Resort Bankruptcy
Moonlight on Track for Ski Season Despite Bankruptcy
The Big Sky 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.
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PS I heard that coffee plantations and private islands are all the rage now--does anybody know where I can buy one for cheap?
At least be informed, otherwise some might take you for a fool.
I happen to think Montana could do better if it diversified away from real estate development.
Yes, I am a fool alright. I have no debt, a stable and successful business, and haven't hitched my future to an unsustainable enterprise like MLB. Yup, I'm a complete dumb ass.
1st thing you should do is use spell check, or read what you have written before submitting.
2nd I believe that Juancho has a good point even if he "seems to be pulling numbers from thin air." The debt is there, MT has its small little security blanket of false hope. There are too many people believing that 'if it has a huge price tag' that it will be 'greener on the other side...their side'
The debt will not go away. Jobs are scarce. The ignorant are sucking their thumbs under the security blanket that has been bottle fed to them.
I do not need to see "true" numbers to get the point that there are many people in MT holding tight to this security blanket hoping it will all go away on its own.
Moonlight Basin and Lehman go back to court on 12/7 to begin working out the details. At that time we will all have a look at the actual numbers.
I am content to wait for the facts, but don't let that stop you from making things up, I can understand how much fun that is for you.
Write?
My guess is that you are just one of many living the "Big Sky dream" on OPM. That stands for other peoples money that you (and moonlight) borrowed and can't pay back. Its likely you have no skills, no education, and no future. Like so many, you surfed the real estate wave with nary a plan for the future. You care about Moonlight because you are somehow connected to it. Get out while you can--the party in the mountains is over.
p.s. as for the mis-spell FENSKE "write" as in right...right? :-) see below for a copy of one of your previous posts.
By fenske, 11-25-09
Well, you got one thing write. That last sentence was spot on.
Fenske: The fact is: MLB has insurmountable debts that will require the stiffing of lenders and suppliers. No need to wait for the hearing brother. LOL.
Really? As I seem to recall, the vendors at the Y/C hears were paid first and in full, that's right 100%.
But why wait for the facts and reality to emerge?
My guess is that you are just one of many living the "Big Sky dream" on OPM. That stands for other peoples money that you (and moonlight) borrowed and can't pay back.
Sorry Juan, only money I currently owe is my mortgage in Bozeman, I owe less that 50% of the note.
Its likely you have no skills, no education, and no future. Like so many, you surfed the real estate wave with nary a plan for the future.
Never been in Real Estate, but it looks like fun. Having your picture in the paper, smiling in a vacant way, getting your 6 % cut. Where do I sign up?
You care about Moonlight because you are somehow connected to it. Get out while you can--the party in the mountains is over.
I am connected by a 12" string. My seasons pass is attached to that string. I want to ski the Headwaters again this winter.
What is your stake in all this? Did you get fired from your dish washing job up in Big Sky?
Really, got a source?
http://www.newwest.net/topic/article/crossharbor_wins_battle_for_yellowstone_club/C35/L35/
2nd paragraph from above link
"The deal, which came in the wake of a disputed auction of the club late last week and was signed only minutes before today’s court hearing, calls for CrossHarbor to pay $115 million in cash and debt for the club, in addition to providing a $15 million fund for trade creditors and up to $75 million in working capital going forward. The Credit Suisse lender group, which is owed $310 million, will get a new note for $80 million and could collect additional funds from a so-called “liquidating trust” and from the sale of the Chateau de Farcheville in France.
All unsecured creditors, with the exception of some members with special claims, should get paid in full under the deal. "
Look, you have some sort of bee in your bonnet over someone or something that has to do with a business that is in trouble.
Stick to the facts and leave your personal feelings out of it.
Not ever? Ever is a very, v e r y looooooong time.
Good luck to ya.
Those poor poor banks.
Accusations have been made that Credit Suisse was found to have engaged in predatory lending practices and failure to preform due diligence. This too will be revealed eventually.
So no, I have no sympathy for a bank that is so sloppy with their money.
As for me and my selfish interests, what ever you say big boy, the Headwaters has been there for a hundred thousand winters, no matter who owns MLB I will still be able to ski there.
That really burns your a$$, doesn't it?
Haaaaaa Haaaaaa
Looks like you were all wrong.
I will make a few turns in you honor.
Call me silly but I though people loved to come to Montana for it unadulterated landscapes and tranquility not all this #$!# the rich build to ruin in. And all for a lousy dollar I might add.
Personaly montana would be alot better off and beautiful if we could just take this whole resort and the people concerned and send them all back to the ugly place they came from.
You want to make a buck - mess up your own backyard not our's.
Don't you just love all this crap rich people build, it really improves the view.
Call me silly but I though people loved to come to Montana for it unadulterated landscapes and tranquility not all this #$!# the rich build to ruin in. And all for a lousy dollar I might add.
Personaly montana would be alot better off and beautiful if we could just take this whole resort and the people concerned and send them all back to the ugly place they came from.
You want to make a buck - mess up your own backyard not our's.
You could use a spelling lesson.
These "rich people" didn't build anything. They paid Montanans good wages to build this "crap".
I have made a living building "crap" for rich people and their money spends just fine.
You could use a spelling lesson.
These "rich people" didn't build anything. They paid Montanans good wages to build this "crap".
I have made a living building "crap" for rich people and their money spends just fine.
Thanks for making my - it's all done to make a lousy dollar. Montana isn't (or wasn't) beautiful and it doesn't attract tourists for all the crap you lackies build for the rich, but for all the crap we don't or didn't build. It's the beauty and serenity that make Montana great and what attracts people. And people like you ruin it with every nail you pound and bucket of cement you dump, every tree you cut, in your lust for the almighty dollar.
You like rich people's money - go to California there's a lot more there, and leave Monatan be - what's left of her.
Feel free to correct my spelling, but I can't pay you for it, so you probably won't do it unless you can make a buck. Some people....
You want to wear a sackcloth & ashes, good for you.
I work to live here.