A $7 million deal is on the table to sell the business and operations of the South Island's biggest ski field to a tourism giant which already owns another ski resort.
Negotiations are under way to sell assets of the 550ha Treble Cone Ski Area near Wanaka to Cardrona Alpine Resort, owned by southern tourism giant Real Journeys which has the existing and nearby Cardrona field.
Don Fletcher, chairman of the privately owned Treble Cone Investments, John Darby speaking on behalf of the field's majority investor and Bridget Legnavsky, general manager of Real Journeys' Cardrona Alpine Resort, all spoke of benefits of the sale.
Fletcher said that if the deal went ahead, it could result in significant gains for Treble Cone "which has struggled to earn a little bit of money but never enough to grow. It's under-capitalised. The land is owned by the Department of Conservation. We have a lease which comes up for review in 2035 when it is renewable so part of the deal is DoC will have to agree to the lease transfer."
Property records put Treble Cone's value at just over $15m.
The field is famous for its long, uncrowded, groomed runs, off-piste terrain and unrivalled views over Lake Wanaka and the Southern Alps.
Fletcher said Treble Cone Investments made average annual Ebitda in the last few years of only $500,000 to $1m, not enough to make big improvements to the resort which needed money invested in it.
"We turn over $6m to $8m annually and have about 100,000 skier days a year. But costs are leaving us with only $500,000 to $1m a year if it's good and if it's a bad year, we lose money," he said.
A new investor might well take a fresh view of the field's infrastructure including its access, ski lifts, and restaurant, he indicated.
Treble Cone had 59 shareholders, including Darby and George Kerr who jointly control 60 per cent of the shares.
Darby backs the deal: "We think it's a rational move to consolidate further investments across Treble Cone, Cardrona and the new Soho Basin. The $7m cash doesn't fairly represent the total consideration because it's in addition to a number of ski passes being issued."
Treble Cone was New Zealand's only property on the world's top 100 ski field list, he added.
Cardrona Alpine Resort was not buying Treble Cone Investments "just the assets which is the licence to operate, the ski lifts and buildings".
Legnavsky said Cardrona saw the purchase as "a brilliant opportunity to complement our existing offering. The terrain at Treble Cone is considered by many as the best skiing and riding in the world.
"It makes an awful lot of sense to have both resorts work together to offer more variety and flexibility to our visitors and locals who come into this region to enjoy the mountains and the sports they offer," she said.
Due diligence was under way, she said.
Fletcher said the shareholders were mainly skiing enthusiasts who bought in for around $12,000 each which enabled them to get ski passes which they valued highly. The sale proposal would see them retain access, he stressed.
Fletcher's June 18 letter sent to the 59 shareholders said Treble Cone Investments had entered into an exclusive and conditional heads of agreement with Cardrona Alpine Resort to sell the assets and business for $7m.
Cardrona would provide Treble Cone's shareholders with a replacement 20-year ski pass to three fields: Treble Cone, Cardrona and Soho once that was developed, the letter said.
The agreement was subject to conditions including completion of formal documentation and due diligence due to be completed by August 30.
Shareholder approval would be sought at a special general meeting at a date yet to be confirmed. But the deal would be after this year's ski season, Fletcher said.
Treble Cone's board would engage an external adviser to provide an independent appraisal of the offer and a copy of that would go to shareholders, he said. That is expected to be an accounting or business consultancy firm.
That would assist shareholders in deciding if the sale was fair and reasonable, he said.