Resort administrators said Thursday they believe they’re close to securing federal permission to access $52 million in foreign investments earmarked for snowmaking and lodging improvements at the Dover resort.
Release of the escrowed money, amassed through the federal EB-5 visa program, depends on a long-delayed federal review of visa applications submitted by Mount Snow investors. Recent communications with U.S. Citizenship and Immigration Services indicate the review process is moving forward, said Dick Deutsch, president of Mount Snow Ltd.
“We think that we would know something on several of the investors in a very short period of time,” Deutsch said during a quarterly earnings report for Mount Snow parent company Peak Resorts. “I can’t quantify the exact amount of that period of time, but I think it will be in the very near future.”
Deutsch also disclosed that the Mount Snow EB-5 project remains fully funded, despite the fact that the delay has caused some foreign investors to pull out.
“We have been able to replace those investors with new ones,” he said. “Demand continues to be very strong.”
The federal EB-5 program allows foreigners to gain visas and permanent residency by investing in job-creating projects in the U.S. The initiative has come under intense scrutiny in Vermont after allegations of a $200 million EB-5 fraud surfaced this year at Jay Peak Resort.
In addition to state and federal investigations of Jay Peak, the federal government requested information about the state-run Vermont EB-5 Regional Center. The exact details of that probe are unclear, though a state official has said the inquiry centered on Jay Peak and the state’s EB-5 marketing activities.
In September, Peak Resorts President and Chief Executive Officer Timothy Boyd blamed Mount Snow’s EB-5 delay on the ongoing federal review of the regional center. “We are not part of the inquiry, but we are part of the Vermont regional center, and we believe that’s why our (investor) petitions are being held right now,” he said.
State officials disagreed with Boyd’s assessment at the time. And on Thursday, Mount Snow executives appeared to back away from it as well.
Instead, Deutsch pointed to U.S. Citizenship and Immigration Services’ acknowledged backlog of visa petitions related to the EB-5 program.
“I can’t be sure of anything regarding the investigation of the Vermont regional center,” Deutsch said. “I do think there is an incredible backlog at (USCIS). … That’s what we know for sure right now.”
Whatever the reason, the fact that Mount Snow can’t access its $52 million has caused heartburn for Missouri-based Peak Resorts, which owns 13 resorts. The company already has invested heavily in Mount Snow’s EB-5 projects, which include the West Lake snowmaking upgrade and a new Carinthia Ski Lodge.
Boyd on Thursday assured investors that Peak Resorts will be able to recoup those investments when the EB-5 money is released.
“When we are able to finally break escrow, we will be able to reimburse the company approximately $15 million, which will further enhance our liquidity and balance sheet going forward,” he said.
In the meantime, the EB-5 holdups – and last season’s poor skier numbers – have forced some financial maneuvering at Peak. That includes a $20 million stock sale that was announced in August and is now complete.
“The transaction enabled us to significantly strengthen our balance sheet and alleviate the liquidity issue we had from the delayed release of our EB-5 funds,” Boyd said.
The company also borrowed $2.75 million from a line of credit and took out a $5.5 million bridge loan during the second quarter of its fiscal year, administrators announced Thursday. Some of that money subsequently was paid back via proceeds from the stock sale.
Overall, Peak Resorts didn’t have much good news to report from the quarter ending Oct. 31. The company posted a net loss of $8 million, with administrators saying such numbers were expected due to the seasonal nature of the ski business.
They repeatedly expressed optimism about the financial future of the company.
Some of that positive thinking comes on the EB-5 front. While Citizenship and Immigration Services won’t comment publicly on specific EB-5 cases, Boyd said Peak is seeing signs of progress.
“Even though we still have not had our first investor approved to allow us to break escrow, we are encouraged by the fact that several of our investors have received notification by the USCIS that their applications are now being adjudicated,” he said.
In response to questions from financial analysts participating in Thursday’s earnings report, Deutsch indicated that good EB-5 news could come as soon as mid-December. But he also cautioned that “you never know the schedule on how (USCIS) is going to adjudicate and make a decision on these investors.”
Resort executives also say they are optimistic about this ski season. Boyd cited the success of the company’s new Peak Pass, which offers season passes that are good for seven Northeast resorts including Mount Snow.
“The performance of the Peak Pass … has really been exceptional,” Boyd said. “This product should allow us to build a strong foundation with long-term, positive ramifications for us.”
He also cited the relatively early start to the ski season. While the 2015-16 season featured warm weather and diminished skier visits, Boyd said four Peak resorts – including Mount Snow – were able to open for Thanksgiving weekend this year.
“Clearly, the ski season is always a marathon and not a sprint when it comes to the weather,” Boyd said. “However, it is encouraging to get out of the blocks early and make the race easier to run.”
