Moonlight Struggles for Cash in Wake of Lehman Bankruptcy
Moonlight Basin, the new ski resort near Big Sky, is the latest high-end development to get slammed by the credit crunch. All construction has now stopped, though owner Lee Poole says everything will be fine.
By Robert Struckman, 9-24-08
Work has halted at the Moonlight Basin resort near Big Sky, Montana, after its construction funding vanished—a casualty of the bankruptcy of the Wall Street investment firm Lehman Brothers.
“Lehman Brothers has been Moonlight Basin’s banking partner for the last 13 months,” wrote Moonlight CEO Lee Poole in an emailed statement in response to questions about the development. “We are… working through the matter and expect to continue normal operations.”
Moonlight had access to about $170 million in financing through Lehman Brothers, sources said, though Poole decline to confirm the number or other details of the resort’s financial situation.
Moonlight Basin, which opened its ski mountain in 2004, has been developing a four-season resort with a Jack Nicklaus golf course and a new lodge at the base of Six Shooter Lift, as well as residential developments and villages with hotels, dining and shopping.
But new resort development projects throughout the Rocky Mountain West have been hit hard by the real estate bust and the associated credit crunch, with Tamarack Resort in Idaho falling into bankruptcy and the high-end Yellowstone Club, also near Big Sky, struggling to sort out numerous financial problems. Resort development requires lots of capital and lots of eager buyers of expensive second homes—both of which are now in short supply.
About a year ago, a Moonlight spokesman spoke about its expansion with an air of inevitability: “It’s going to happen no matter what. The question is how quickly,” said Russ McElyea, who went on to tell NewWest.Net that the build-out would “move as quickly as possible.”
Moonlight Basin officials have given mixed signals at times. Last December, a spokesman announced that the resort was for sale. A month earlier, the resort had sent out a press release to advertise its search for equity partners - hardly a routine way for a resort to find funding.
Construction sources confirmed the sense of urgency at the development, saying work has been practically pell-mell this summer and fall, even as projects across the region have slowed down and, in some cases, been scrapped altogether, or at least put on ice.
Then came the news 10 days ago of the Lehman Brothers failure. The money stopped coming, and all work was halted. Since then, three liens—totaling almost $200,000—have been filed against the resort.
“We expect all this stuff to work itself out. I expect this to be a little hiccup, and things will get back to normal,” said Rick Hueser, general manager of Williams Plumbing and Heating of Bozeman, which filed two of the liens. “We have a great relationship with the people at Moonlight on the construction side.”
As for ongoing operations at the resort, Poole would only say, “We are looking forward to a great 2008-2009 ski season.”
About the liens, Poole wrote, “We are working on plans to complete current construction projects, and make sure all contractors are paid.”
On the subject of resuming construction, he added, “We are working with several potential capital partners to complete a deal for sale of a partial equity position in our company.”
____________________________________________________________________________
Moonlight CEO denies rumors of bankruptcy
By DANIEL PERSON Chronicle Staff Writer
The CEO of Moonlight Basin Ranch Friday batted back rumors of bankruptcy and frozen credit swirling since the ski resort’s announcement of layoffs this week, and he vowed that lifts would be running come ski season.
“We are going to be open Dec. 12. That’s a fact,” Lee Poole said Friday in an interview with the Chronicle.
Earlier this week, Poole announced that an unspecified number of workers would be laid off, citing the collapse of its lender Lehman Brothers. In the written announcement, Poole said the layoffs would be temporary, though he gave no intention of when the workers would be hired back.
The release said Moonlight was “pursing a number of options to obtain alternative financing and to replace Lehman as its primary lender.”
On Friday, Poole said, “We expect to have good news to announce in the close term.”
“We believe we will have a deal struck very soon,” he said.
Poole also said he was confident Moonlight would return to normal operations, thanks to funds that were housed in Lehman Brothers being freed up and a partnership coming “in the very near future.”
Poole declined to be more specific. He continued to decline to say how many workers were laid off this week.
Russ McElyea of Moonlight Basin said Friday that reports of Moonlight’s financial situation have been exaggerated, namely that the company was pursuing bankruptcy and that its line of credit was frozen.
“We have no plans” to file bankruptcy, McElyea said. “We can shoot that rumor down in a heartbeat.”
McElyea, who compared the collapse of Lehman Brothers to “a nuke going off on Wall Street,” said the collapse did not cause Moonlight’s credit be frozen, but did put the company into “capital conservation mode.”
Again without specifics, McElyea said Moonlight’s pursuit of financing is helped by being “in a good position of equity” in an active equity market.
Poole painted the collapse of Lehman Brothers as an unexpected and unprecedented event.
“In my lifetime, I’ve never seen a bank just disappear,” he said.
Daniel Person can be reached at dperson@dailychronicle.com or 582-2665.
1992: Lee Poole, Joe Vujovich and Keith Brown buy 25,000 acres in the Jack Creek drainage from Plum Creek Timber Co. for $6.5 million for real estate. They close on the deal the same day Tim Blixseth buys the land from Plum Creek that would become the Yellowstone Club.
Feb. 2003: Poole and Vujovich announce they intend to build a ski resort on their land. “We’re bucking a national trend,” Vujovich says about the resort, given fears about dwindling snowfall and aging baby-boomers in the United States. The cost of the project is put at $5 million.
Sept. 2003: Lifts begin going in at Moonlight Basin. The lifts cost $4 million. The lifts open up 1,500 acres of skiable terrain. Real estate development continues, with “ski-in, ski-out” houses fetching top dollar. By 2007, a 20-acre parcel at Moonlight Basin is offered for $3 million.
Dec. 2007: Having bought out his partners, Poole tells the Chronicle he is actively trying to sell all or part of Moonlight Basin Ranch. His reason is to raise more capital and accelerate development on the property. He told the paper he wanted construction to be complete in five years. The resort’s master plan calls for 1,250 new homes, a five-star hotel, new ski lifts, completion of a Jack Nicklaus golf course and high-quality housing for many of the 1,200 employees the resort will need.
May 2008: Poole says the resort laid off 10 percent more people than usual at the end of the ski season, citing a soft real estate market. A total of 28 full-time and part-time people lose their jobs.
Sept. 2008: Poole announces construction at Moonlight Basin Ranch has stalled, citing the bankruptcy of its main lender, Lehman Brothers. Lehman Brothers went under in mid-September and was seen as a harbinger for financial trouble caused by a high rate of default mortgages that helped fuel the real estate boom across the country. Three liens are filed against Moonlight Basin, amounting to about $195,000.
Oct. 8, 2008: Moonlight Basin announces it is laying off workers, again citing the loss of financing from Lehman Brothers. The company does not specify how many people it is laying off. It calls the layoffs “temporary,” but does not specify when it expects to rehire the workers.
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Moonlight Struggles for Cash in Wake of Lehman Bankruptcy
Started by Peter, Oct 14 2008 07:17 AM
14 replies to this topic
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Posted 14 October 2008 - 07:41 AM
From what I've heard from Moonlight Employees is that the owner is quite wealthy so I'm sure he could always use his own personal funds to finish the ski resort if he desired.
Does anyone know who is responsible for collecting Moonlight Basin's account payable (debt) now?
Does anyone know who is responsible for collecting Moonlight Basin's account payable (debt) now?
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Posted 31 July 2009 - 03:34 PM
According to a poster on the TGR forums, Barclay's PLC has forclosed on Moonlight Basin and Lee Poole is no longer the owner.
http://www.tetongrav...ad.php?t=164648
http://www.tetongrav...ad.php?t=164648
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Posted 02 August 2009 - 08:31 PM
From the same TGR thread, posted tonight:
Just saw a letter tonight sent from Lee to all MLB homeowners, dated 7/28 that says "Although we continue toward securing our equity partnership, Lehman has informed me that their board has made the decision to begin foreclosure proceedings. This process is a legal transfer of ownership in which Lehman will become the owner of Moonlight Basin.....It is Lehman's intention to continue summer and winter operations at the resort.
Quote
Just saw a letter tonight sent from Lee to all MLB homeowners, dated 7/28 that says "Although we continue toward securing our equity partnership, Lehman has informed me that their board has made the decision to begin foreclosure proceedings. This process is a legal transfer of ownership in which Lehman will become the owner of Moonlight Basin.....It is Lehman's intention to continue summer and winter operations at the resort.
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Posted 05 August 2009 - 11:24 PM
Moonlight Basin Faces Foreclosure by Lender
The five-year-old Montana resort faces an uncertain future as it struggles with massive debt and a moribund real estate market.
By Jonathan Weber , 8-05-09
Moonlight Basin, the ski-and-golf resort and real estate development near Big Sky, is facing foreclosure by its major lender, Lehman Bros., according to numerous sources with knowledge of the situation. A letter from Moonlight founder and owner Lee Poole to resort property owners said Lehman had “made the decision to begin foreclosure proceedings,” though the Madison County court clerk said no foreclosure notice had yet been received.
The letter said “It is Lehman’s intention to continue summer and winter operations at the resort.” A spokeswoman for Lehman Bros., which is in bankruptcy but continues to operate as it unwinds its many businesses, declined to comment.
Moonlight borrowed about $170 million from Lehman Bros. in 2007, and the funds were used to buy out Poole’s two partners and continue construction at the property. The investment bank collapsed last fall, and at around the same time Moonlight began to experience a severe cash squeeze due to the collapse of real estate sales. The resort did open for ski operations last winter, and the first nine holes of the spectacular Jack Nicklaus golf course have been completed. But it’s been clear since the fall that Moonlight would not be able to continue to operate without a sale or a major cash infusion.
Moonlight’s troubles are mirrored at high-end resorts across the West, including Tamarack in Idaho, which is now shut down, and the Yellowstone Club in Big Sky, which recently emerged from bankruptcy. The market for expensive vacation properties has all but collapsed over the past 18 months and there are no signs yet of any revival.
Moonlight opened in 2004, and features spectacular expert skiing on one face of Lone Peak and a relatively conservation-minded approach to development. The property borders magnificent backcountry near the Lee Metcalf wildnerness. Like all new ski resorts, the business model was based on the sale of real estate, and hundreds of houses and condos have been built. While the soaring main lodge and restaurant and many of the ski lifts are in place, other key pieces of infrastructure, including the main base lodge of the ski hill and additional lifts, are not yet built.
Poole, a one-time ranch hand from Ennis, and other executives have been aggressively shopping Moonlight for the past year, and Lehman has continued to provide some funding to keep the resort going. It’s not clear what triggered the decision to pursue foreclosure. Nor is it clear exactly what will happen from here; a bankruptcy filing could be a part of the restructuring.
In a foresclosure, a lender takes possession of the property in lieu of repayment of a loan, though if the property is worth less than the loan it can also pursue collection of the difference. In many loans of this type there is also a personal guarantee, and if that were the case at Moonlight, Lehman could potentially pursue Poole’s personal assets.
Lehman, as the new owner of the property, would likely bring in an operating company to run the recreation activities, or could partner with neighboring Big Sky Resort for the skiing and manage the real estate separately. Moonlight has an agreement with Big Sky enabling skiers to use both areas on one ticket, and the two resorts have been promoting the combination as “The Biggest Skiing in America.” But that agreement expires after next year.
Employees were told in a meeting last week that Lehman intended to keep the team in place, though they might be fired and and then rehired, sources said.
In the letter to homeowners, Poole said Lehman had recently “green lighted and funded several projects at the resort in preparation for this coming winter and next summer season and our team is hard at work on these projects.”
The five-year-old Montana resort faces an uncertain future as it struggles with massive debt and a moribund real estate market.
By Jonathan Weber , 8-05-09
Moonlight Basin, the ski-and-golf resort and real estate development near Big Sky, is facing foreclosure by its major lender, Lehman Bros., according to numerous sources with knowledge of the situation. A letter from Moonlight founder and owner Lee Poole to resort property owners said Lehman had “made the decision to begin foreclosure proceedings,” though the Madison County court clerk said no foreclosure notice had yet been received.
The letter said “It is Lehman’s intention to continue summer and winter operations at the resort.” A spokeswoman for Lehman Bros., which is in bankruptcy but continues to operate as it unwinds its many businesses, declined to comment.
Moonlight borrowed about $170 million from Lehman Bros. in 2007, and the funds were used to buy out Poole’s two partners and continue construction at the property. The investment bank collapsed last fall, and at around the same time Moonlight began to experience a severe cash squeeze due to the collapse of real estate sales. The resort did open for ski operations last winter, and the first nine holes of the spectacular Jack Nicklaus golf course have been completed. But it’s been clear since the fall that Moonlight would not be able to continue to operate without a sale or a major cash infusion.
Moonlight’s troubles are mirrored at high-end resorts across the West, including Tamarack in Idaho, which is now shut down, and the Yellowstone Club in Big Sky, which recently emerged from bankruptcy. The market for expensive vacation properties has all but collapsed over the past 18 months and there are no signs yet of any revival.
Moonlight opened in 2004, and features spectacular expert skiing on one face of Lone Peak and a relatively conservation-minded approach to development. The property borders magnificent backcountry near the Lee Metcalf wildnerness. Like all new ski resorts, the business model was based on the sale of real estate, and hundreds of houses and condos have been built. While the soaring main lodge and restaurant and many of the ski lifts are in place, other key pieces of infrastructure, including the main base lodge of the ski hill and additional lifts, are not yet built.
Poole, a one-time ranch hand from Ennis, and other executives have been aggressively shopping Moonlight for the past year, and Lehman has continued to provide some funding to keep the resort going. It’s not clear what triggered the decision to pursue foreclosure. Nor is it clear exactly what will happen from here; a bankruptcy filing could be a part of the restructuring.
In a foresclosure, a lender takes possession of the property in lieu of repayment of a loan, though if the property is worth less than the loan it can also pursue collection of the difference. In many loans of this type there is also a personal guarantee, and if that were the case at Moonlight, Lehman could potentially pursue Poole’s personal assets.
Lehman, as the new owner of the property, would likely bring in an operating company to run the recreation activities, or could partner with neighboring Big Sky Resort for the skiing and manage the real estate separately. Moonlight has an agreement with Big Sky enabling skiers to use both areas on one ticket, and the two resorts have been promoting the combination as “The Biggest Skiing in America.” But that agreement expires after next year.
Employees were told in a meeting last week that Lehman intended to keep the team in place, though they might be fired and and then rehired, sources said.
In the letter to homeowners, Poole said Lehman had recently “green lighted and funded several projects at the resort in preparation for this coming winter and next summer season and our team is hard at work on these projects.”
- Peter<br />
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Posted 14 September 2009 - 07:05 PM
From someone posting as a Moonlight Basin employee on the TGR forums:
Quote
Today Lehman Bros. filed a foreclosure motion against Moonlight Basin. This has been pending for about 45 days so, nothing much new.
As soon as there is some hard information to pass along I will do so.
Otherwise, we are still going forward with plans to ski this winter and operate as normal as ever.
As soon as there is some hard information to pass along I will do so.
Otherwise, we are still going forward with plans to ski this winter and operate as normal as ever.
- Peter<br />
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Posted 15 September 2009 - 06:44 AM
Foreclosure comes to Moonlight
published on Monday, September 14, 2009 9:43 PM MDT
By DANIEL PERSON Bozeman Chronicle Staff Writer
Two years after Moonlight Basin borrowed $100 million from Lehman Brothers Commercial Bank, the New York investment firm has moved to foreclose on the ski mountain and real estate development.
ERIK PETERSEN/CHRONICLE Skiers ride a lift at Moonlight Basin last season. Lehman Brothers Commercial Bank has moved to foreclose on the ski mountain and real estate development. In court papers filed Sept. 10, Lehman Brothers claims the resort owes the bank $86.9 million, including more than $78 million of the original loan and about $8.3 million in interest.
The action was expected. Moonlight CEO Lee Poole sent a letter to homeowners in the ski and golf community in late July informing them that Lehman Brothers had decided to begin foreclosure proceedings.
In foreclosure complaint filed in Madison County, Lehman asks Moonlight Basin be put up for sale in order to recoup its loan, but also asks it be allowed to bid on property. The resort covers 7,800 acres in the Madison Mountains, including the north face of Lone Peak.
Representatives of Moonlight Basin, who informed the Chronicle that the foreclosure papers had been served, declined to comment on Lehman’s action, but reiterated that lifts should be turning this winter.
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* Skiers began hitting the slopes in Moonlight Basin, which shares a mountain with Big Sky and the Yellowstone Club, in 2003.
According to the court documents, Moonlight Basin put up its lodge, spa, Jack Nicklaus golf course and several entities up as collateral for the $100 million loan. Payments of the loan were supposed to begin in March 2008, according to the documents filed by Lehman Brothers, but that deadline was extended to Sept. 7, 2008 n exactly a year after the loan was made.
Shortly after that date came and went, Lehman Brothers faced its own financial trouble, filing for bankruptcy. As a result, according to Poole, cash flow at the resort was squelched and construction came to a halt.
Lehman Brothers restructured, and by November work had resumed at Moonlight Basin. But court documents claim the resort and its lender still had major differences. The bank claims it sent Moonlight a letter in December 2008 demanding all unpaid principal and interest, and over the next “several months” Lehman and Moonlight entered “workout negotiations.”
A temporary fix was hammered out in June 19 with a forbearance agreement, a financial tool that grants delinquent borrowers time to round up payments. But that fix ended on July 19, and a Lehman Brothers moved to foreclose a short time later.
In the filings, Lehman Brothers requests that the court give it priority over other companies with liens against Moonlight Basin, including several local companies that hold liens against Moonlight Basin. Specifically named in the papers are Williams Plumbing and Heating, which the court paper says holds liens of totaling more than $100,000 against Moonlight; Sime Construction of Billings, which filed several liens against Moonlight including a $386,979 lien filed in December 2008; and several others.
Billings lawyer Doug James, named as an attorney for Lehman Brothers, did not return a phone call Monday. It is unclear who will end up with ownership of the resort. The foreclosure papers ask the courts to put all the property involved up for sale, but requests that Lehman is allowed to purchase it.
published on Monday, September 14, 2009 9:43 PM MDT
By DANIEL PERSON Bozeman Chronicle Staff Writer
Two years after Moonlight Basin borrowed $100 million from Lehman Brothers Commercial Bank, the New York investment firm has moved to foreclose on the ski mountain and real estate development.
ERIK PETERSEN/CHRONICLE Skiers ride a lift at Moonlight Basin last season. Lehman Brothers Commercial Bank has moved to foreclose on the ski mountain and real estate development. In court papers filed Sept. 10, Lehman Brothers claims the resort owes the bank $86.9 million, including more than $78 million of the original loan and about $8.3 million in interest.
The action was expected. Moonlight CEO Lee Poole sent a letter to homeowners in the ski and golf community in late July informing them that Lehman Brothers had decided to begin foreclosure proceedings.
In foreclosure complaint filed in Madison County, Lehman asks Moonlight Basin be put up for sale in order to recoup its loan, but also asks it be allowed to bid on property. The resort covers 7,800 acres in the Madison Mountains, including the north face of Lone Peak.
Representatives of Moonlight Basin, who informed the Chronicle that the foreclosure papers had been served, declined to comment on Lehman’s action, but reiterated that lifts should be turning this winter.
Advertisement
* Skiers began hitting the slopes in Moonlight Basin, which shares a mountain with Big Sky and the Yellowstone Club, in 2003.
According to the court documents, Moonlight Basin put up its lodge, spa, Jack Nicklaus golf course and several entities up as collateral for the $100 million loan. Payments of the loan were supposed to begin in March 2008, according to the documents filed by Lehman Brothers, but that deadline was extended to Sept. 7, 2008 n exactly a year after the loan was made.
Shortly after that date came and went, Lehman Brothers faced its own financial trouble, filing for bankruptcy. As a result, according to Poole, cash flow at the resort was squelched and construction came to a halt.
Lehman Brothers restructured, and by November work had resumed at Moonlight Basin. But court documents claim the resort and its lender still had major differences. The bank claims it sent Moonlight a letter in December 2008 demanding all unpaid principal and interest, and over the next “several months” Lehman and Moonlight entered “workout negotiations.”
A temporary fix was hammered out in June 19 with a forbearance agreement, a financial tool that grants delinquent borrowers time to round up payments. But that fix ended on July 19, and a Lehman Brothers moved to foreclose a short time later.
In the filings, Lehman Brothers requests that the court give it priority over other companies with liens against Moonlight Basin, including several local companies that hold liens against Moonlight Basin. Specifically named in the papers are Williams Plumbing and Heating, which the court paper says holds liens of totaling more than $100,000 against Moonlight; Sime Construction of Billings, which filed several liens against Moonlight including a $386,979 lien filed in December 2008; and several others.
Billings lawyer Doug James, named as an attorney for Lehman Brothers, did not return a phone call Monday. It is unclear who will end up with ownership of the resort. The foreclosure papers ask the courts to put all the property involved up for sale, but requests that Lehman is allowed to purchase it.
- Peter<br />
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Posted 25 September 2009 - 08:29 PM
"...During the process of discussing the issue of the Association submitting an Affidavit to support the request for a Receiver, Lehman committed to the Association that it "expects to make additional reasonable protective advances to enable the Receiver to take possession and to operate the Resort and to continue the provision of essential services to homeowners, such as those represented by the Association, that rely upon the Mortgaged Property for services such as water, sewer and snow plowing." This commitment by Lehman has also been included in the body of the Affidavit that was prepared. Thus, Lehman has represented to the Association and intends to represent to the Court that if a Receiver is appointed, it will operate the Resort this season and will provide funding for provision of essential services to the members of the Association (and other homeowners in Moonlight Basin)."
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Posted 19 November 2009 - 10:05 AM
Moonlight Basin Files for Bankruptcy Protection
By Jonathan Weber , 11-19-09
Moonlight Basin, a new ski and golf resort in Big Sky, Montana that just a few years ago was one of the hottest properties around, filed for Chapter 11 bankruptcy protection on Wednesday in its latest effort to avoid a shut-down of the property.
In the bankruptcy filing, Moonlight seeks permission to obtain $21 million in interim financing from Trilogy Capital, a Connecticut based hedge fund, which would enable Moonlight to remain open and have a ski season as planned. The Moonlight filing clearly indicates that if that funding deal is not approved, the resort will close, perhaps within the week. A court hearing is scheduled for Nov. 24.
Lehman Bros. is likely to oppose the new financing, since it comes with onerous conditions and would be paid back before Lehman or any other creditor received any money. In the foreclosure proceeding, which will be put on hold by the bankruptcy case, Lehman is attempting to take control of the property, presumably for a sale down the road when market conditions improve.
Moonlight, which opened in 2004, is set in spectacular terrain on the west side of Lone Peak, which it shares with Big Sky Resort. While there was conflict in the early days, the two resorts of late have been marketing a joint lift ticket under the tagline “The Biggest Skiing in America.” Moonlight also has a half-finished Jack Nicklaus golf course, and an extensive real estate development business that includes high-end homes, condos and cabins. It employs about 250 people.
In a press release, Moonlight owner Lee Poole said: “With this filing, we can assure everyone - ouor customers, hoeownbers, suppliers, employees and our communities - that Moonlight Basin intends to be open for business as usual.” The opening is currently scheudled for Dec. 12.
By Jonathan Weber , 11-19-09
Moonlight Basin, a new ski and golf resort in Big Sky, Montana that just a few years ago was one of the hottest properties around, filed for Chapter 11 bankruptcy protection on Wednesday in its latest effort to avoid a shut-down of the property.
In the bankruptcy filing, Moonlight seeks permission to obtain $21 million in interim financing from Trilogy Capital, a Connecticut based hedge fund, which would enable Moonlight to remain open and have a ski season as planned. The Moonlight filing clearly indicates that if that funding deal is not approved, the resort will close, perhaps within the week. A court hearing is scheduled for Nov. 24.
Lehman Bros. is likely to oppose the new financing, since it comes with onerous conditions and would be paid back before Lehman or any other creditor received any money. In the foreclosure proceeding, which will be put on hold by the bankruptcy case, Lehman is attempting to take control of the property, presumably for a sale down the road when market conditions improve.
Moonlight, which opened in 2004, is set in spectacular terrain on the west side of Lone Peak, which it shares with Big Sky Resort. While there was conflict in the early days, the two resorts of late have been marketing a joint lift ticket under the tagline “The Biggest Skiing in America.” Moonlight also has a half-finished Jack Nicklaus golf course, and an extensive real estate development business that includes high-end homes, condos and cabins. It employs about 250 people.
In a press release, Moonlight owner Lee Poole said: “With this filing, we can assure everyone - ouor customers, hoeownbers, suppliers, employees and our communities - that Moonlight Basin intends to be open for business as usual.” The opening is currently scheudled for Dec. 12.
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Posted 20 November 2009 - 01:17 PM
Bankruptcy papers show big trouble at Moonlight Basin
Friday, November 20, 2009
Bozeman Daily Chronicle
published on Thursday, November 19, 2009 9:25 PM MST
By DANIEL PERSON Chronicle Staff Writer
Bankruptcy papers filed by Moonlight Basin Wednesday afternoon paint a dire financial portrait of Montana’s newest ski resort.
By Moonlight’s own reckoning, it is losing more than $1.5 million a month. Its earnings aren’t enough to cover a $643,000 payroll, $14,000 in utility bills, $200,000 in professional fees and the remainder of its $2.7 million monthly expenses.
Local contractors’ liens against the company top $800,000. That’s dwarfed by $93 million owed to Lehman Brothers, the Manhattan, N.Y., bank that lent Moonlight $100 million in 2007.
In light of these woes, Chapter 11 bankruptcy was the resort’s best bet as it prepared to open for its seventh ski season, Moonlight owner Lee Poole told the Chronicle Thursday.
“It gives us time to collect our thoughts and put our business plan together. It’s our right and we took advantage of it,” Poole said in a phone interview about the company’s decision to file for bankruptcy protection.
The company filed the papers less than 24 hours before the company was due in court for a hearing in Virginia City to determine whether Lehman Brothers should get control of the resort.
The hearing was called off because of the bankruptcy filing, which prohibits those who are owed by Moonlight from repossessing property or taking other steps to recoup debts.
But Lehman Brothers and other creditors are still very much in the picture and Moonlight Basin is likely to go further into debt in order to get up and running this ski season.
In papers filed in bankruptcy court, Moonlight Basin asked the court for permission to take $21 million in financing from a Connecticut-based hedge fund. But, as in all bankruptcy proceedings, businesses owed money will have a seat in the courtroom when those decisions are made. While some debts may be forgiven, Moonlight’s new business plan must be approved by both the judge and a majority of its creditors.
And the so-called “secured creditors” like Lehman Brothers -- lenders that required collateral be put up in exchange for financing -- can be especially resilient in bankruptcy proceedings, Bozeman bankruptcy lawyer Stuart Whitehair said Thursday.
“Either the secured creditor is going to get paid or get the collateral,” he said.
The collateral, in this case, is the resort.
Lehman Brothers had been pushing for Douglas Wilson to be put in charge of Moonlight Basin, which Lehman said it intended to keep running this winter. Wilson has taken over other troubled resorts, most notably Tamarack Resort in Idaho.
Moonlight was preparing to argue in court that current managers should remain in charge, saying that the resort only took the massive loan under the promise that Lehman would either find a buyer for the resort or provide it long-term financing. Lehman did neither, Moonlight said in court papers filed in Madison County.
Poole said Thursday Moonlight is still confident in that stance, but maintained that bankruptcy was the best course for the resort, which employs 250 seasonal and year-round employees.
“It helps protect a lot of jobs,” he said.
The resort’s ski season is scheduled to begin Dec. 12.
Friday, November 20, 2009
Bozeman Daily Chronicle
published on Thursday, November 19, 2009 9:25 PM MST
By DANIEL PERSON Chronicle Staff Writer
Bankruptcy papers filed by Moonlight Basin Wednesday afternoon paint a dire financial portrait of Montana’s newest ski resort.
By Moonlight’s own reckoning, it is losing more than $1.5 million a month. Its earnings aren’t enough to cover a $643,000 payroll, $14,000 in utility bills, $200,000 in professional fees and the remainder of its $2.7 million monthly expenses.
Local contractors’ liens against the company top $800,000. That’s dwarfed by $93 million owed to Lehman Brothers, the Manhattan, N.Y., bank that lent Moonlight $100 million in 2007.
In light of these woes, Chapter 11 bankruptcy was the resort’s best bet as it prepared to open for its seventh ski season, Moonlight owner Lee Poole told the Chronicle Thursday.
“It gives us time to collect our thoughts and put our business plan together. It’s our right and we took advantage of it,” Poole said in a phone interview about the company’s decision to file for bankruptcy protection.
The company filed the papers less than 24 hours before the company was due in court for a hearing in Virginia City to determine whether Lehman Brothers should get control of the resort.
The hearing was called off because of the bankruptcy filing, which prohibits those who are owed by Moonlight from repossessing property or taking other steps to recoup debts.
But Lehman Brothers and other creditors are still very much in the picture and Moonlight Basin is likely to go further into debt in order to get up and running this ski season.
In papers filed in bankruptcy court, Moonlight Basin asked the court for permission to take $21 million in financing from a Connecticut-based hedge fund. But, as in all bankruptcy proceedings, businesses owed money will have a seat in the courtroom when those decisions are made. While some debts may be forgiven, Moonlight’s new business plan must be approved by both the judge and a majority of its creditors.
And the so-called “secured creditors” like Lehman Brothers -- lenders that required collateral be put up in exchange for financing -- can be especially resilient in bankruptcy proceedings, Bozeman bankruptcy lawyer Stuart Whitehair said Thursday.
“Either the secured creditor is going to get paid or get the collateral,” he said.
The collateral, in this case, is the resort.
Lehman Brothers had been pushing for Douglas Wilson to be put in charge of Moonlight Basin, which Lehman said it intended to keep running this winter. Wilson has taken over other troubled resorts, most notably Tamarack Resort in Idaho.
Moonlight was preparing to argue in court that current managers should remain in charge, saying that the resort only took the massive loan under the promise that Lehman would either find a buyer for the resort or provide it long-term financing. Lehman did neither, Moonlight said in court papers filed in Madison County.
Poole said Thursday Moonlight is still confident in that stance, but maintained that bankruptcy was the best course for the resort, which employs 250 seasonal and year-round employees.
“It helps protect a lot of jobs,” he said.
The resort’s ski season is scheduled to begin Dec. 12.
- Peter<br />
Liftblog.com
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#12
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Posted 24 November 2009 - 01:35 PM
Great news for employees and homeowners:
Moonlight on Track for Ski Season Despite Bankruptcy
The Big Sly resort looks set to open and operate normally this season. But the long-term financing issues are anything but resolved.
By Jonathan Weber , 11-24-09
Moonlight Basin, the Big Sky resort that filed for bankruptcy protection last week, will have sufficient capital to open as scheduled on Dec. 12 and, barring extraordinary events, to operate as normal through the ski season after a U.S. Bankruptcy Court judge on Tuesday resolved some initial issues in complex case.
Lehman Bros., which loaned the resort $170 million in two related transactions in 2007, agreed to allow the resort to use a cash advance from Lehman and anticipated proceeds from a condo sale to make payroll and meet other immediate needs. Lehman’s attorney, Doug James, declared multiple times that Lehman fully intended to keep the resort open. “Lehman is committed to Moonlight,” said James, noting that the investment bank, which is itself bankrupt, had advanced Moonlight some $13 million to pay expenses since the resort defaulted on its debt last fall.
Moonlight and its owner, Lee Poole, are at odds with Lehman, and at Tuesday’s hearing sought approval for new interim funding from a Connecticut hedge fund called Trilogy Capital. But Judge Ralph B. Kirscher deferred a decision on the “emergency” funding request until Dec. 7.
Poole, who was at the hearing along with a number of Moonlight employees but did not testify, said afterwards: “We’re really pleased that we’re all moving forward to opening. Moonlight is going to move forward.”
But Poole and Moonlight management did not get what they hoped for from the hearing, which was preliminary approval of the funding from Trilogy. While Lehman is willing to continue funding the resort - and, as expected, filed a formal proposal for $23 million in so-called debtor-in-possession (DIP) financing - it wants to appoint a receiver to replace Poole.
If Moonlight’s plan for $23 million in DIP financing from Trilogy were approved, Poole and the rest of the management team would remain in place, and Moonlight would pursue litigation against Lehman for the investment bank’s alleged failure to follow through on promises of financing in 2007 - 2008. But if Lehman’s DIP loan were approved, Poole would most likely loose control of the property. A hearing - and in all likelihood a decision - on the funding options will take place Dec. 7.
Lehman in September filed a foreclosure action in state court seeking to take control of the property and appoint a receiver. That action is automatically put on hold by the bankruptcy filing.
Court documents show that Lehman had a tentative offer last January from a man named John Hudson and his firm, Preservation Capital, to buy the resort in partnership with Poole for $50 million in cash and $70 million in debt. But that deal did not close, and Hudson later reduced the offer dramatically, to $10 million to $20 million in cash and $20 million to $30 million in debt, along with some equity, according to an email filed in court by Lehman. Lehman evidently rejected that offer. Hudson could not be reached for comment Tuesday.
The original Lehman loan to Moonlight was also personally guaranteed by Poole, meaning Lehman at some point could go after his personal assets.
Moonlight has argued in state court that the Lehman loan was a bridge loan and that the bank had promised either a sale or the provision of a substantial long-term loan in short order. But with the real estate market in meltdown in the fall of 2007, and with the credit markets in meltdown soon after, neither of those things materialized. Moonlight alleges culpability on Lehman’s part for the bank’s alleged failure to keep its promises, and also says Lehman had a conflict of interest as both the investment banker looking for a sale and the bridge lender.
Moonlight attorney Andy Patten alluded to those allegations Tuesday, saying that Lehman had offered a very favorable DIP loan in order to avoid facing those issues. The Lehman DIP proposal carries a 5% interest rate and no fees. The Trilogy proposal, by contrast, has a 15% interest rate and numerous hefty fees and conditions.
In either case, the DIP loan will fund operations for a year to 18 months, during which time a buyer would presumably be sought.
For Moonlight employees and skiers and homeowners, though, the near future at least now appears assured.
Moonlight on Track for Ski Season Despite Bankruptcy
The Big Sly resort looks set to open and operate normally this season. But the long-term financing issues are anything but resolved.
By Jonathan Weber , 11-24-09
Moonlight Basin, the Big Sky resort that filed for bankruptcy protection last week, will have sufficient capital to open as scheduled on Dec. 12 and, barring extraordinary events, to operate as normal through the ski season after a U.S. Bankruptcy Court judge on Tuesday resolved some initial issues in complex case.
Lehman Bros., which loaned the resort $170 million in two related transactions in 2007, agreed to allow the resort to use a cash advance from Lehman and anticipated proceeds from a condo sale to make payroll and meet other immediate needs. Lehman’s attorney, Doug James, declared multiple times that Lehman fully intended to keep the resort open. “Lehman is committed to Moonlight,” said James, noting that the investment bank, which is itself bankrupt, had advanced Moonlight some $13 million to pay expenses since the resort defaulted on its debt last fall.
Moonlight and its owner, Lee Poole, are at odds with Lehman, and at Tuesday’s hearing sought approval for new interim funding from a Connecticut hedge fund called Trilogy Capital. But Judge Ralph B. Kirscher deferred a decision on the “emergency” funding request until Dec. 7.
Poole, who was at the hearing along with a number of Moonlight employees but did not testify, said afterwards: “We’re really pleased that we’re all moving forward to opening. Moonlight is going to move forward.”
But Poole and Moonlight management did not get what they hoped for from the hearing, which was preliminary approval of the funding from Trilogy. While Lehman is willing to continue funding the resort - and, as expected, filed a formal proposal for $23 million in so-called debtor-in-possession (DIP) financing - it wants to appoint a receiver to replace Poole.
If Moonlight’s plan for $23 million in DIP financing from Trilogy were approved, Poole and the rest of the management team would remain in place, and Moonlight would pursue litigation against Lehman for the investment bank’s alleged failure to follow through on promises of financing in 2007 - 2008. But if Lehman’s DIP loan were approved, Poole would most likely loose control of the property. A hearing - and in all likelihood a decision - on the funding options will take place Dec. 7.
Lehman in September filed a foreclosure action in state court seeking to take control of the property and appoint a receiver. That action is automatically put on hold by the bankruptcy filing.
Court documents show that Lehman had a tentative offer last January from a man named John Hudson and his firm, Preservation Capital, to buy the resort in partnership with Poole for $50 million in cash and $70 million in debt. But that deal did not close, and Hudson later reduced the offer dramatically, to $10 million to $20 million in cash and $20 million to $30 million in debt, along with some equity, according to an email filed in court by Lehman. Lehman evidently rejected that offer. Hudson could not be reached for comment Tuesday.
The original Lehman loan to Moonlight was also personally guaranteed by Poole, meaning Lehman at some point could go after his personal assets.
Moonlight has argued in state court that the Lehman loan was a bridge loan and that the bank had promised either a sale or the provision of a substantial long-term loan in short order. But with the real estate market in meltdown in the fall of 2007, and with the credit markets in meltdown soon after, neither of those things materialized. Moonlight alleges culpability on Lehman’s part for the bank’s alleged failure to keep its promises, and also says Lehman had a conflict of interest as both the investment banker looking for a sale and the bridge lender.
Moonlight attorney Andy Patten alluded to those allegations Tuesday, saying that Lehman had offered a very favorable DIP loan in order to avoid facing those issues. The Lehman DIP proposal carries a 5% interest rate and no fees. The Trilogy proposal, by contrast, has a 15% interest rate and numerous hefty fees and conditions.
In either case, the DIP loan will fund operations for a year to 18 months, during which time a buyer would presumably be sought.
For Moonlight employees and skiers and homeowners, though, the near future at least now appears assured.
- Peter<br />
Liftblog.com
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#13
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Posted 09 December 2009 - 08:18 PM
Great news!
Moonlight Basin Secures Financing for the Next Two Ski Seasons
Ennis, Montana – December 8, 2009 –
The agreement reached today and approved by the judge, provides the funding necessary to operate Moonlight Basin resort for the next two ski seasons, during which Moonlight Basin will be working closely with a newly appointed CRO (Chief Restructuring Officer), William Henrich, on a comprehensive restructuring plan. With this agreement Moonlight Basin achieved the following important goals:
1. Certainty regarding funding and operation of the resort for the next two ski seasons while our team works on a long-term restructuring plan.
2. The ability to continue litigation against Lehman.
3. Continued control of the resort operation which ensures the current management team stays in place, therefore maintaining the Montana Hospitality guests and owners of the resort have come to appreciate and rely on.
4. Moonlight bargained for and obtained significant protections for secured lien holders.
Lee Poole expressed his satisfaction with today’s outcome by saying, “We came to a mutual agreement that has the best interest of all of Moonlight Basin’s stakeholders in mind. We are grateful that the outcome of today will allow us to form a sound long term restructuring plan, have our day in court with Lehman, and most importantly, continue operations for the next two ski seasons.
We look forward to moving into the next phase of reorganization for the benefit of all of our homeowners, vendors, clients and our communities. I'm excited to get our guests out on the hill this coming Saturday to enjoy the record early season snow fall and a mid-mountain base of well over 30 inches.” Today, December 7th also marks employee orientation for all of Moonlight Basin’s seasonal team members. This Friday, December 11, Moonlight Basin will host a special opening day for Moonlight Basin and Biggest Skiing in America season pass holders only. The following day, Saturday the 12th, will be the official opening day for the public. ########
Moonlight Basin Secures Financing for the Next Two Ski Seasons
Ennis, Montana – December 8, 2009 –
The agreement reached today and approved by the judge, provides the funding necessary to operate Moonlight Basin resort for the next two ski seasons, during which Moonlight Basin will be working closely with a newly appointed CRO (Chief Restructuring Officer), William Henrich, on a comprehensive restructuring plan. With this agreement Moonlight Basin achieved the following important goals:
1. Certainty regarding funding and operation of the resort for the next two ski seasons while our team works on a long-term restructuring plan.
2. The ability to continue litigation against Lehman.
3. Continued control of the resort operation which ensures the current management team stays in place, therefore maintaining the Montana Hospitality guests and owners of the resort have come to appreciate and rely on.
4. Moonlight bargained for and obtained significant protections for secured lien holders.
Lee Poole expressed his satisfaction with today’s outcome by saying, “We came to a mutual agreement that has the best interest of all of Moonlight Basin’s stakeholders in mind. We are grateful that the outcome of today will allow us to form a sound long term restructuring plan, have our day in court with Lehman, and most importantly, continue operations for the next two ski seasons.
We look forward to moving into the next phase of reorganization for the benefit of all of our homeowners, vendors, clients and our communities. I'm excited to get our guests out on the hill this coming Saturday to enjoy the record early season snow fall and a mid-mountain base of well over 30 inches.” Today, December 7th also marks employee orientation for all of Moonlight Basin’s seasonal team members. This Friday, December 11, Moonlight Basin will host a special opening day for Moonlight Basin and Biggest Skiing in America season pass holders only. The following day, Saturday the 12th, will be the official opening day for the public. ########
- Peter<br />
Liftblog.com
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#14
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Bald Eagle Lifts: Defying Gravity
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Posted 09 December 2009 - 10:47 PM
Great to hear that Moonlight is going to be operating for at least the near future, great news for skiers of course, but even better news for the employees of Moonlight. Here's hoping they have an incredible season full of snow and people and hopefully get on better financial footing. It's always good for the industry to have the members of it in good financial shape.
#15
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Posted 25 July 2011 - 07:46 PM
Quote
Lehman Brothers to Takeover Moonlight
By DANIEL PERSON, Bozeman Chronicle Staff Writer
Manhattan investment bank Lehman Brothers will take ownership of Moonlight Basin under a plan the bank and the resort submitted Friday to U.S. bankruptcy court.
The settlement comes after years of court battles between Lehman and Moonlight over a $100 million loan that came due in 2009. While it was agreed that most of the loan wasn't repaid, Moonlight management contended that the resort took the loan with the promise that Lehman would either sell the resort within three months or provide the resort with long-term financing.
In the settlement submitted to U.S. Judge Ralph Kirscher, Moonlight's claims have been dropped. Under the proposed plan, Lehman will supply funds sufficient to satisfy in full the claims of Moonlight Basin's administrative creditors and provide a recovery for Moonlight Basin's unsecured creditors.
Officials with both Lehman and Moonlight said in the press release that the settlement ensures that Moonlight will stay open in the long term.
"This agreement further ensures Moonlight will remain financially stable with continued long-term operations," Moonlight Chief Operating Officer Russ McElyea said in the press release. "Our summer and winter programs will continue to deliver outstanding experiences for our guests. Moonlight Basin is an integral part of the Big Sky Community, and this agreement will deliver a positive outcome for our employees, vendors, guests and for the community as a whole."
Moonlight Basin is a resort and real estate development in the Lone Peak area with 1,900 skiable acres. It also boasts a Jack Nicklaus-designed golf course and a full-service spa.
By DANIEL PERSON, Bozeman Chronicle Staff Writer
Manhattan investment bank Lehman Brothers will take ownership of Moonlight Basin under a plan the bank and the resort submitted Friday to U.S. bankruptcy court.
The settlement comes after years of court battles between Lehman and Moonlight over a $100 million loan that came due in 2009. While it was agreed that most of the loan wasn't repaid, Moonlight management contended that the resort took the loan with the promise that Lehman would either sell the resort within three months or provide the resort with long-term financing.
In the settlement submitted to U.S. Judge Ralph Kirscher, Moonlight's claims have been dropped. Under the proposed plan, Lehman will supply funds sufficient to satisfy in full the claims of Moonlight Basin's administrative creditors and provide a recovery for Moonlight Basin's unsecured creditors.
Officials with both Lehman and Moonlight said in the press release that the settlement ensures that Moonlight will stay open in the long term.
"This agreement further ensures Moonlight will remain financially stable with continued long-term operations," Moonlight Chief Operating Officer Russ McElyea said in the press release. "Our summer and winter programs will continue to deliver outstanding experiences for our guests. Moonlight Basin is an integral part of the Big Sky Community, and this agreement will deliver a positive outcome for our employees, vendors, guests and for the community as a whole."
Moonlight Basin is a resort and real estate development in the Lone Peak area with 1,900 skiable acres. It also boasts a Jack Nicklaus-designed golf course and a full-service spa.
- Peter<br />
Liftblog.com
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