UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 1, 2007 (February 28, 2007)
AMERICAN SKIING COMPANY
(Exact name of registrant as specified in its charter)
Delaware | | 1-13057 | | 04-3373730 |
(State or other jurisdiction of
incorporation or organization) | | (Commission File Number) | | (I.R.S. Employer
Identification No.) |
136 HEBER AVENUE, SUITE 303, PARK CITY, UTAH 84060
(Address of principal executive offices)
Registrant’s telephone number, including area code: (435) 615-0340
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement
On March 1, 2007, in conjunction with its completion of the sale of Steamboat Ski & Resort Corporation, American Skiing Company (the “Company”) permanently repaid all outstanding obligations under the $85.0 million term portion of its first lien loan and $105.0 million second lien term loan, both with Credit Suisse, GE Capital and certain other lenders (together with the $40.0 million revolving portion of the first lien term loan, collectively the “Resort Senior Credit Facility”). The Company terminated all agreements relating to the second lien term loan. In addition, the Company entered into an amendment of the $40.0 million revolving facility of its first lien loan. The amendment to the revolving facility provides, among other things, for a reduction of the aggregate commitments available under the facility to $10.0 million and the elimination of the commitment fee thereunder, for the elimination of the annual EBITDA covenant for the fiscal quarter ending April 29, 2007, and for the approval by the revolving facility lenders of any future advances under the revolving credit facility. The Company does not presently anticipate a need for additional advances under the revolving credit facility prior to the end of the fiscal quarter ending April 29, 2007.
The holders of the Company’s Series C-1 Preferred Stock and Series C-2 Preferred Stock (collectively, the “Holders”) had previously agreed with the lenders under the Resort Senior Credit Facility that the Holders would not exercise any remedies as a result of the failure to redeem the Series C-1 Preferred Stock and the Series C-2 Preferred Stock prior to their final maturities. This agreement between the lenders under the Resort Senior Credit Facility and the Holders was terminated as of March 1, 2007.
On February 28, 2007, the Company’s subsidiary, Grand Summit Resort Properties, Inc., repaid all outstanding obligations (consisting only of deferred interest obligations) under its $110.0 million senior construction loan with Textron Financial Corporation and $10.6 million subordinated construction loan with Textron Financial Corporation (collectively, the “Construction Loan Facility”). In conjunction with the repayment of all obligations under the Construction Loan Facility, the Company terminated all agreements relating to the Construction Loan Facility.
Item 2.01. Completion of Acquisition or Disposition of Assets
On March 1, 2007, the Company completed the sale of Steamboat Ski & Resort Corporation to Intrawest Holdings S.A.R.L. and Steamboat Acquisition Corp. (the “Steamboat Sale”). Total proceeds received by the Company, subject to a final post-closing working capital and income adjustment, was $239.1 million, after preliminary adjustments for working capital and debt assumed by the buyer, and income realized by the Company from and after October 31, 2006.
Certain statements contained in this Report constitute forward-looking statements under U.S. federal securities laws. These forward-looking statements reflect our current expectations concerning future results and events. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties. In addition to factors discussed above, other factors that could cause actual results, performances or achievements to differ materially from those projected include factors listed from time to time in our documents we have filed with the Securities and
2
Exchange Commission. We caution the reader that this list is not exhaustive. We operate in a changing business environment and new risks arise from time to time. The forward-looking statements included in this Report are made only as of the date of this Report and we do not have or undertake any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances other than as required by applicable federal securities laws.
Item 9.01 Financial Statements and Exhibits.
(b) Pro-forma Financial Information
The following unaudited pro forma financial data (the “Pro Forma Financial Data”) is derived from the historical financial statements of the Company. The Pro Forma Financial Data and the accompanying notes should be read in conjunction with the Company’s Form 10-K as filed with the SEC on October 30, 2006, and the Company’s Form 10-Q as filed with the SEC on December 8, 2006.
The unaudited pro forma balance sheet data as of October 29, 2006 gives effect to the Steamboat Sale as if the transaction had occurred on such date. Actual account balances as of the closing date will differ from those at October 29, 2006, and accordingly, the actual amounts and application of the net sales proceeds will differ from those presented herein.
The unaudited pro forma statements of operations for the thirteen weeks ended October 29, 2006, the thirteen weeks ended October 30, 2005, and the year ended July 30, 2006, give effect to the transaction as if it had occurred on August 1, 2005. Tax effects of pro forma adjustments were calculated at the statutory rate in effect during the periods for which pro forma condensed income statements are presented. However, tax effects of all pro forma adjustments resulted in offsetting adjustments in the valuation allowances that the Company has recorded against all existing net deferred income tax assets.
The pro forma statements of operations disclose income (loss) from continuing operations before nonrecurring charges or credits directly attributable to the Steamboat Sale. Material nonrecurring charges or credits and related tax effects which result directly from the Steamboat Sale and which will be included in the income of the Company within the 12 months succeeding the Steamboat Sale are disclosed separately in the accompanying notes.
The Company expects that the tax effects of the net gain generated from the Steamboat Sale will be offset by its net operating loss carryforwards for regular income tax purposes. As a result, the Company anticipates being subject only to the alternative minimum tax and state tax liabilities and has recorded an estimate of taxes payable based on the alternative minimum tax associated with these transactions.
The Pro Forma Financial Data is not intended to be indicative of either future results of operations or results that might have been achieved had the transactions actually occurred on the dates specified. In the opinion of management, all adjustments necessary to present fairly the Pro Forma Financial Data have been made based upon the terms and structure of the Steamboat Sale.
3
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Pro Forma Balance Sheet Data
As of October 29, 2006
(in thousands)
| | October 29, 2006
as reported | | Pro Forma
Adjustments | | Notes | | Pro Forma
as adjusted | |
Assets | | | | | | | | | |
| | | | | | | | | |
Current Assets | | | | | | | | | |
Cash and cash equivalents | | $ | 7,813 | | $ | 34,362 | | a-d | | $ | 42,175 | |
Restricted cash | | 2,452 | | (113 | ) | b | | 2,339 | |
Accounts receivable, net | | 6,042 | | (871 | ) | b | | 5,171 | |
Inventory | | 8,034 | | (615 | ) | b | | 7,419 | |
Prepaid expenses and other | | 5,383 | | (246 | ) | b | | 5,137 | |
Deferred income taxes | | 3,923 | | (1,983 | ) | e | | 1,940 | |
Total current assets | | 33,647 | | 30,534 | | | | 64,181 | |
| | | | | | | | | |
Property and equipment, net | | 333,528 | | (78,145 | ) | b | | 255,383 | |
Real estate developed for sale | | 1,992 | | (1,217 | ) | b | | 775 | |
Intangible assets, net | | 6,235 | | — | | | | 6,235 | |
Deferred financing costs, net | | 5,084 | | (5,084 | ) | b,c | | — | |
Other assets | | 17,409 | | (7,495 | ) | b,c | | 9,914 | |
Total assets | | $ | 397,895 | | $ | (61,407 | ) | | | $ | 336,488 | |
| | | | | | | | | |
| | | | | | | | | |
Liabilities and Stockholders’ Deficit | | | | | | | | | |
| | | | | | | | | |
Current Liabilities | | | | | | | | | |
Current portion of long-term debt | | $ | 21,957 | | $ | (18,977 | ) | b,c | | $ | 2,980 | |
Accounts payable and other current liabilities | | 47,308 | | (10,266 | ) | b-e | | 37,042 | |
Deposits and deferred revenue | | 51,644 | | (13,363 | ) | b | | 38,281 | |
Total current liabilities | | 120,909 | | (42,606 | ) | | | 78,303 | |
| | | | | | | | | |
Long-term debt, net of current portion | | 197,846 | | (188,869 | ) | b,c | | 8,977 | |
Subordinated notes and debentures | | 114,261 | | — | | | | 114,261 | |
Other long-term liabilities | | 14,959 | | (375 | ) | b | | 14,584 | |
Deferred income taxes | | 3,923 | | (1,983 | ) | e | | 1,940 | |
| | | | | | | | | |
Mandatorily Redeemable Series B Preferred Stock | | — | | — | | | | — | |
Mandatorily Redeemable Series C-1 Preferred Stock | | 73,507 | | — | | | | 73,507 | |
Mandatorily Redeemable Series C-2 Preferred Stock | | 297,739 | | — | | | | 297,739 | |
Mandatorily Redeemable Series D Preferred Stock | | — | | — | | | | — | |
Total liabilities | | 823,144 | | (233,833 | ) | | | 589,311 | |
| | | | | | | | | |
Stockholders’ deficit | | | | | | | | | |
Common Stock, Class A | | 148 | | — | | | | 148 | |
Common Stock | | 170 | | — | | | | 170 | |
Additional paid-in capital | | 302,285 | | — | | | | 302,285 | |
Accumulated deficit | | (727,852 | ) | 172,426 | | c,e | | (555,426 | ) |
Total stockholders’ deficit | | (425,249 | ) | 172,426 | | | | (252,823 | ) |
| | | | | | | | | |
Total liabilities and stockholders’ deficit | | $ | 397,895 | | $ | (61,407 | ) | | | $ | 336,488 | |
4
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Pro Forma Balance Sheet Data
Summary of Pro Forma Adjustments
As of October 29, 2006
(in thousands)
Transactions associated with the Steamboat Sale
Balance
Sheet Account | | Note | | Adjustment | | Amount | |
Cash and cash equivalents | | a | | Record cash proceeds from the Steamboat Sale | | $ | 254,537 | |
| | a | | Record expenses related to the Steamboat Sale | | (5,185 | ) |
| | b | | Remove historical account balances related to Steamboat | | (2,709 | ) |
| | c | | Repay Resort Senior Credit Facility | | (209,169 | ) |
| | c | | Prepayment fee on Resort Senior Credit Facility | | (1,050 | ) |
| | c | | Terminate interest rate swap agreement | | 1,588 | |
| | d | | Repay deferred interest on Construction Loan Facility | | (3,650 | ) |
| | | | | | 34,362 | |
| | | | | | | |
Restricted cash | | b | | Remove historical account balances related to Steamboat | | (113 | ) |
| | | | | | (113 | ) |
| | | | | | | |
Accounts receivable, net | | b | | Remove historical account balances related to Steamboat | | (871 | ) |
| | | | | | (871 | ) |
| | | | | | | |
Inventory | | b | | Remove historical account balances related to Steamboat | | (615 | ) |
| | | | | | (615 | ) |
| | | | | | | |
Prepaid expenses and other | | b | | Remove historical account balances related to Steamboat | | (246 | ) |
| | | | | | (246 | ) |
| | | | | | | |
Deferred income taxes | | e | | Tax impact of Steamboat Sale | | (1,983 | ) |
| | | | | | (1,983 | ) |
| | | | | | | |
Property and equipment, net | | b | | Remove historical account balances related to Steamboat | | (78,145 | ) |
| | | | | | (78,145 | ) |
| | | | | | | |
Real estate developed for sale | | b | | Remove historical account balances related to Steamboat | | (1,217 | ) |
| | | | | | (1,217 | ) |
| | | | | | | |
Deferred financing costs, net | | b | | Remove historical account balances related to Steamboat | | (5 | ) |
| | c | | Write off costs related to Resort Senior Credit Facility | | (5,079 | ) |
| | | | | | (5,084 | ) |
| | | | | | | |
Other assets | | b | | Remove historical account balances related to Steamboat | | (5,907 | ) |
| | c | | Terminate interest rate swap agreement | | (1,588 | ) |
| | | | | | (7,495 | ) |
| | | | | | | | |
5
Balance
Sheet Account | | Note | | Adjustment | | Amount | |
Current portion of long-term debt | | b | | Remove historical account balances related to Steamboat | | $ | (757 | ) |
| | c | | Repay Resort Senior Credit Facility | | (18,220 | ) |
| | | | | | (18,977 | ) |
| | | | | | | |
Accounts payable and other current liabilities | | b | | Remove historical account balances related to Steamboat | | (5,600 | ) |
| | c | | Repay accrued interest on Resort Senior Credit Facility | | (4,481 | ) |
| | d | | Repay deferred interest on Construction Loan Facility | | (3,650 | ) |
| | e | | Income tax payable on gain on Steamboat Sale | | 3,465 | |
| | | | | | (10,266 | ) |
| | | | | | | |
Deposits and deferred revenue | | b | | Remove historical account balances related to Steamboat | | (13,363 | ) |
| | | | | | (13,363 | ) |
| | | | | | | |
Long-term debt, net of current portion | | b | | Remove historical account balances related to Steamboat | | (2,401 | ) |
| | c | | Repay Resort Senior Credit Facility | | (186,468 | ) |
| | | | | | (188,869 | ) |
| | | | | | | |
Other long-term liabilities | | b | | Remove historical account balances related to Steamboat | | (375 | ) |
| | | | | | (375 | ) |
| | | | | | | |
Deferred income taxes | | e | | Tax impact of Steamboat Sale | | (1,983 | ) |
| | | | | | (1,983 | ) |
| | | | | | | |
Accumulated deficit | | c | | Write off costs related to Resort Senior Credit Facility | | (5,079 | ) |
| | c | | Prepayment fee on Resort Senior Credit Facility | | (1,050 | ) |
| | e | | Gain on Steamboat Sale | | 182,020 | |
| | e | | Tax impact of gain on Steamboat Sale | | (3,465 | ) |
| | | | | | 172,426 | |
| | | | | | | | |
6
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Pro Forma Statement of Operations
For the thirteen weeks ended October 29, 2006
(in thousands, except per share amounts)
| | 13 weeks ended
October 29, 2006
as reported | | Pro Forma
Adjustments | | Notes | | Pro Forma
as adjusted | |
Net revenues: | | | | | | | | | |
Resort | | $ | 17,702 | | $ | (3,768 | ) | b | | $ | 13,934 | |
Real estate | | 4,822 | | (3,275 | ) | b | | 1,547 | |
Total net revenues | | 22,524 | | (7,043 | ) | | | 15,481 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Resort | | 25,151 | | (4,994 | ) | b | | 20,157 | |
Real estate | | 4,338 | | (2,855 | ) | b | | 1,483 | |
Marketing, general and administrative | | 12,478 | | (2,387 | ) | b | | 10,091 | |
Depreciation and amortization | | 2,714 | | (624 | ) | b | | 2,090 | |
Total operating expenses | | 44,681 | | (10,860 | ) | | | 33,821 | |
| | | | | | | | | |
Loss from operations | | (22,157 | ) | 3,817 | | | | (18,340 | ) |
| | | | | | | | | |
Interest expense | | (23,111 | ) | 6,462 | | b,c | | (16,649 | ) |
Interest income | | 146 | | (146 | ) | b | | — | |
Interest rate swap agreement | | (197 | ) | 197 | | c | | — | |
Loss before benefit for income taxes | | (45,319 | ) | 10,330 | | | | (34,989 | ) |
| | | | | | | | | |
Benefit for income taxes | | — | | — | | | | — | |
| | | | | | | | | |
Loss attributable to common stockholders | | $ | (45,319 | ) | $ | 10,330 | | | | $ | (34,989 | ) |
| | | | | | | | | |
Basic and diluted loss per common share | | $ | (1.43 | ) | | | | | $ | (1.10 | ) |
| | | | | | | | | |
Basic and diluted weighted average common shares outstanding | | 31,738 | | | | | | 31,738 | |
7
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Pro Forma Statement of Operations
For the thirteen weeks ended October 29, 2006
Summary of Pro Forma Adjustments
(in thousands)
Transactions associated with the Steamboat Sale
Income Statement Account | | Note | | Adjustment | | Amount | |
Interest expense | | b | | Remove historical account balances related to Steamboat | | $ | (29 | ) |
| | c | | Remove expense related to Resort Senior Credit Facility | | (6,156 | ) |
| | c | | Remove deferred financing costs from interest expense | | (277 | ) |
| | | | | | (6,462 | ) |
| | | | | | | |
Interest income | | b | | Remove historical account balances related to Steamboat | | (146 | ) |
| | | | | | (146 | ) |
| | | | | | | |
Interest rate swap agreement | | c | | Remove impact of interest rate swap agreement | | 197 | |
| | | | | | 197 | |
| | | | | | | |
All other accounts | | b | | Remove historical account balances related to Steamboat | | | |
| | | | | | | | |
8
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Pro Forma Statement of Operations
For the thirteen weeks ended October 30, 2005
(in thousands, except per share amounts)
| | 13 weeks ended
October 30, 2005
as reported | | Pro Forma
Adjustments | | Notes | | Pro Forma
as adjusted | |
Net revenues: | | | | | | | | | |
Resort | | $ | 17,147 | | $ | (3,456 | ) | b | | $ | 13,691 | |
Real estate | | 2,969 | | (159 | ) | b | | 2,810 | |
Total net revenues | | 20,116 | | (3,615 | ) | | | 16,501 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Resort | | 23,963 | | (4,615 | ) | b | | 19,348 | |
Real estate | | 1,942 | | — | | b | | 1,942 | |
Marketing, general and administrative | | 11,568 | | (2,343 | ) | b | | 9,225 | |
Depreciation and amortization | | 2,910 | | (611 | ) | b | | 2,299 | |
Impairment loss on property sold | | 1,533 | | — | | | | 1,533 | |
Total operating expenses | | 41,916 | | (7,569 | ) | | | 34,347 | |
| | | | | | | | | |
Loss from operations | | (21,800 | ) | 3,954 | | | | (17,846 | ) |
| | | | | | | | | |
Interest expense | | (21,244 | ) | 5,791 | | b,c | | (15,453 | ) |
Interest income | | 151 | | (151 | ) | b | | — | |
Gain on sale of property | | 169 | | — | | | | 169 | |
Interest rate swap agreement | | 525 | | (525 | ) | c | | — | |
Loss before benefit for income taxes | | (42,199 | ) | 9,069 | | | | (33,130 | ) |
| | | | | | | | | |
Benefit for income taxes | | — | | — | | | | — | |
| | | | | | | | | |
Net loss attributable to common stockholders | | $ | (42,199 | ) | $ | 9,069 | | | | $ | (33,130 | ) |
| | | | | | | | | |
Basic and diluted loss per common share | | $ | (1.33 | ) | | | | | $ | (1.04 | ) |
| | | | | | | | | |
Basic and diluted weighted average common shares outstanding | | 31,738 | | | | | | 31,738 | |
9
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Pro Forma Statement of Operations
For the thirteen weeks ended October 30, 2005
Summary of Pro Forma Adjustments
(in thousands)
Transactions associated with the Steamboat Sale
Income Statement Account | | Note | | Adjustment | | Amount | |
Interest expense | | b | | Remove historical account balances related to Steamboat | | $ | (59 | ) |
| | c | | Remove expense related to Resort Senior Credit Facility | | (5,455 | ) |
| | c | | Remove deferred financing costs from interest expense | | (277 | ) |
| | | | | | (5,791 | ) |
| | | | | | | |
Interest income | | b | | Remove historical account balances related to Steamboat | | (151 | ) |
| | | | | | (151 | ) |
| | | | | | | |
Interest rate swap agreement | | c | | Remove impact of interest rate swap agreement | | (525 | ) |
| | | | | | (525 | ) |
| | | | | | | �� |
All other accounts | | b | | Remove historical account balances related to Steamboat | | | |
| | | | | | | | |
10
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Pro Forma Statement of Operations
For the year ended July 30, 2006
(in thousands, except per share amounts)
| | Year ended
July 30, 2006
as reported | | Pro Forma
Adjustments | | Notes | | Pro Forma
as adjusted | |
Net revenues: | | | | | | | | | |
Resort | | $ | 274,369 | | $ | (74,012 | ) | b | | $ | 200,357 | |
Real estate | | 33,441 | | (164 | ) | b | | 33,277 | |
Total net revenues | | 307,810 | | (74,176 | ) | | | 233,634 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Resort | | 174,426 | | (37,317 | ) | b | | 137,109 | |
Real estate | | 27,559 | | (43 | ) | b | | 27,516 | |
Marketing, general and administrative | | 53,167 | | (9,327 | ) | b | | 43,840 | |
Depreciation and amortization | | 31,116 | | (5,461 | ) | b | | 25,655 | |
Impairment loss on property sold | | 1,533 | | — | | | | 1,533 | |
Loss on disposal of commercial property | | 917 | | — | | | | 917 | |
Total operating expenses | | 288,718 | | (52,148 | ) | | | 236,570 | |
| | | | | | | | | |
Income (loss) from operations | | 19,092 | | (22,028 | ) | | | (2,936 | ) |
| | | | | | | | | |
Interest expense | | (87,470 | ) | 23,944 | | b,c | | (63,526 | ) |
Interest income | | 595 | | (595 | ) | b | | — | |
Gain on sale of property | | 169 | | — | | | | 169 | |
Interest rate swap agreement | | 1,961 | | (1,961 | ) | c | | — | |
Loss before benefit for income taxes | | (65,653 | ) | (640 | ) | | | (66,293 | ) |
| | | | | | �� | | | |
Benefit for income taxes | | — | | — | | | | — | |
| | | | | | | | | |
Net loss attributable to common stockholders | | $ | (65,653 | ) | $ | (640 | ) | | | $ | (66,293 | ) |
| | | | | | | | | |
Basic and diluted loss per common share | | $ | (2.07 | ) | | | | | $ | (2.09 | ) |
| | | | | | | | | |
Basic and diluted weighted average common shares outstanding | | 31,738 | | | | | | 31,738 | |
11
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Pro Forma Statement of Operations
For the year ended July 30, 2006
Summary of Pro Forma Adjustments
(in thousands)
Transactions associated with the Steamboat Sale
Income Statement Account | | Note | | Adjustment | | Amount | |
Interest expense | | b | | Remove historical account balances related to Steamboat | | $ | (276 | ) |
| | c | | Remove expense related to Resort Senior Credit Facility | | (22,559 | ) |
| | c | | Remove deferred financing costs from interest expense | | (1,109 | ) |
| | | | | | (23,944 | ) |
| | | | | | | |
Interest income | | b | | Remove historical account balances related to Steamboat | | (595 | ) |
| | | | | | (595 | ) |
| | | | | | | |
Interest rate swap agreement | | c | | Remove impact of interest rate swap agreement | | (1,961 | ) |
| | | | | | (1,961 | ) |
| | | | | | | |
All other accounts | | b | | Remove historical account balances related to Steamboat | | | |
| | | | | | | | |
12
American Skiing Company and Subsidiaries
Notes to Unaudited Condensed Consolidated Pro Forma Financial Statement Data
General
On December 18, 2006, the Company and Steamboat Ski & Resort Corporation (“Steamboat”) entered into the Steamboat Purchase Agreement with Wintergames Holdings SARL to sell all of the Company’s stock in Steamboat, the owner and operator of the Steamboat ski resort. On March 1, 2007, the Steamboat Sale was completed with Intrawest Holdings S.A.R.L., formerly known as Wintergames Holdings SARL. The Company used the net proceeds from the sale to repay existing senior debt. The attached pro forma statements of operations remove the results from operations of Steamboat and adjust interest expense as if the Steamboat Sale was completed on August 1, 2005. The attached pro forma balance sheet data as of October 29, 2006 assumes that the sale was completed as of that date. Actual account balances as of the actual closing date will differ from those at October 29, 2006, and accordingly, the actual amounts and application of the net sales proceeds will differ from those presented herein.
All material nonrecurring charges and credits directly attributable to the Steamboat Sale are included in the accompanying condensed consolidated pro forma balance sheet data. These nonrecurring charges and credits, and the related tax effects have been excluded from the accompanying condensed consolidated pro forma statements of operations. These include the following pro forma adjustments as referenced in the notes following:
(c) Prepayment fee and write off of deferred financing costs associated with repayment of the Company’s Resort Senior Credit Facility from the proceeds of the Steamboat Sale; and
(e) Gain and related tax impact from the Steamboat Sale.
Tax effects of pro forma adjustments were calculated at the statutory rate in effect during the periods for which pro forma condensed income statements are presented. However, tax effects of all pro forma adjustments resulted in offsetting adjustments in the valuation allowances that the Company has recorded against all existing net deferred income tax assets.
The Company expects that the tax effects of the net gain generated from the Steamboat Sale will be offset by its net operating loss carryforwards for regular income tax purposes. As a result, the Company anticipates being subject only to the alternative minimum tax and state tax liabilities and has recorded an estimate of taxes payable based on the alternative minimum tax associated with the transaction.
13
Adjustments related to the Steamboat Sale
(a) The Company completed the Steamboat Sale on March 1, 2007. The purchase price was $265.0 million, less the assumption of approximately $4 million in debt ($3.2 million on a pro forma basis as of October 29, 2006), and was subject to certain working capital and earnings adjustments ($7.3 million on a pro forma basis as of October 29, 2006). The net sales price ($254.5 million on a pro forma basis) was paid in cash. In addition, the Company expects to pay a total approximately $5.2 million in investment banking fees and other related closing costs at the time of closing or shortly thereafter, resulting in net cash proceeds on a pro forma basis of $249.3 million.
(b) All results of operations and historical balance sheet account balances related to the operations and the assets and liabilities sold have been removed from the pro forma financial statements.
(c) The Company used the net sales proceeds to pay off its Resort Senior Credit Facility. As of October 29, 2006, the total balance was $209.2 million, including $17.4 million outstanding under the Revolving Facility, $82.3 million under the First Lien Term Loan, $105.0 million under the Second Lien Term Loan, and $4.5 million in accrued interest. The terms of the Resort Senior Credit Facility provide for a fee of 1% to be paid upon the optional prepayment of the Second Lien Term Loan. Repayment in full of the Resort Senior Credit Facility also resulted in the termination of its interest rate swap agreement, resulting in a payment to the Company of its market value ($1.6 million as of October 29, 2006). Repayment of the Resort Senior Credit Facility also resulted in the write-off of all remaining deferred financing costs ($5.1 million as of October 29, 2006). All interest expense related to the Resort Senior Credit Facility, including amortization of deferred financing costs, and market value adjustments on the interest rate swap agreement have been removed from the pro forma statements of operations in all periods presented.
(d) The Company also paid the remaining balance of deferred interest due under its Construction Loan Facility ($3.7 million as of October 29, 2006), which was collateralized by remaining assets at the Steamboat Grand Hotel which were sold as part of the transaction.
(e) On a pro forma basis as of October 29, 2006, the gain on the Steamboat Sale would have been $182.0 million for financial reporting purposes and $170.9 for income tax purposes. The Company expects to offset the income tax impact of the gain by utilizing deferred tax benefits that have previously been reserved through a valuation allowance. Accordingly, income taxes attributable to this transaction would be limited to alternative minimum tax, which, on a pro forma basis would have been $3.5 million.
(d) Exhibits
Exhibit 10.1 Purchase Agreement by and among Steamboat Ski & Resort Corporation, American Skiing Company, Steamboat Acquisition Corp. and Wintergames Holdings SARL dated December 18, 2006
Exhibit 10.2 First Amendment and Waiver to First Lien Credit Agreement among American Skiing Company, certain of its subsidiaries as borrowers, and General Electric Capital Corporation as Agent for the lenders thereunder dated March 1, 2007
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: March 1, 2007 | American Skiing Company |
| | |
| | |
| By: | /s/ Foster A. Stewart, Jr. |
| | Name: | Foster A. Stewart, Jr. |
| | Title: | Senior Vice President and |
| | | General Counsel |
15
INDEX TO EXHIBITS
10.1 Purchase Agreement by and among Steamboat Ski & Resort Corporation, American Skiing Company, Steamboat Acquisition Corp. and Wintergames Holdings SARL dated December 18, 2006
10.2 First Amendment and Waiver to First Lien Credit Agreement among American Skiing Company, certain of its subsidiaries as borrowers, and General Electric Capital Corporation as Agent for the lenders thereunder dated March 1, 2007
16
