The Hospitality and Leisure Group advised the owner of an 11,000 acre luxury four season mountain retreat.
The Hospitality and Leisure Group advised the owner of an 11,000 acre luxury four season mountain retreat. The retreats’ amenities included skiing, snowboarding, 45 holes of championship golf, 40,000 square feet of combined indoor/outdoor meeting facilities, tennis, spa, multiple dining options and lodging facilities. On the heels of losing a critical operating line of credit and a poor winter season, A&M was asked to prepare and assist ownership to implement a strategy to reduce near term operating costs, position the retreat to survive through a difficult liquidity environment and devise a strategy to recapitalize the asset and attract new capital.
A&M advised the client to consider a two-phased approach to resolve the asset’s performance and liquidity issues. The first phase focused on assessing the long-term potential of the asset and its operation when reorganized and recapitalized. The tasks consisted of a review of the client’s business plan, in-depth operational diagnostic and recommendations for short term cash generation from operations, updated cash flow forecast and development of a potential Chapter 11 Bankruptcy plan. The second phase focused on leveraging the A&M network to identify sources for Debtor-In-Possession (“DIP”) financing and recapitalization outside of bankruptcy code.
The first phase resulted in:
- Short-term, immediately executable revenue enhancement initiatives and cost reductions, working closely with the resort’s executive operating staff. This effort extended the need for additional liquidity by one operating month, thereby reducing the need for external financing;
- Quantification of needed bridge financing up to $9 million to meet short term liquidity needs;
- Confirmation that Chapter 11 bankruptcy proceedings should be planned for in the event an alternative resolution approach did not surface, and;
- Identification of long range capital improvements to necessary to maintain the product at a competitive market position in the long term
The second phase resulted in:
- Implementation of Phase 1 recommendations, including the continuation of operational improvements, planning for a potential bankruptcy and the simultaneous marketing effort for both the DIP financing and the long-term equity recapitalization
The A&M Advantage
The Hospitality and Leisure Group approached this client mandate considering the options available to the owner that minimized risk and ensured the sustainability of the retreat and its stakeholders. The Hospitality and Leisure Group was prepared for the worst (bankruptcy), but never lost sight of potential positive outcomes. Approximately 90 days after A&M’s engagement in the second phase of our assignment, our professionals arranged a sale of the retreat to a well-capitalized third party. Bankruptcy was averted due to the reduction in operating costs, revenue producing enhancements, and extension of a possible negative liquidity event by 30 days. In partnership with our client, A&M implemented an ‘out of the box’ solution that satisfied the owner and its creditors and secured the future of the retreat.