My Page: Jonathan Weber

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Stranded on the Ice

I was driving to work this morning and there was a bit of a hubbub at the Maclay Bridge - a fire engine and a police car, and three firemen in rescue gear at the edge of the river. I saw a dog on the ice, and my first (scary) thought was that it was waiting by the hole where its owner had fallen through. But no. The dog had simply gotten himself out onto the ice and gotten scared, and refused to move. A fire fighter, secured by a line being held by his colleagues, inched out to save the dog, which of course was scared of him too. I left before the drama was over, but I assume dog and rescuers are fine.

Bankruptcy Saga

Averting what could have been a nasty court fight, Moonlight Basin and Lehman Bros. have reached an agreement on $24 million in interim financing that will keep the bankrupt ski-and-golf resort up and running for at least the next 18 months.

Under the agreement, which was finalized following two full days of negotiations Sunday and Monday in Butte and formally approved by the U.S. Bankruptcy Court court Tuesday morning, Lehman will provide the so-called debtor-in-possession (DIP) financing on very favorable terms, and will be able to oversee budgets and spending at resort. Moonlight had initially proposed $21 million in DIP funding from Trilogy Capital, but that deal carried very steep interest and fees, and perhaps more importantly, it was still subject to due-diligence and probably could not have been done in time to meet Moonlight’s immediate cash needs.

Trouble for Max

Update, Sunday, Dec. 6: Democratic senators rallied behind Baucus over the weekend, asserting there would be “no distraction” in the healthcare debate. Republican response was relatively muted, though some called for an ethics committee investigation. Baucus told reporters he had done nothing wrong and had gone “out of my way to be on the up and up.”

In a revelation that could taint Montana’s senior Senator at a pivotal moment in his long career, Senator Max Baucus’ office disclosed late Friday that he had recommended long-time staffer and recent girlfriend Melodee Hanes for the job of U.S. Attorney for Montana. She later withdrew from consideration because the two had decided to move in together in Washington.

Hanes and Baucus both recently divorced their spouses. The statement from Baucus spokesman Ty Matsdorf said “in no way was their relationship the cause of their respective divorces.” Hanes, an attorney, was state director for Baucus and now works at the Justice Department. She was one of three people Baucus recommended to President Obama for the job of U.S. Attorney for Montana, and the statement asserted that the recommendation was solely on merit.

The story was first reported by Main Justice, which covers the Justice Department.

Resort Bankruptcies

For the bankrupt Moonlight Basin ski resort, the good news is that two entities stand ready to provide cash to operate the property through the ski season. The bad news is, tensions between Moonlight management and lender Lehman Bros. are running high, and a bankruptcy court hearing in Butte on Monday could turn into an ugly showdown over the terms of the financing and who exercises management control.

River Recreation and Conservation

The Blackfoot River, with its excellent fishing, outstanding scenery, varied whitewater, and proximity to Missoula, is one of the great recreation resources of Western Montana. Its very popularity, though, inevitably creates some issues, and a proposed new recreation management plan could eventually lead to a permit system for use of some parts of the river. The plan has been in development for more than two years by the Montana Department of Fish Wildlife & Parks and a community working group, and the pubic has until Dec. 16 to offer comments and feedback before the plan is adopted.

Trapping in Missoula

It’s a walk I’ve taken hundreds of times, a trail that runs alongside the Big Flat irrigation ditch near the confluence of the Bitterroot and Clark Fork rivers. My nephew, in his first year at college in Portland, is here for Thanksgiving, and we were wandering along the riverbank just off the trail, with our two dogs nosing about nearby. Suddenly there was an odd “thump” followed by frantic yelping. My dog Rontu, a sweet and shy Norwegian Elkhound, had gotten caught in a leg-hold trap.

Resort Bankruptcy

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.”

Hip Hop Party

Anyone who has had any contact with the foster care system knows that it is, well, in need of help. Missoula-based Porch Productions is currently working on a documentary film in which it follows six Missoula children as they “age out” of foster care. It’s a worthy and important topic, and Porch Productions will be holding a benefit to support the film on Tuesday evening at the Badlander. It’s a hip-hop party, and promises to be lots of fun. Visit MissoulaEvents.Net for all the details, and you can find Porch Productions on the web at www.porchproductions.net. First Interstate Bank has put up a challenge grant for the documentary, which is called “From Place to Place,” so all the money raised Tuesday will be doubled. 

News Analysis

For U.S. Bankruptcy Court Judge Ralph B. Kirscher, the opening hearing in the Moonlight Basin bankruptcy case, scheduled for this Tuesday in Butte, promises more than a little bit of deja vu: it was just a year ago that some of the same lawyers appeared in the same courtroom to begin arguments in the Yellowstone Club bankruptcy case, and there are certainly plenty of parallels in the two situations.

Like the Yellowstone Club, Moonlight is a new ski-and-golf resort in Big Sky that got caught out with an unsustainable debt load when the mountain real estate market crashed. Like the Yellowstone Club, Moonlight is an important economic engine for Big Sky and greater Bozeman, and the outcome of the bankruptcy will have a big impact on the community. And as in the Yellowstone Club case, the opening chapter of the bankruptcy will likely feature a battle between management and a Wall Street lender over who controls the property while a broader solution is found.

Unfortunately for Big Sky, though, the closer analogy is the case of Tamarack Resort in Idaho. Like Moonlight, Tamarack was conceived by a charismatic businessman as a public four-season resort with high-end real estate sales at the heart of the business model. Like Moonlight, Tamarack found itself in the position of relying on an angry lender to continue funding the operation after the meltdown hit. Like Moonlight, Tamarack has been unable to find a new owner to save the day, with many questioning whether the resort is fundamentally viable. Tamarack is now closed, with a foreclosure trial scheduled for February.

Resort Bankruptcies

Moonlight Basin, the troubled Big Sky, Montana ski resort, filed for Chapter 11 bankruptcy protection on Wednesday, just a day before a foreclosure hearing that could have put the property in the hands of its primary lender, Lehman Bros. Moonlight took a loan of $100 million from Lehman Bros. in the fall of 2007 with the intention of quickly selling the resort, but the real estate meltdown scotched that plan, and the bankruptcy of Lehman Bros. itself in the fall of 2008 has left the six-year-old resort in limbo.

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. Lehman Bros. indicated in the foreclosure case that it also intended to keep the resort open, but the investment bank wanted to gain full control and appoint a receiver in the place of current management before it provided the funds needed to continue operations. The foreclosure proceeding, which is a state court action, is automatically put on hold by the bankruptcy filing.

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