{"id":22768,"date":"2020-05-06T09:51:37","date_gmt":"2020-05-06T15:51:37","guid":{"rendered":"https:\/\/www.skyhinews.com\/?p=64522"},"modified":"2020-05-06T09:51:37","modified_gmt":"2020-05-06T15:51:37","slug":"sp-gives-vail-resorts-negative-outlook-on-ability-to-repay-new-debt","status":"publish","type":"post","link":"https:\/\/alwaysmountaintime.com\/krky\/local-news\/sp-gives-vail-resorts-negative-outlook-on-ability-to-repay-new-debt\/","title":{"rendered":"S&amp;P gives Vail Resorts negative outlook on ability to repay new debt"},"content":{"rendered":"<p>Bonds rating services Moody\u2019s and S&amp;P took a hard look at the ski industry in assigning a credit rating to Vail Resorts last week. The credit ratings were published April 29 as a result of Vail\u2019s effort to take on an additional $600 million in debt through the use of issuing cash bonds.<\/p>\n<p>While Vail Resorts received a stable outlook from Moody\u2019s, S&amp;P was not as optimistic, assigning the company a negative outlook in its examination of Vail Resorts\u2019 ability to repay the debt it takes on.&nbsp;<\/p>\n<p>\u201cThe negative rating outlook reflects leverage above 4x in fiscal 2020 due to property closures and our expectation that Vail\u2019s operating performance may continue to be impacted in fiscal 2021 as a result of decreased destination travel and consumer spending,\u201d <a rel=\"noreferrer noopener\" href=\"https:\/\/www.standardandpoors.com\/en_US\/web\/guest\/article\/-\/view\/type\/HTML\/id\/2421735\" target=\"_blank\">S&amp;P Global Ratings wrote in their report.<\/a><\/p>\n<p><a rel=\"noreferrer noopener\" href=\"https:\/\/www.macrotrends.net\/stocks\/charts\/MTN\/vail-resorts\/ebitda-margin\" target=\"_blank\">As of Jan. 31<\/a> Vail Resorts\u2019 total liability including stockholder equity was about $5 billion, and the company\u2019s annual earnings before interest, taxes, depreciation and amortization (EBITDA) was about $700 million.&nbsp;<\/p>\n<div class=\"row\">\n<div class=\"col\" readability=\"6\">\n<div class=\"row shn-donation shn-donation-mobile p-0\" readability=\"7\">\n<div class=\"col-xl-4 p-2\">\n<div data-bg=\"url(https:\/\/cdn.skyhinews.com\/wp-content\/uploads\/sites\/9\/2020\/02\/shn-logo-2x-wht.png)\" class=\"p-0 mt-2 mb-2 h-75 text-center rocket-lazyload\">\n<p><img decoding=\"async\" src=\"https:\/\/cdn.skyhinews.com\/wp-content\/uploads\/sites\/9\/2020\/02\/shn-logo-2x-wht.png\" class=\"logo m-0 p-0 invisible\"><\/p>\n<\/div>\n<\/div>\n<p><h3 class=\"d-inline mr-3\">Support Local Journalism<\/h3>\n<p><button class=\"btn d-inline\" type=\"button\" onclick=\"handleDonationButtonClickMidArticle()\">Donate<\/button><\/p>\n<\/div>\n<p><\/div>\n<\/div>\n<p>The company\u2019s bonding effort would add another $600M in debt to the company\u2019s balance sheet in exchange for an infusion of $600M in liquidity to be used for \u201cgeneral corporate purposes,\u201d according to a <a rel=\"noreferrer noopener\" href=\"http:\/\/investors.vailresorts.com\/news-releases\/news-release-details\/vail-resorts-announces-commencement-senior-notes-offering\" target=\"_blank\">press release issued by Vail Resorts<\/a> on April 29.&nbsp;The press release initially listed the offering of senior notes as $500M but <a rel=\"noreferrer noopener\" href=\"https:\/\/www.dailycamera.com\/2020\/04\/30\/vail-bumps-private-offering-to-600m-to-bolster-liquidity\/\" target=\"_blank\">documents filed with the U.S. Securities and Exchange Commission show that the offering was bumped up to $600 million<\/a>.<\/p>\n<h2>\u2018Lower capital expenditures\u2019<\/h2>\n<p>Moody\u2019s, in issuing a stable outlook for Vail Resorts, said its view reflects the expectation that Vail Resorts winter operations \u201cwill reopen by the start of the 2020-2021 ski season and remain in operation for most of the ski season, along with some economic recovery, resulting in improved operating results and credit metrics in fiscal 2021.&nbsp;<\/p>\n<p>\u201cThe stable outlook also reflects Moody\u2019s expectation for positive free cash flows in fiscal 2021 driven by lower capital expenditures and dividend distributions,\u201d according to the <a rel=\"noreferrer noopener\" href=\"https:\/\/www.moodys.com\/research\/Moodys-assigns-Vail-Resorts-CFR-of-Ba3-CFR-senior-unsecured--PR_423812\" target=\"_blank\">Moody\u2019s report<\/a>.&nbsp;<\/p>\n<p>Vail Resorts CEO Rob Katz, on April 1, <a href=\"http:\/\/investors.vailresorts.com\/news-releases\/news-release-details\/vail-resorts-provides-business-update-response-covid-19\" target=\"_blank\" rel=\"noopener noreferrer\">said dividends would be suspended for the next two quarters<\/a>.<\/p>\n<p>\u201cWe remain committed to returning excess capital to shareholders and will re-evaluate decisions on capital allocation in&nbsp;December 2020,\u201d Katz said.&nbsp;<\/p>\n<p>While Vail Resorts has also deferred certain capital expenditures, including a terrain expansion at Beaver Creek, the company would like to move forward with an <a rel=\"noreferrer noopener\" href=\"https:\/\/www.fs.usda.gov\/nfs\/11558\/www\/nepa\/113560_FSPLT3_5290784.pdf\" target=\"_blank\">expansion of Keystone Resort<\/a>, the U.S. Forest Service wrote May 1 in a <a href=\"https:\/\/www.fs.usda.gov\/nfs\/11558\/www\/nepa\/113560_FSPLT3_5290717.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">press release<\/a>.&nbsp;<\/p>\n<p>\u201cKeystone is proposing to develop new ski terrain and increase terrain variety at the resort by developing 13 ski trails in Bergman Bowl and 3 ski trails in Erickson Bowl; installing a detachable chairlift in Bergman Bowl; installing 22 acres of snowmaking coverage on new beginner and intermediate ski trails; constructing a new ski patrol facility; and expanding the Outpost Restaurant,\u201d according to the release.&nbsp;<\/p>\n<p>The Forest Service is <a href=\"https:\/\/cara.ecosystem-management.org\/Public\/\/CommentInput?Project=58011\" target=\"_blank\" rel=\"noopener noreferrer\">seeking public comment<\/a> during the month of May on Vail Resorts\u2019 effort to initiate an Environmental Assessment on the Keystone expansion.&nbsp;<\/p>\n<h2>Second wave possibility&nbsp;<\/h2>\n<p>In their reports, both Moody\u2019s and S&amp;P said a second wave of coronavirus is among the potential concerns facing Vail Resorts.&nbsp;<\/p>\n<p>\u201cOur assumption is that stay-at-home orders will be lifted before the company\u2019s 2020\/2021 winter ski season,\u201d S&amp;P wrote in their report. \u201cHowever, a potential second wave of infections in the later part of 2020 may result in partial or full closures of many of Vail\u2019s resorts. Additionally, depending on the nature of a recovery in the second half of 2020, consumers may remain averse to travel, which could weaken demand at Vail\u2019s destination resorts.\u201d<\/p>\n<p>Moody\u2019s said the leisure travel sector including ski resorts have been one of the sectors most significantly affected by the shock to the market as a result of the coronavirus outbreak.&nbsp;<\/p>\n<p>\u201cThe weaknesses in Vail\u2019s credit profile, including its exposure to mandated stay at home orders, increased social distancing measures and discretionary consumer spending, have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the outbreak continuing to spread,\u201d Moody\u2019s wrote in its report.&nbsp;<\/p>\n<p>S&amp;P said it could revise its outlook to stable if they see more likelihood that resorts will remain fully operational through the 2020-2021 winter season, and if debt can reach levels below 4.25 times earnings.&nbsp;<\/p>\n<p>\u201cWhile unlikely at this time, longer-term we could consider an upgrade if we believe operating performance can sustain lease-adjusted debt to EBITDA below 3.25x,\u201d S&amp;P wrote.<\/p>\n<p>Moody\u2019s said it too could upgrade its outlook if operations resume for the 2020-2021 ski season \u201cand signs of good visitation trends and stable effective ticket and ancillary activity prices, leading to an expectation that the company\u2019s operating profits return close to fiscal year 2019 levels and that debt\/EBITA will approach 4.0x.\u201d<\/p>\n<p><a href=\"https:\/\/www.skyhinews.com\/news\/sp-gives-vail-resorts-negative-outlook-on-ability-to-repay-new-debt\/\" target=\"_blank\" rel=\"noopener noreferrer\">via:: Sky-Hi News<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bonds rating services Moody\u2019s and S&amp;P took a hard look at the ski industry in assigning a credit rating to Vail Resorts last week. The credit ratings were published April 29 as a result of Vail\u2019s effort to take on an additional $600 million in debt through the use of issuing cash bonds. While Vail [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[56],"tags":[],"class_list":{"0":"post-22768","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-local-news"},"acf":[],"publishpress_future_action":{"enabled":false,"date":"2026-06-20 21:00:31","action":"change-status","newStatus":"draft","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"KRKY Ski Country","distributor_original_site_url":"https:\/\/alwaysmountaintime.com\/krky","push-errors":false,"_links":{"self":[{"href":"https:\/\/alwaysmountaintime.com\/krky\/wp-json\/wp\/v2\/posts\/22768","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/alwaysmountaintime.com\/krky\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alwaysmountaintime.com\/krky\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alwaysmountaintime.com\/krky\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/alwaysmountaintime.com\/krky\/wp-json\/wp\/v2\/comments?post=22768"}],"version-history":[{"count":0,"href":"https:\/\/alwaysmountaintime.com\/krky\/wp-json\/wp\/v2\/posts\/22768\/revisions"}],"wp:attachment":[{"href":"https:\/\/alwaysmountaintime.com\/krky\/wp-json\/wp\/v2\/media?parent=22768"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alwaysmountaintime.com\/krky\/wp-json\/wp\/v2\/categories?post=22768"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alwaysmountaintime.com\/krky\/wp-json\/wp\/v2\/tags?post=22768"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}