Sale of The Canyons Plunges Into Legal Limbo (updated)

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SAM Magazine-Park City, Utah, Aug. 8, 2007-Recriminations are swirling around the $100 million July 15 sale agreement that would transfer The Canyons from American Skiing Company (ASC) to Talisker Corp. For the moment, the sale is on hold, perhaps until a Colorado court rules on a temporary injunction by Oct. 1. But eventual resolution of all the issues entangling The Canyons may not come until next spring or summer.

The most immediate dispute stems from a $95 million bid by Vail Resorts (VR) for The Canyons. ASC informed Vail that it had rejected VR's bid in a letter dated July 16, in part because ASC believed that Vail had reached an agreement with a third party regarding the potential purchase of the Canyons without disclosing that agreement to ASC.

Vail, seeking to halt the sale of The Canyons to Talisker, claimed in a suit filed July 27 that ASC failed to consider the merits of the company's initial offer. Vail also upped its bid to $110 million. ASC replied that no sale agreement ever existed with VR. However, all parties have agreed to put the deal on hold until a Colorado court rules on a preliminary injunction filed by VR; that is expected to occur by Oct. 1.

Not to be left out, Kenny Griswold, the former owner of Wolf Mountain, has filed suit against ASC for defaulting on the terms of ASC's lease of terrain used by The Canyons, alleging that a 1996 lease agreement requires that Griswold approve any transfer of ownership of ski operations at The Canyons. Talisker is also named in this suit. An earlier suit, regarding an alleged default by ASC under its ground lease, is scheduled to be heard in May 2008.

Griswold, for his part, is being sued by Peninsula Advisors of Park City, which claims that Griswold breached an agreement reached in October 2006 to sell land owned by Wolf Mountain, and within the boundary of The Canyons, worth hundreds of millions in development rights. Peninsula says that the goal of acquiring Griswold's property was to lease the land to Talisker. In return, Griswold has countersued Peninsula.

While ownership of The Canyons is obscured in this cloud of suits and countersuits, things are becoming much clearer for ASC and the company's shareholders. The company failed to meet a July 31 deadline to satisfy Oak Hill Partners, the company's majority shareholder. ASC is now headed for total dissolution; following the sale of its remaining assets and after ASC's outstanding liabilities are met, the remaining proceeds will be distributed to Oak Hill. Unless they go to Griswold. Or Vail. Or is it Peninsula?