Killington, Pico to be sold
Powdr and SP Land Co. to pay $83.5 million
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Steve Selbo, president of SP Land Co., holds designs for a new ski village Tuesday at the Killington Ski Area. SP Land Co. and Powdr Corp. have agreed to buy the resort for $83.5 million. Powdr already owns six resorts in the West. VYTO STARINSKAS / RUTLAND HERALD |
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By Bruce Edwards Herald Staff - Published: February 21, 2007
KILLINGTON - Killington Resort, the largest ski resort in the East and a name synonymous with Vermont skiing, is being sold to SP Land Co. and Powdr Corp., for $83.5 million.
American Skiing Co. is selling Killington and its adjacent Pico Resort to SP Land Co., a Killington-based real estate development company. SP Land Co. and Powdr Corp., a Utah ski resort company, have entered into a joint venture to own and operate Killington and Pico.
Powdr owns six resorts in the West, including Park City Mountain Resort in Utah, the site of the 2002 Winter Olympics.
SP Land Co., which already owns several hundred acres of land at the base of the resort and at Bear Mountain, will move forward with plans to develop a ski village. SP Land is affiliated with SKI Partners and E2M Partners, a Texas-based private equity firm.
In addition to the sale price of $83.5 million, SP Land will assume $5 million in debt and other liabilities.
As the largest ski area east of the Mississippi, Killington has 1,200 acres of skiable terrain with more than 200 trails and 33 lifts. Pico has 50 trails that cover 200 acres of terrain.
Killington is an economic driver for the region - businesses and restaurants are dependent on it each year.
"Killington is an exceptional mountain, and should be viewed nationally as one of the top 10 resorts in the country," Powdr President John Cumming said in a statement. "It has key factors working in its favor including its size with more than 3,000 vertical feet from summit to base, its proximity to major metropolitan areas, its extensive snowmaking ability, and over 250 annual inches of natural snowfall. These are great mountains, and we are very excited about the opportunities here."
Cumming added that his company is an experienced ski resort operator with a track record of investing in its properties.
As part of a deal three years ago to restructure its real estate debt, ASC turned over 469 acres of land at Killington to SP Land Company.
Steve Selbo, president of SP Land, said the deal to buy Killington and Pico started to take shape last year when SP Land and ASC were in discussions about how to move forward with the ski village. During those talks, Selbo said ASC officials suggested that it might make more sense for SP Land to also own the rest of the resort. That led SP Land to approach Powdr Corp. to form a partnership to buy Killington and Pico, Selbo said.
With Powdr Corp. as a partner, Selbo said plans to develop the ski village are very much alive.
"We basically are looking at first phase plans right now and will have to get into an Act 250 process as well as working with the town of Killington to get approvals from the town," he said. "But we are well down the road of what we would like to build."
First phase plans, which remain fluid, include a commercial village hub with shops and restaurants, 150 condominiums and single-family homes and condominiums in the Rams Head area.
Killington President Allen Wilson called the deal a positive development.
"It's very good for the Killington region because there's one entity that will control all of the land and hopefully fast-track the village," Wilson said.
Word that struggling American Skiing Company was selling Killington and Pico follows last week's announcement that the company was selling its Mount Snow resort in West Dover and its Attitash resort in New Hampshire for $73.5 million. The company is already in the process of selling its Steamboat resort for $265 million.
The company has never turned an annual profit since going public in 1997.
Rumors have persisted in recent weeks that ASC was looking to sell several of its resorts as a way to get out from under its mountain of high-interest debt.
"I think what you're seeing here is that the board of directors is recognizing the offer this company made to us is very good for our company and it's good for the resort," said Chip Carey, ASC's senior vice president of sales and marketing.
ASC spokesman David Hirasawa added that once the sale of Steamboat, Mount Snow, Attitash, Killington and Pico go through, ASC will pay off $190 million in bank debt and $117 million in junior notes.
Once completed, ASC will be left with The Canyons in Utah, and Sugarloaf/USA and Sunday River in Maine.
Hirasawa indicated that no other sales are in the works.
"What we can say is the board (of directors) has not authorized any future action in this realm," Hirasawa said.
He said the Killington/Pico sale requires federal antitrust review and approval by the state of Vermont, which owns much of the land leased by Killington. The sale has already been approved by ASC's sole preferred stockholder. The preferred stockholder is Oak Hill Capital Partners, a private equity firm that invested heavily in ASC several years ago.
Hirasawa said the sale is scheduled to close by the end of April.
According to documents filed with the Securities and Exchange Commission, SP Land Company is the official buyer of Killington and Pico.
Powdr spokesman Mark Fischer said SP Land and Powdr have formed a joint venture to own and operate the resorts. He said Powdr has an equity stake in the resorts.
Fischer said the 15-year-old privately held company has a reputation of investing in its resort properties.
"They've bought other resorts over the years and what they do is they go in and start to invest and put in new lifts and base lodges and their objective is to try and provide the best on-mountain experience that they can possibly provide for their guests," Fischer said.
Because ASC has been strapped financially, the long-awaited interconnect between Killington and adjacent Pico has been on hold for several years.
Fischer said an interconnect between the two ski areas is the kind of project Powdr continues to pursue at Park City, working to connect its resort with Deer Valley and The Canyons.
Once Powdr and SP Land close on the purchase, Fischer said Powdr will come in and make an assessment on what improvements are needed.
Wilson of Killington cautioned that while the interconnect remains part of the vision, the first priority is developing the ski village. Once that's accomplished and skier numbers warrant it, then constructing the interconnect will be viable, he said.
"In my opinion, once the business volumes necessitate the interconnect, I could see it occurring but I don't see it in the near future," Wilson said.
Fischer said Park City and Killington are of a similar size, each generating 800,000 skier visits last year.
The change in ownership should be viewed in a positive light said Michael Berry, president of the National Ski Areas Association.
"Powdr is a very good operator," Berry said. "They own resorts obviously in Utah, Oregon, California and Nevada. They're knowledgeable, experienced operators with a very successful track record."
While far below the $265 million ASC will receive for its Steamboat resort, Berry said $83.5 million for Killington and Pico is consistent with similar deals in the industry.
"Based on my back of the envelop calculations, I think it's an appropriate and fair price," he said.
Parker Riehle of the Vermont Ski Areas Association was bullish on the deal as well.
"This is really, really good news for Killington and the future of that resort given the combination of SP Land and Powdr Resorts," said Riehle, president of the VSAA.
He called Powdr a "premier ski area operator," which bodes well for the future of Killington.
Contact Bruce Edwards at bruce.edwards@rutlandherald.com.
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