Wow. Bretton Woods owners to buy Loon and two Tahoe resorts

[FridayHiker]

Help! I can't find the :faint: smilie!

CNL is buying Loon and two Tahoe resorts -- Northstar and Sierra -- from Booth Creek. For Florida folks, they sure took to skiing rather quickly.

http://www.theunionleader.com/artic...rticleId=834a88e3-e323-44f7-ae4a-a36582838440

Key paragraphs:

The new owners of Bretton Woods ski resort and the Mount Washington Hotel will purchase Loon Mountain in Lincoln by the end of the month and then lease the resort back to its current owners to operate....

Resort officials from both companies say Loon customers and employees should see no changes with the sale. They also said the transaction will not affect Loon's multi-resort "Threedom Passes" or other ticket arrangements.

Chris Ellms, general manager of Bretton Woods, said "We view this as more of a financing arrangement with no management changes.",,,

Although Waterville Valley and Cranmore will not be sold, CNL will hold the first mortgage on those resorts as collateral for a $12 million loan to a Booth Creek subsidiary as part of the overall sales agreement...

Under the sales agreement, Booth Creek would operate Loon Mountain for the next 20 years with three 10-year renewal options....

Much more at link, but I won't c/p the whole thing for copyright reasons.

 

[thetrailboss]

Whoa....this is getting scary....we're getting back to one company owning most of the NH ski areas (e.g. ASC in the late 1990's....they were trustbusted).

 

[Angus]

there was a good article in the wsj a few weekends (sat edition) ago about how ski areas are becoming very popular with the private equity firms. this appears to be another example of that - plus the buy and lease back scenario is similar to what crotched did earlier in the year. honestly, I don't understand how ski areas fit the typical private equity investment profile - other than there has been a huge industry consolidation via ski area closures.

related question would be anyone aware of any technology breakthroughs that is/will be driving the cost of snow making down appreciably?

 

[riverc0il]

angus, interesting point regarding this being a recemt trend. i was thinking about that myself. seems like that would suggest that many ski areas are short on capital. perhaps it is because or recent expansions (BW, Loon, Crotched, etc. all invested a huge amount of money recently in their areas and real estate in the case of loon). hopefully this is a short term solution only. obviously the leasers think it is a good long term strategy, though the potential for nelsap expanding given changing demographics and potentially varying climate issues seems rather risky. you gotta wonder if the companies now leasing these mountains will be able to meet their lease financial requirements 10, 20, 30 years from now once the money from the sale has been expended, unless they plan on eventually buying it back? seems like a risk only to be taken in dire financial straights? i am not to familiar with this type of stuff, and would appreciate some enlightenment if any one is familiar, but it doesn't make sense on the surface and in the long term.

 

[jack97]

there was a good article in the wsj a few weekends (sat edition) ago about how ski areas are becoming very popular with the private equity firms. this appears to be another example of that - plus the buy and lease back scenario is similar to what crotched did earlier in the year. honestly, I don't understand how ski areas fit the typical private equity investment profile - other than there has been a huge industry consolidation via ski area closures.

Interesting point about private equity firms; the common thread in BW, Loon and Crotched is these firms took on debt while having a leash back agreement with the original owners. What I don’t understand is how they manage this debt better; can they re- finance the debt in more favorable terms or is it tax related?

 

[Vortex]

The article says no change in the threedom pass set up. Looks vauge, is that this year and years to come?

 

[riverc0il]

The article says no change in the threedom pass set up. Looks vauge, is that this year and years to come?

if i read this right, nothing has changed with booth creek. they are just leasing some of the properties they run now instead of owning them straight out which would suggest no change.

 

[Vortex]

I hope that is correct. I thought so also, just not 100% sure. I saw the channel 9 live spot Sat night and it just said it was sold. The article gave a bit more info. I would think they would have sent the pass holders an e-mail or something. Maybe its forthcoming. Hope so. I heard more talk about it at Waterville than Loon, Maybe because more info came out Sunday and I was at Waterville then. Not a peep at Loon on Sat.

 

[stomachdoc]

Here's my understanding:

1) The entire entity known as Booth Creek was sold to an investment group (but will still be known as Booth Creek)

2) This entity sold all of the mountains, except WV and Cranmore

3) This entity then leased back all of the mountains to run them on a 30 year lease (with a 10 year "get out.")

4) I'm glad I'm a Doctor, 'cause I really don't understand this financial stuff.

 

[Vortex]

Here's my understanding:

1) The entire entity known as Booth Creek was sold to an investment group (but will still be known as Booth Creek)

2) This entity sold all of the mountains, except WV and Cranmore

3) This entity then leased back all of the mountains to run them on a 30 year lease (with a 10 year "get out.")

4) I'm glad I'm a Doctor, 'cause I really don't understand this financial stuff.

I was hoping I would run into you Sunday so you could explain it. That makes two of us without and understaning.:roll:

 

[FridayHiker]

From what I've read, three of the Booth Creek principals (Gillett and two others) plus one other investor are basically buying Booth Creek from the other investors.

My guess -- pure speculation -- is that in order to get the capital for the buyout, they brought in CNL. Ski area companies tend to reinvest cash (when they have it) rather than building up large cash reserves, so (speculation alert) Booth Creek wouldn't likely have had the capital on hand to buy out the other investors. John Hancock Mutual Life and CIBC both owned quite a bit of stock at one point; I'm not sure whether or not they still own it, but I suspect so based on the fact that I think that at least one JH person was still sitting on the Booth Creek board.

Here's an article with a bit more detail:

http://www.skipressworld.com/us/en/...tt_key_to_booth_creek_buyout.html?cat=Finance

 

[Vortex]

Those statements seem to be be stonger about the threedom passes remaining the same than those in the Union Leader.

The Threedom pass is what eventually let me to buy property, cause of being able to hit 3 local mountains (fun) and the re-sale value if it ever decided I wanted a change.(money)

 

[askstowell]

Maybe they should buy Tenney while they're at it too.

 

[Marc]

related question would be anyone aware of any technology breakthroughs that is/will be driving the cost of snow making down appreciably?

There aren't really many breakthroughs that could drive the cost of snow making down. Pressurizing copious amounts of water and air and moving the water up hill will always take large amounts of energy even if we can make our machinery near 100% efficient. You can't get around physics with technology.

The only thing that can seriously reduce the cost of snowmaking is reducing the cost of the current forms of conveniently stored potential energy.

 

[ski_resort_observer]

Doesn't Crotched have a "lease back" arrangement as well?

There is additional info over at SJ including a post by Kat Bennett, marketing manager of Cranmore, a Booth Creek resort.
http://www.snowjournal.com/page.php?cid=topic10168

 

[Vortex]

Nice linc. Thankx.

 

[jack97]

CNL (the private equity firm) is acting like a bank. Booth Creek is refinancing the debt; getting the cask out to pay off an investor. Instead of going to a traditional lending institution for refinancing, they choose to sell the properties to CNL. Booth Creek still pays CNL under the terms of the lease for the next 20 – 30 years. Since CNL bought the properties for 170 million, the lease agreement should cover this with along with profit.

Leasing is sometimes a better option than taking on more debt. It makes a company look better in the short-term operational cost.



Yes, Crotched did something similar. It looks like a trend, private equity firms getting in the "banking" business.

 

[riverc0il]

is lease a "lease to own" sort of deal? or is this an indefinite lease? i am curious if the long term plan is to buy it back or not. funny how corporations work in ways no sane individual ever would. could you imagine buying a house then selling it out just to lease it, heh!

 

[jack97]

Its not a lease to own. The union article said the lease agreement for 20 years with 3 ten year renewable options. The guys running Booth Creek look at this as a business. And its health is judge by the number on the columns/ledgers on a quarterly basis.

 

[maplevalleymaster]

Oh wow, they really seem to be expanding way too fast. Three resorts in one year?? Have they not heard of ASC and its failures?