Bank terminates line of credit for Wintergreen

Bank of America ended its line of credit with Wintergreen Resort, removing the resort’s short-term borrowing resource, according to an official statement released by Wintergreen Partners Inc. on Monday.

According to the statement, the bank “terminated” the resort’s $3 million line of credit Feb. 2 because of the ski season’s revenue shortfall, which caused the resort to violate parts of the agreement.

December and January’s mild weather led to a $2.5 million operating profit shortfall for the season so far. If February continues to be warm, resort management expects $1.5 million or more in additional revenue shortages, according to the statement.

“Resort management is continuing to work closely with all its constituencies in order to most effectively deal with the challenges which the warm weather has presented to the resort,” said Rob Sullivan, the resort’s chief financial officer.

The warm ski season, the terminated line of credit and the ongoing negotiations between Wintergreen and the Department of Taxation concerning conservation easement tax credits led to the current financial difficulty.

The Crawford’s Knob easement is currently valued around $3 million, about $8.5 million less than it was originally appraised at in 2004 and for which it received tax credits in 2008, according to a letter from the board of directors to members Jan. 30.

To address the financial problems, the resort’s board of directors approved earlier billing for 2013 membership dues, a new management plan to reduce operating costs by $1.5 million a year and a new $6 million private debt offering. The resort used a similar private debt offering in 2009, which raised about $7.5 million, according to the statement.

No details concerning the private debt offering or the management plan have been released.

About 500 equity owners attended an informational meeting at Wintergreen on Feb. 4 concerning the financial challenges and future plan. About 1,700 members received the letter inviting them to the meeting, according to the statement.

Nelson County Administrator Steve Carter said he had not been approached by anyone from Wintergreen’s executives or board of directors about the county working with the resort, but he said it’s a possibility.

“Of course Wintergreen is significant to the county,” he said. “We certainly don’t want them to fail.”

He said Wintergreen brings a lot of money into the county with its meal, lodging and sales tax. And property owners in Wintergreen pay a lot of real estate taxes.

Jean Payne, the commissioner of revenue for Nelson County said the resort makes up about 35 percent of the county’s food and lodging taxes, but could not give a specific amount because Virginia has a privacy law that does not allow the release of a corporation’s income.

She said the resort itself does not pay real estate taxes. Carter said that was due to a settlement between the county and the resort in the 1990s concerning double taxation.