses!

From the Purchase and sale agreement between American Skiing Company Killington, Ltd., Pico Ski Area Management Company and SP Land Company, LLC dated February 16, 2007

http://www.sec.gov/Archives/edgar/data/1043432/000110465907016723/a07-7202_1ex10d1.htm

8.23 Lifetime Passes. Buyer shall honor all Lifetime Passes and shall cause any agreement for the sale of the Resort or the Business to require such subsequent owner to honor such passes; provided that in no event shall Buyer be required to enforce (nor shall it have any liability in respect to) such covenant with respect to such subsequent owner. This covenant shall survive Closing indefinitely.

9.1 Survival. ...(d) the covenant of Buyer contained in Section 8.23 shall survive indefinitely. The agreements of the Sellers and the Buyer contained in this Agreement which by their terms require action following the Closing shall survive until the expiration of the applicable statute of limitation or, to the extent such agreements are expressly limited to other dates or times, such agreements shall survive only to such dates or times.

Schedule 3.27(b) sets forth a list of all holders of “lifetime” and “honorary” ski passes and similar rights and privilege for use of Resort facilities or accommodations (“Lifetime Passes”). (I'm trying to find this schedule, but it may not be public)

 

[SkiDork]

I doubt you can claim them. If you bought stock or bonds that had an intrinsic value- that is, if the stock was in a going concern or if the bonds were paying the coupon and hadn't matured yet, then maybe, but I don't think that's the case- otherwise as a stockholder you'd have gotten a vote (and compensation) on the sale, or as a bondholder you'd be entitled to the face value plus any early payment penalty.

If instead (and I suspect this is the case) you bought a piece of paper that entitles you to nothing more than a lifetime pass, you'r33e SOL.

The piece of paper was actually a re-issued bond with the exact same wording as the original but a different serial number.

 

[ctenidae]

The piece of paper was actually a re-issued bond with the exact same wording as the original but a different serial number.

Right, but did it pay anything? if there was no income stream, it's just a pass. However, in light of the P&S, that could be an entirely moot point. Seems SP Land may be in violation of the P&S, and only 4 days after close.

 

[SkiDork]

Right, but did it pay anything? if there was no income stream, it's just a pass. However, in light of the P&S, that could be an entirely moot point. Seems SP Land may be in violation of the P&S, and only 4 days after close.

I'm certainly not a lawyer but I'll try to scan it and post it here very soon.

 

[ctenidae]

I can make it easy- did you ever receive a check form them, or a notice delaying a payment? if not, it's probably not a paying bond. Still, I'd like to see the bond.

 

[JimG.]

STOP IT!

I really miss ski season when all you guys talk about is the snow.

I was pretty much over ski season but all this legal talk is giving me a relapse.

 

[ski_resort_observer]

Don't forget that SP Land Company purchased the developement rights to almost 500 acres of land at the base of kmart from ASC back in 2004. I think they paid 75m?

I also seem to remember that as far back as 2000 SP Land thru their parent company Ski Partners Ltd has been financially involved with kmart.

 

[awf170]

STOP IT!

I really miss ski season when all you guys talk about is the snow.

I was pretty much over ski season but all this legal talk is giving me a relapse.

Its going to snow on Mt. Wash on Wednesday night! Hopefully. Perfect setup for awesome corn on Sunday. Monroe Brook is going to be off the hook again!

(That probably didn't help)

 

[Geoff]

Don't forget that SP Land Company purchased the developement rights to almost 500 acres of land at the base of kmart from ASC back in 2004. I think they paid 75m?

I also seem to remember that as far back as 2000 SP Land thru their parent company Ski Partners Ltd has been financially involved with kmart.

It wasn't exactly a "purchase". ASC defaulted on a large loan from a subsidiary of the Texas-based Eiger Fund called Ski Partners. ASC ended up swapping a 75% interest in the land at the bottom of Killington they got in the land swap deal with the state for Parker's Gore. Eiger created another subsidiary called SP Land to own this asset. Last year, Eiger was reporting that they were in the process of selling a big chunk of that land to Centex, a big Texas property developer that does both huge residential developments and resorts in places like Hawaii and the Carolinas. Centex backed out, I recall, last fall.

Last Friday, SP Land bought the remaining 25% of all that land plus all the Killington ski resort assets (allmost all on leased land). If you read the SEC filing from ASC, there is a $3 million escrow account on this sale. If the new owners refuse to honor the lifetime passes, those passholders can always get the Vermont attorney general's office to go after that $3 million sitting in the escrow account that is supposed to go to ASC if there are no other claims against Killington that aren't already accounted for. The SEC filing says that the new owners are supposed to honor those passes but I don't have any idea if that is legally binding.

 

[ckofer]

So, do the certificate holders get any compensation? Seems to me if you buy an interest in something that is later sold, you should get paid for your portion of that interest.

It would seem like a good opportunity for the new company to offer, for a limited time, some sort of promotion to those pass holders. Maybe it's somewhere in this thread, but any idea how many are out there?

 

[millerm277]

It would seem like a good opportunity for the new company to offer, for a limited time, some sort of promotion to those pass holders. Maybe it's somewhere in this thread, but any idea how many are out there?

For the true lifetime passes, that should be recognized regardless of owner, I believe the number is around 240, and those are the people who may have a legal claim, and will probably file a lawsuit.

 

[ctenidae]

The SEC filing says that the new owners are supposed to honor those passes but I don't have any idea if that is legally binding.

It is part of a contract (it's not just an SEC filing- it's the actual P&S, which must be filed with the SEC), so it's binding. Who has the power to enforce, though, gets a little murky. The passholders could, conceivably, sue for specific performance. Hard to say how that'd go.

 

[jerryg]

If the new owners refuse to honor the lifetime passes, those passholders can always get the Vermont attorney general's office to go after that $3 million sitting in the escrow account that is supposed to go to ASC if there are no other claims against Killington that aren't already accounted for. The SEC filing says that the new owners are supposed to honor those passes but I don't have any idea if that is legally binding.

Right. New owners decide to not abide by the wording of the contract so the other guy has to pay. Nice try. ASC may be inept at many things, but their lawyers are far better than that. ANY lawyer is.

 

[SkiDork]

Hold the Presses!

From the Purchase and sale agreement between American Skiing Company Killington, Ltd., Pico Ski Area Management Company and SP Land Company, LLC dated February 16, 2007

http://www.sec.gov/Archives/edgar/data/1043432/000110465907016723/a07-7202_1ex10d1.htm

8.23 Lifetime Passes. Buyer shall honor all Lifetime Passes and shall cause any agreement for the sale of the Resort or the Business to require such subsequent owner to honor such passes; provided that in no event shall Buyer be required to enforce (nor shall it have any liability in respect to) such covenant with respect to such subsequent owner. This covenant shall survive Closing indefinitely.

9.1 Survival. ...(d) the covenant of Buyer contained in Section 8.23 shall survive indefinitely. The agreements of the Sellers and the Buyer contained in this Agreement which by their terms require action following the Closing shall survive until the expiration of the applicable statute of limitation or, to the extent such agreements are expressly limited to other dates or times, such agreements shall survive only to such dates or times.

Schedule 3.27(b) sets forth a list of all holders of “lifetime” and “honorary” ski passes and similar rights and privilege for use of Resort facilities or accommodations (“Lifetime Passes”). (I'm trying to find this schedule, but it may not be public)

This is very interesting. Not being a lawyer I don't know what to do with this info, but I'll be sure to speak to some other bond passholders I know and see what they think we should do. Thanks for the post.

 

[SkiDork]

from Mr Moose on KZone, re: SEC filing document referenced above

The February document often quoted from the SEC filing on the proposed sale from ASC to SP land is a pre closing document. The controling document is what was actually signed at the closing. The interested parties, the bond holders, need to get a copy of that document. Since it is a sale of a public coporation, and since they are interested parties, they should be able to get a copy.

Gotta try to get a copy of the actual closing document. I imagine those 2 clauses were re-worded or eliminated.

 

[threecy]

If that clause is in the final contract, passholders certainly do have reason to be angry with the new owners. However, I would find it hard to believe the new owners would violate an agreement so quickly...it'll be interesting to see the final agreement.

 

[madskier6]

from Mr Moose on KZone, re: SEC filing document referenced above

The February document often quoted from the SEC filing on the proposed sale from ASC to SP land is a pre closing document. The controling document is what was actually signed at the closing. The interested parties, the bond holders, need to get a copy of that document. Since it is a sale of a public coporation, and since they are interested parties, they should be able to get a copy.

Gotta try to get a copy of the actual closing document. I imagine those 2 clauses were re-worded or eliminated.

Just a clarification: The SEC filing, while a "pre-closing document" is the Purchase Agreement, which is a legally binding contract. Another Purchase Agreement would not have been signed at the closing but other documents would have been signed and delivered. The SEC filing Purchase Agreement speaks as of its date (February 16, 2007). The closing deliverables that were signed and delivered at the closing were effective as of the closing date and determined the final terms of the deal. So you have to read the 2 sets of documents together to determine the final closing terms.

What may have happened is that SP Land required that ASC waive or eliminate the Section 8.23 covenant before they agreed to close the deal. If this is what happened, there should have been some sort of document (but not another Purchase Agreement) that was signed by both parties (or at least ASC) that waived or deleted the Section 8.23 covenant. There may have been a purchase price adjustment to address the deletion of Section 8.23.

 

[SkiDork]

Just a clarification: The SEC filing, while a "pre-closing document" is the Purchase Agreement, which is a legally binding contract. Another Purchase Agreement would not have been signed at the closing but other documents would have been signed and delivered. The SEC filing Purchase Agreement speaks as of its date (February 16, 2007). The closing deliverables that were signed and delivered at the closing were effective as of the closing date and determined the final terms of the deal. So you have to read the 2 sets of documents together to determine the final closing terms.

What may have happened is that SP Land required that ASC waive or eliminate the Section 8.23 covenant before they agreed to close the deal. If this is what happened, there should have been some sort of document (but not another Purchase Agreement) that was signed by both parties (or at least ASC) that waived or deleted the Section 8.23 covenant. There may have been a purchase price adjustment to address the deletion of Section 8.23.

Interesting. Not sure how to go about getting hold of the final closing documents. Any suggestions?