Resort Development
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
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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.”
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Comments
taken for himself? It is clear Joe was the smart one by taking the buyout from Lee several years ago. The original property was all part of that Plumb Creek trade Blixseth put together.
On another note, some sources have mentioned Moonlight is nearly bankrupt if not so already. The belief is this will happen before December. This is just another example of banks over inflating land values and over extending credit. Almost every other large ski, golf, or private development out west has failed with maybe the YC to come. Why is this? Maybe the lack of financial controls just like AIG, Lehman, Freddie, and I want to know why the Greenberg's at AIG were not prosecuted fully. One son stiffed a Bozeman contractor to the tune of 580K until the courts ordered the payment for his Big Easy Trophy home. Why does our executive, judicial, legislative branches allow such activities? I say it is time for all good Americans to stand up for what is right. For the people, by the people or has everyone forgot!