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Whitetail to be auctioned

June 17, 1999|By DON AINES

MERCERSBURG, Pa. - Whitetail Ski Resort officials said Wednesday the Montgomery Township, Pa., business is headed for the auction block and most of its year-round employees have been laid off.

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The announcement came the day after members of the Mercersburg General Purpose Authority said a proposal to buy the resort and a golf course was essentially dead because investors could not be found to buy all of the $42 million in tax-exempt revenue bonds needed to finance the project.

"As recently as a day or two ago, we had a large investment group looking at it," Whitetail spokeswoman Rachel Nichols said Wednesday.

She said the investment banking firm marketing the bonds got commitments for about two-thirds of the bonds, but a deal to buy all of them couldn't be completed.

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The deadline for bid solicitations is July 31, she said. If a suitable bidder can be found by then, that would leave enough time to conclude a sale by September and open the slopes next winter.

Nichols said Richard Perl, the general managing partner for Whitetail Ski Co., told the employees about the decision Wednesday. She said most of the 40 employees were laid off and her job was reduced to part time.

Perl was unavailable for comment Wednesday. Nichols said the ski area was going on the block to satisfy investors and creditors.

"At this point I am not," Don MacAskill said when asked if he was still working for Whitetail. He had left his job as vice president and general manager of the Okemo Ski Resort in Vermont to become Whitetail's general manager in October.

His decision to leave "was really a mutual thing," he said.

With cost-cutting measures in place and only about 10 employees remaining, MacAskill said he thought it was best to leave.

"I hope to reapply for the same position with the new owner," MacAskill said.

Chief Financial Officer Chip Vicary left last month, Nichols said.

During the ski season, the resort employs 800 or more full- and part-time employees with a payroll of $2 million, according to MacAskill. If a buyer can be found, those jobs could still be there for the 1999-2000 season, Nichols said.

The resort remains open for summer fly fishing and mountain biking, she said.

Whitetail has been hurt by three consecutive warm winters. MacAskill said the number of ski visits was about 140,000 in 1998-1999, up from about 100,000 in 1997-98.

Last season the company had a net operating profit of $1.2 million on gross revenues of about $7 million. That profit was realized despite paying off some earlier debts, he said.

A bid solicitation appeared in Wednesday's Wall Street Journal offering a resort development opportunity for an unnamed Pennsylvania ski facility. MacAskill said the announcement was for Whitetail.

The advertisement offered the resort and its 17 trails, five ski lifts, 30,000-square-foot ski lodge, a championship golf course under construction and more than 600 acres of land for residential development.

The Mercersburg General Purpose Authority deal, along with deals that fell through last year with the Dauphin County, Pa., and Northumberland County, Pa., general authorities, did not include residential lands around the ski area and golf course that are owned by the Whitetail Land Partnership.

"My understanding is there's a possibility that (residential land) could be part of the offering," Nichols said. She said 53 units have been built or are under construction and 43 have been purchased.

Groundbreaking recently began for The Inns at Whitetail, a 17-unit condominium project, she said. Nichols said there were contracts on 16 of the units.

Nichols said that part of the project called for up to 1,500 units around the 550-acre ski area and 287-acre golf course.

Construction now under way on the links and buildings will continue, she said. The Dauphin County General Authority already owns the golf course, which is expected to open sometime next year.

In April the Mercersburg General Purpose Authority announced its plan to buy the ski area from Whitetail Ski Co. and the golf course from the Dauphin County General Authority. Unlike general obligation bonds, revenue bonds are not guaranteed by the authority or borough, which is about six miles north of the resort.

Buyers of the bonds would be repaid from revenues generated by the ski area and golf course. While the authority loses no money on the deal, a number of people besides employees stand to be big losers.

Borough Manager James E. Leventry said Dolphin and Bradbury, the Philadelphia investment banking firm that marketed the bonds, would have received $900,000 in commissions from the sale of the bonds.

Public Finance Consultants Inc., of Harrisburg, Pa., which prepared the bond issue, stands to lose $200,000 it would have received on a contingency basis. Leventry said Thomas J. Finucane, the borough attorney, would have received up to $75,000 in fees for shepherding the project.

Leventry would have earned $55,000 a year spending half his time managing the borough and the authority.

"I go back to being a full-time manager at the old salary" of $33,000, he said.

"There's a lot of people that did a lot of work on this that are walking away empty-handed," he said.

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