New England Jay going for sale!

[Black Dog]

This is all a part of the ongoing saga of Hermitage, isn't it?

No, The Hermitage Club is a mess of its own. No connection to Jay.
Jay was connected to Burke Mt but looks like they have spit the two apart.

It will probably not be the usual suspects who buy Jay. Chances are they the usual guys have been approached before news of the sale of Jay was even public.

I think you are correct. I bet there are about 4 or 5 top players that probably have already been approached. Either they are not interested or waiting for a fire sale price.
Just my 2 cents. Not sure what is going to happen to Burke.

 

[Tricia]

No, The Hermitage Club is a mess of its own. No connection to Jay.
Jay was connected to Burke Mt but looks like they have spit the two apart.

Its really hard to keep track of all these chess pieces.

 

[Crank]

Can't say I love Jay Peak's current management. Place has increased rooms and amenities added a skating rink, pool, parking garage, golf course... no new lifts or terrain in a long, long time...just more people. Do you really think they added 10 jobs for every 500K of foreign investment? I don't really care about that but that is what the EB-5 program dictates. Whatever happened to the West Bowl expansion that was on the drawing board a decade or so back? That I care about.

 

[LKLA]

Can't say I love Jay Peak's current management. Place has increased rooms and amenities added a skating rink, pool, parking garage, golf course... no new lifts or terrain in a long, long time...just more people. Do you really think they added 10 jobs for every 500K of foreign investment? I don't really care about that but that is what the EB-5 program dictates. Whatever happened to the West Bowl expansion that was on the drawing board a decade or so back? That I care about.

EB-5 projects typically use economic models to estimate job creation. Without going into detail here, the EB-5 program looks at direct, indirect and induced jobs created across the entire project. In a nutshell that means folks at a factory where the building beams are made, construction workers on the site and even folks working at nearby businesses. It is more of how many people does the project have a significant impact on than how many people will the project create full time on site jobs for.

Given Jay's location/realities I think they needed to expand beyond skiing in order to make it viable. Not my cup of tea either, but you and I are looking at it from a different perspective.

I think folks will be surprised with the outcome of the sale

 

[Crank]

EB-5 projects typically use economic models to estimate job creation. Without going into detail here, the EB-5 program looks at direct, indirect and induced jobs created across the entire project. In a nutshell that means folks at a factory where the building beams are made, construction workers on the site and even folks working at nearby businesses. It is more of how many people does the project have a significant impact on than how many people will the project create full time on site jobs for.

Given Jay's location/realities I think they needed to expand beyond skiing in order to make it viable. Not my cup of tea either, but you and I are looking at it from a different perspective.

I think folks will be surprised with the outcome of the sale

Pretty sure it's 10 sustainable jobs per 500K.

Did they end up settling with Quiros?

 

[LKLA]

Pretty sure it's 10 sustainable jobs per 500K.

Did they end up settling with Quiros?

Yes, it is 10 jobs per investor - that the project has led, or will lead to 10 full-time employment opportunities - but that was not the point. It was what defines or qualifies as such, right? That’s a much longer discussion.

 

[Erik Timmerman]

Pretty sure it's 10 sustainable jobs per 500K.

Did they end up settling with Quiros?

They did settle, which is pretty disappointing. Guy stole $50 million and doesn't go to jail?

 

[LKLA]

They did settle, which is pretty disappointing. Guy stole $50 million and doesn't go to jail?

The settlement only covers civil charges brought on by the federal government whose main focus was to recover as much of the money as possible for the investors, including paving the way for a sale (which the SEC valued at $42 million). The U.S. Attorney’s Office is conducting a separate criminal investigation that is still very much ongoing. Vermont has sued Quiros and is not willing to settle the case. This is far from settled.

 

[Wilhelmson]

Proportionally compared to Vail, Boyne could take on some more debt.

 

[LKLA]

Proportionally compared to Vail, Boyne could take on some more debt.

Not really.

Vail is public and has very little debt. It could easily tap the public debt markets and/or issue equity - on top of drawing down its credit facilities/lines and come up with A LOT of money. Boyne not so much. They just issued $400 million of debt at a rate of 7.25% due in 2025 to buy the seven resorts and refinance high interest debt. Either one could afford it though (likely not selling for much more than $50M).

If either is interested in Jay Peak is another conversation all together.

 

[Kneale Brownson]

I could see it as a Boyne acquisition, especially with the water park.

Vail is more interested in either destination resorts on properties close to large population centers that can attract lots of skiers for their destination resorts.

 

[Wilhelmson]

That's what I was thinking, beef up their offerings in the northeast to be a real contender against the big two. Of course Alterra could use another premier location in the northeast too, thought the only real crown jewels within reasonable driving distance from population centers.are Killington, Sunday River, and to a lesser extent Sugarbush.

 

[TheArchitect]

That's what I was thinking, beef up their offerings in the northeast to be a real contender against the big two. Of course Alterra could use another premier location in the northeast too, thought the only real crown jewels within reasonable driving distance from population centers.are Killington, Sunday River, and to a lesser extent Sugarbush.

You're forgetting our friends to the north in Montreal. Jay is the first stop for them.

 

[LKLA]

Jay is a great place from a skier's perspective but not so sure it’s a great place from an ownership perspective. Sometimes those two do not exactly line-up.

Pow chasers talk about how awesome it is, and there is good reason for their praise. But don’t understand biz side. Remote, tons of non-ski stuff, staffing issues, high maintenance capex,... Not exactly a prime deal.

 

[Erik Timmerman]

Jay is a great place from a skier's perspective but not so sure it’s a great place from an ownership perspective. Sometimes those two do not exactly line-up.

Pow chasers talk about how awesome it is, and there is good reason for their praise. But don’t understand biz side. Remote, tons of non-ski stuff, staffing issues, high maintenance capex,... Not exactly a prime deal.

Couldn't agree more. They weren't profitable even when they were stealing money. Even after the receiver took over they needed to borrow $5 million for repairs on the tram. If ski resorts typically sell for 8x EBITDA, Jay needs to be practically free. That's not going to pay back very many EB-5 holders. If you do buy it, you still have to operate the place.

 

[Wilhelmson]

Lol, if Stowe sold for $50 fat chance Jay will go for the $250 owed. Those guys are sol. It's more about who would buy for the right price. Although the receiver must be getting in some good ski runs he'll have to sell it soon.

 

[Erik Timmerman]

Lol, if Stowe sold for $50 fat chance Jay will go for the $250 owed. Those guys are sol. It's more about who would buy for the right price. Although the receiver must be getting in some good ski runs he'll have to sell it soon.

They sure are screwed, but they keep talking about paying them back.

 

[LKLA]

Lol, if Stowe sold for $50 fat chance Jay will go for the $250 owed. Those guys are sol. It's more about who would buy for the right price. Although the receiver must be getting in some good ski runs he'll have to sell it soon.

I too think that the chances of them getting $250, $200, $150 million are slim to zero.

Having said that, comparing it to Stowe is not really an apples to apples comparison. Vail "only" acquired the ski and retail assets related to the mountain operations (lift-ticket offices, retail and rental spaces, ski school,...). It did not buy the hotel (Stowe Mountain Lodge), Stowe Mountain Club, or the golf course and extensive real estate on the mountain.

By the way, based on the pre-agreement language regarding cash flow between Nov. 1 and closing, Vail actually ended up paying $41 million.

 

[Green08]

Other sale to keep in mind is Okemo and Sunapee. Something like nearly 1 million skier visits combined there and the money was far less than what one might have expected.

They will get what people will pay. But, all the remaining four or five major resort operators seem well run and somewhat sound at the moment. This has not been a time for stupid money to get thrown around. Rather, it has been disciplined management and investing.

It only makes sense for Vail or Alterra if they think it can pull skiers into trips out West. For Powdr or Boyne they would need to see some kind of untapped local profit (I don’t see it) or they are aiming to break away from Ikon partnership.

 

[James]

Other sale to keep in mind is Okemo and Sunapee. Something like nearly 1 million skier visits combined there and the money was far less than what one might have expected.

They will get what people will pay. But, all the remaining four or five major resort operators seem well run and somewhat sound at the moment. This has not been a time for stupid money to get thrown around. Rather, it has been disciplined management and investing.

It only makes sense for Vail or Alterra if they think it can pull skiers into trips out West. For Powdr or Boyne they would need to see some kind of untapped local profit (I don’t see it) or they are aiming to break away from Ikon partnership.

There were leases to pay off. Maybe that wasn't included? Don't know, what figure are we talking?