Vail Resorts has agreed to acquire its first international mountain resort, Perisher Ski Resort in New South Wales, Australia, for AU$176.6 million (approximately $136 million), subject to certain adjustments.
Article continues below
Perisher is the largest and most visited ski resort in Australia, and is well-positioned with access to the country's largest cities, including Sydney, Melbourne, Adelaide, Canberra and Brisbane. Perisher is also the largest ski resort in the Southern Hemisphere.
The acquisition is expected to close in the fourth quarter of fiscal 2015 following the satisfaction of certain conditions, including approval by the New South Wales Government under the long-term lease and license noted below.
The Company is purchasing 100 percent of the stock in the entities that operate Perisher from Murray Publishers Pty Ltd and Transfield Corporate Pty Ltd in Sydney. Perisher holds a long-term lease and license with the New South Wales Government under the National Parks and Wildlife Act, which expires in 2048 with a 20-year renewal option.
The acquisition includes the resort areas known as Perisher Valley, Smiggin Holes, Blue Cow and Guthega, along with ski school, lodging, food and beverage, retail/rental and transportation operations, which together comprise Perisher.
Vail Resorts also announced that as of today, Perisher has re-opened season pass sales for its upcoming ski season, which is set to open on June 6, 2015.
Perisher's popular "Freedom Pass" is on sale for AU$749 and will include benefits substantially similar to Vail Resorts' Epic Local Pass, with unlimited skiing and riding at Breckenridge, Keystone and Arapahoe Basin in Colorado; Park City and Canyons in Utah; and Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada.
It also will include 10 days of free skiing and riding at Vail and Beaver Creek in Colorado. All U.S. resort access will be subject to certain holiday restrictions. Upon closing the acquisition, all previous purchasers of the 2015 Perisher Freedom Pass will also receive these new benefits and all Epic Pass purchasers will receive unlimited and unrestricted skiing at Perisher.
The company indicated that it expects Perisher to generate incremental Resort Reported EBITDA of approximately AU$20 million (approximately $16 million) during its first twelve months of operation following the acquisition.
The company expects Perisher to generate positive Resort Reported EBITDA of approximately AU$38 million (approximately $30 million) during its ski season, June through September, and negative Resort Reported EBITDA of approximately AU$18 million (approximately $14 million) during its off-season, October through May.
Further, the company expects Perisher to generate approximately $6 million of free cash flow in its first year of operations, after deducting capital expenditures at the resort, income taxes (both U.S. and Australian) and all interest expense relating to the acquisition. These estimates do not include any incremental benefit of increased visitation to the Company's U.S. resorts from Australian guests.
At closing, the Company intends to fund the purchase price with cash on hand and the revolver portion of its senior credit facility. Depending upon timing of the closing, the Company will pay the sellers or receive from the sellers the net cash flow of Perisher since January 25, 2015.
In addition, the Agreement provides that the Company will pay New South Wales stamp duty related to the acquisition, estimated to be approximately AU$4 million ($3 million). ■