killington cancelling lifetime passes

[ctenidae]

From the "Definitive Information regarding Mergers and Acquisitions" filing (http://www.sec.gov/Archives/edgar/d....htm#MaterialTermsOfTheKillingtonPurch_051620) dated 3/9/07:

Covenants

Article VIII of the Killington Purchase Agreement contains a number of covenants by American Skiing, Killington, Ltd., Pico and Buyer, including covenants relating to:

(P25) Buyer honoring all lifetime passes indefinitely and causing any agreement for the sale of Killington/Pico to require the subsequent owner to honor such passes.

I'd say that pretty much states definitively that honoring the lifetime passes is part of the sale agreement.

 

[SkiDork]

From the "Definitive Information regarding Mergers and Acquisitions" filing (http://www.sec.gov/Archives/edgar/d....htm#MaterialTermsOfTheKillingtonPurch_051620) dated 3/9/07:

Covenants

Article VIII of the Killington Purchase Agreement contains a number of covenants by American Skiing, Killington, Ltd., Pico and Buyer, including covenants relating to:

(P25) Buyer honoring all lifetime passes indefinitely and causing any agreement for the sale of Killington/Pico to require the subsequent owner to honor such passes.

I'd say that pretty much states definitively that honoring the lifetime passes is part of the sale agreement.

Right, but if you read some of the posts above it sounds like I need to get hold of the closing documents, some of which may have over-ridden this clause.

 

[JimG.]

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)

No, that was great!

I'd love to get up there again but it's just too far for me at this point.

 

[tree_skier]

Just my 2 cents but if it was my company and I had the legal right to I would cancel the lifetime passes and a well run company wouldn't do it if they didn't have the right to. Now I have also worked for people who actually said "it's my company and I will do whatever the he@# I want, I don't care if it's against the fu@#$%^ law let them complain to the state" so if I have one I would look into it further then just taking the companies word for it. The above attitude lost them a good employee and I now own a competing business.

 

[jerryg]

Just my 2 cents but if it was my company and I had the legal right to I would cancel the lifetime passes and a well run company wouldn't do it if they didn't have the right to. Now I have also worked for people who actually said "it's my company and I will do whatever the he@# I want, I don't care if it's against the fu@#$%^ law let them complain to the state" so if I have one I would look into it further then just taking the companies word for it. The above attitude lost them a good employee and I now own a competing business.

So you would or wouldn't? This is a little unclear. Thanks.

 

[tree_skier]

So you would or wouldn't? This is a little unclear. Thanks.

I would look into it if I owned one if not I don't really care. Seeing as I don't own one I don't really care.

I am surprised they lasted through ASC but that's another story. Also on the legal side I am not surprised about the timing of the anouncement. If they had waited and let the holders use the passes (even for summertime) then they would have made a statement to thier continued value.

 

[madskier6]

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

I'm not certain whether public companies have to disclose these kinds of documents once they've disclosed the Purchase Agreement, as in ASC's case. You can check the on-line SEC filing databases to be sure.

I checked the 8-K filing that ASC filed on the date of closing. There is no mention of any changes to the Purchase Agreement that occurred at the closing. That doens't necessarily mean that Section 8.23 wasn't eliminated.

The thing to do is to send SP Land a letter requesting clarification on their cancelling the lifetime pass and referencing Section 8.23 of the Purchase Agreement. Depending on their answer, you could then send a similar letter to ASC requesting similar clarification.

 

[ctenidae]

Right, but if you read some of the posts above it sounds like I need to get hold of the closing documents, some of which may have over-ridden this clause.

That clause is in the SEC filing relating all material aspects of the final contract. If the covenant was struck from the final, then they're going to have a bigger problem than 240 passholders. The SEC doesn't take too kindly to misleading public information. OF course, if you could get your hands on the actual signed contract, that'd be cool.

 

[SkiDork]

I'm not certain whether public companies have to disclose these kinds of documents once they've disclosed the Purchase Agreement, as in ASC's case. You can check the on-line SEC filing databases to be sure.

I checked the 8-K filing that ASC filed on the date of closing. There is no mention of any changes to the Purchase Agreement that occurred at the closing. That doens't necessarily mean that Section 8.23 wasn't eliminated.

The thing to do is to send SP Land a letter requesting clarification on their cancelling the lifetime pass and referencing Section 8.23 of the Purchase Agreement. Depending on their answer, you could then send a similar letter to ASC requesting similar clarification.

Thanks. Technically ASC sent the letter cancelling the lifetime passes. So should I send the letter to them first?

 

[madskier6]

Thanks. Technically ASC sent the letter cancelling the lifetime passes. So should I send the letter to them first?

Yes. My mistake. I thought the letter came from the new owner.

 

[madskier6]

That clause is in the SEC filing relating all material aspects of the final contract. If the covenant was struck from the final, then they're going to have a bigger problem than 240 passholders. The SEC doesn't take too kindly to misleading public information. OF course, if you could get your hands on the actual signed contract, that'd be cool.

That SEC filing was dated March 9 so it reflected what was in the Purchase Agreement. That filing does not reflect the terms of the deal "as it closed". I agree with you that ASC would have an obligation to disclose any "material" changes in the final "as closed" deal. The question would be whether this change in the final deal (if it occurred), is material to ASC's business as a whole, thereby requiring them to disclose it to the public.

 

[jerryg]

Thanks. Technically ASC sent the letter cancelling the lifetime passes. So should I send the letter to them first?

Only if they were contracted to make that business decision on behalf of SP and Powdr. Prior to sending a letter to ASC, you should determine if they changed the purchase agreement and have interest in future operations. The cancellation is effective for next season onward and unless they are continuing to do business with either entity, sending to ASC would not get you anywhere. It reads as though their intent was that these passes were to be honored, but once the deal was completed, they can no longer assist as it is not their property.

 

[threecy]

Any ASC stock owners have access to this stuff?

 

[madskier6]

Only if they were contracted to make that business decision on behalf of SP and Powdr. Prior to sending a letter to ASC, you should determine if they changed the purchase agreement and have interest in future operations. The cancellation is effective for next season onward and unless they are continuing to do business with either entity, sending to ASC would not get you anywhere. It reads as though their intent was that these passes were to be honored, but once the deal was completed, they can no longer assist as it is not their property.

My point in sending a letter is to flesh out the issue of what happened to the Section 8.23 covenant. At this point, he does not know whether they changed the Purchase Agreement and if he inquired, perhaps ASC would tell him. They also might not say anything at all but it's worth a shot.

Sending it to ASC first makes sense because that is who sent him the letter advising him that his rights had terminated. In addition, if he has a legitimate claim, it would be against ASC as that was the entity whose actions terminated his rights by selling the Killington assets. ASC is the entity who should be worried about passholders complaining about this. ASC is responsible for all liabilities of K/Pico arising prior to the sale so that is who his claim would be against.

If you were going to file a lawsuit, you would name both Buyer and Seller as parties to the lawsuit & let them fight it out as to who is responsible.

 

[jerryg]

My point in sending a letter is to flesh out the issue of what happened to the Section 8.23 covenant. At this point, he does not know whether they changed the Purchase Agreement and if he inquired, perhaps ASC would tell him. They also might not say anything at all but it's worth a shot.

Sending it to ASC first makes sense because that is who sent him the letter advising him that his rights had terminated. In addition, if he has a legitimate claim, it would be against ASC as that was the entity whose actions terminated his rights by selling the Killington assets. ASC is the entity who should be worried about passholders complaining about this. ASC is responsible for all liabilities of K/Pico arising prior to the sale so that is who his claim would be against.

If you were going to file a lawsuit, you would name both Buyer and Seller as parties to the lawsuit & let them fight it out as to who is responsible.

Nope. ASC holds no liability in this whatsoever. Did the letter come from Killington management or ASC? i.e., Dave Hirasawa? Are you kidding? "Hey as we've already pissed you all off, we decided to throw another bone onto the fire. We have decided that while WE honored your lifetime passes/bonds while WE owned the mountain... Well, we have decided that SP/Powdr will not. WE are writing to let you know this because they DID NOT MAKE THIS DECISION. WE did. We are not the owners anymore, but just before we signed on the dotted line, WE made that business decision for SP/Powdr"

Are you nuts, dude?

 

[ski_resort_observer]

I agree with jerryg in assuming that the lawyers did an extensive due diligence on this question and determined that they could legally do this.

 

[threecy]

Nope. ASC holds no liability in this whatsoever. Did the letter come from Killington management or ASC? i.e., Dave Hirasawa? Are you kidding? "Hey as we've already pissed you all off, we decided to throw another bone onto the fire. We have decided that while WE honored your lifetime passes/bonds while WE owned the mountain... Well, we have decided that SP/Powdr will not. WE are writing to let you know this because they DID NOT MAKE THIS DECISION. WE did. We are not the owners anymore, but just before we signed on the dotted line, WE made that business decision for SP/Powdr"

Are you nuts, dude?

I don't think madskier is nuts. In theory, the unrecognized pass income is a liability, which is either passed onto the new owner or held by the seller. Since you're talking about potentially over a million dollars in lost revenue, it is quite possible that the new owners told ASC to deal with it. If the 6,000$ figure I've seen is right, they've certainly received their money's worth. That's not to say they didn't buy a 'lifetime' pass...but someone has to take the blow...if ASC refused to discount the price of the deal, then it's quite likely the new owners took it out.

It's also possible that the new owners are banking on settling out of court by giving the passholders the equivlent of the passes - if these passes are as old as I've seen stated in some places, they certainly weren't valued at what they would be at the current size of Killington. They're lifetime passes, not ownership per se - it might be easier to just say "apply X$ of remaining value to future season passes."

Another angle that I haven't seen is the agreement when these passes were purchased - does anyone have a copy of that contract?

madrider has it right - if you're going to sue, name both the current owner and the previous owner - let them and the courts fight it out. This is similar to how other ski area lawsuits are filed - name as many defendants as possible.

 

[madskier6]

Nope. ASC holds no liability in this whatsoever. Did the letter come from Killington management or ASC? i.e., Dave Hirasawa? Are you kidding? "Hey as we've already pissed you all off, we decided to throw another bone onto the fire. We have decided that while WE honored your lifetime passes/bonds while WE owned the mountain... Well, we have decided that SP/Powdr will not. WE are writing to let you know this because they DID NOT MAKE THIS DECISION. WE did. We are not the owners anymore, but just before we signed on the dotted line, WE made that business decision for SP/Powdr"

Are you nuts, dude?

I disagree. Why do you think that ASC made the decision for SP/Powdr? Without a contractual obligation to honor the passes, SP/Powdr would have no duty to honor the passes. It's not like the rights under lifetime passes run with the land or the Killington facilities. It's a contractual obligation only.

From what I've heard the letter came from ASC or Killington management (that part doesn't matter) and stated that "when the sale closes" you will not have any more rights under the lifetime pass. By sending the letter, ASC was positioning themselves to limit any claims from passholders once SP/Powdr refuses to honor the passes.

 

[ctenidae]

Pre-closing covenants did prohibit ASC from issuing any new lifetime apsses, but doesn't say anything about cancelling them. Conversely, the agrrement specifically bars SP/Powdr from cancelling any, but says nothing about issuing them. However, the lists of lifetime passholders are specifically mentioned several times in teh docs.

The best PR move would have been for ASC to cancel the passes, and SP/Powdr to reinstate them. If that is, in fact, their plan, then they've done a piss-poor job executing.

 

[jerryg]

I disagree. Why do you think that ASC made the decision for SP/Powdr? Without a contractual obligation to honor the passes, SP/Powdr would have no duty to honor the passes. It's not like the rights under lifetime passes run with the land or the Killington facilities. It's a contractual obligation only.

From what I've heard the letter came from ASC or Killington management (that part doesn't matter) and stated that "when the sale closes" you will not have any more rights under the lifetime pass. By sending the letter, ASC was positioning themselves to limit any claims from passholders once SP/Powdr refuses to honor the passes.

I put it on quotes because I was being sarcastic and making read as though Dave Hirasawa was saying it. I firmly beleive that this was not an attempt for ASC to strip the passholders. This is on the hands of the new owners. You can sure ASC all you want, but a.) you aren't gonna get anything out of them and b.) there laywers can easily defend this. It's in the fine print for any one to understand that IF, and it's a big IF, there is any part to be held liable for honoring the passes, it is not ASC and if SP/Powdr went and signed a contract that in effect said that they were going to allow ASC to cancel life passes effective the day before the sale, well then SP/Powdr would look pretty negligiable.

Hate ASC or not - this is not the intent of ASC and people are going a litte far in their ASC hatred to try and put the blame on them. Hell, I ski at a resort that is still owned by them and I'm nt bitching. Furthermore, for ASC to come out and comment on this without Powdr doing so, is not even rational. If due dilligence is needed, it will come to fruition in court and the new Vermont skiing PR nightmare will ensue.