Mark Johnson, the popular talk radio host for WDEV, interviewed Bill Stenger, CEO and president of Jay Peak Resort, on Wednesday regarding allegations from a group of 20 unhappy immigrant visa investors who say their stake in Tram Haus Lodge was converted into unsecured loans without their knowledge.
Each of the 35 limited partners in the project invested $500,000 through the EB-5 program.
Jay Peak converted the equity holdings into nine-year loans on Aug. 31, 2013. Investors say they were not informed of the change until January and did not receive the promissory note until May.
Stenger said there was “no gain to be had by Jay Peak” as a result of the change in the terms of the agreement with the Tram Haus investors. Earlier this month, Jay Peak offered an accelerated, five-year loan schedule.
“We’ve improved the payback cycle and they’ll be paid back 100 percent in 2018,” Stenger said.
Investors say they have lost faith in Jay Peak and have not been appeased by the new offer.
Stenger told Johnson that he is working to regain the trust of the investors, and he regrets his delayed communication.
“I can’t und0 the fact that there was a lapse in communication,” Stenger said. “That was wrong, and I can’t say anymore than we did a poor job in communicating in a timely way. Much of it was a delay in document creation but nonetheless, we should have communicated better and for that I am sorry.”
Johnson asked, “How do you have noncommunication when we’re talking about this level of money and really a relatively small number of investors?”
“Mark, it was an error,” Stenger said. “We were traveling, we were doing a lot of things, we were completing construction. I was also waiting for documents to be created, so that the exhibits that were going to be part of this, there was a delay in the creation of the exhibits. I just should have pushed harder. It took a few months to get the documents created and look at the price we’re paying for it.”
Johnson: “So why not delay the change?”
“In hindsight, I wish I had,” Stenger said. “Believe me, I have second-guessed myself why didn’t I communicate better. It was an error. I’ve accepted full responsibility for it. There was no gain to be had by delaying communication, none whatsoever.”
Johnson: “How do you pay back $17.5 million of an investment out of the current property?”
“We’re a growing company with growing income, growing proceeds,” Stenger said. “We will have the ability to do this, and we’re at a point in our evolution where we’re capable of meeting the obligations we have.”
Johnson: “Are you allowed to use investment money you get today to pay back initial investors?”
Stenger: “No, we wouldn’t do that ever.”
“What we do have is a resort that is growing in value, and we have a resort that’s growing in attendance and operating proceeds. It’s a substantially bigger and better operation than it was six years ago.”
Johnson: “You’re kicking off enough profit that you can pay back $17.5 million in five years?”
Stenger: “Yes, we’ll be able to do that. Or we’ll be able to finance the property to do that if we need to.”
Johnson: “OK so one option would be to increase the debt at Jay Peak?”
Stenger: “Yes, we could easily do that if we need to.”