VR stock up amid heavy trading, spurring rumors
Vail Resorts’ stock price has jumped 35 percent in the last 60 days and that’s fueling speculation locally and elsewhere that the company is up for sale. Is the spike the result of a solid quarter the company just reported, stockholders attempting to cash out, or just idle minds and tongues at work? It’s not the first time rumors that the company is on the sales block have been circulated. Those have been persistent during the past three years and are a part of the landscape of big business in a small community.But whether Vail Resorts is or isn’t for sale – the company won’t say – the stock has been heavily traded this week. “We don’t speculate on rumors about our stock price or potential transactions, and therefore we have no comment,” said spokeswoman Kelly Ladyga.Strong performanceIn mid-June the company announced it had experienced its most profitable second quarter with a net profit of $62.5 million. The stock at market close Wednesday was trading at $19.16 a share and earlier in the week had hit $19.27.Adding to the speculation is a run-up of the volume of stock trading. In a typical day about 82,000 shares are traded. Tuesday the trading volume was 124,000 shares, and Wednesday, 104,000. By Thursday the price had slipped to $18.88 a share and volume to 57,000, while the market as a whole dipped. In most business acquisitions, companies are prevented from making any comments by signed confidentiality statements. So reportable information can be hard to come by. One market analyst thinks the stock activity may just be the result of the strong quarter that’s keeping things moving.”At least some of the run-up is due to the strong performance in the last quarter,” said analyst Will Marks, who covers Vail Resorts stock for San Francisco-based JMP Securities. “This could be driving it.”Over the past two years, the company has struggled. Last year it reported a net loss of $8.5 million on revenue of $710 million after suffering the effects of the troika of war, terrorism worries and a national recession. The year before, Vail Resorts reported year-end earnings of $7.5 million.Acquisitions, expensesLeon Black’s Apollo Group acquired the company, then Vail Associates, in 1992 after it became mired in then-owner George Gillett’s bankruptcy. In 1997 the renamed company, Vail Resorts, made its initial public offering with shares offered at $22. The stock reached a high of $32 in March 1999 – after the World Alpine Skiing Championships – and plunged to its low, $10.19 a share, almost three years later. The company has sold 35 million shares. Since Apollo acquired Vail Resorts, the company has acquired control of Breckenridge and Keystone ski resorts from Ralston Purina. Two summers ago it purchased Heavenly ski resort in Lake Tahoe for $100 million.Vail Resorts also purchased RockResorts, 10 luxury hotels scattered across the country, as well as other lodging properties.Apollo Ski Partners, the parent company of Vail Resorts, last month sold 1.3 million shares of stock in a private offering for $20.25 million to an unnamed buyer. Apollo did retain voting control of the Vail Resorts board.Vail Resorts restated its earnings twice in the last year, revising them downward. Each time the Securities and Exchange Commission has investigated, once at the company’s request. The company subsequently changed the way it accounts for its club memberships and amortized them over the life of the membership instead of showing them as one-time earnings.Despite the net profit reported for its traditionally profitable second quarter, Vail Resorts is expecting to lose up to $14 million at year-end due to one-time refinancing expenses on $360 million in loans that will total $36 million as well as mold cleanup expenses of $5 million in one of the company’s employee housing complexes in Breckenridge.Cliff Thompson can be contacted via e-mail at firstname.lastname@example.org or by calling 949-0555, ext. 450.
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