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Wednesday, 05 May 2010 15:14

$7 million investment rescues Ghost Town from bankruptcy

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Ghost Town in the Sky amusement park in Maggie Valley will emerge from bankruptcy under a new corporate structure.

One of the current owners has agreed to put up $7 million to buy the park. It’s not nearly enough to cover the $13.5 million in debt the park has. The rest of the park’s debt will be wiped clean, allowing the new corporate entity to start over with a fresh slate free and clear of old debt.

The deal was approved by the federal bankruptcy court on Tuesday (May 5), saving the park from certain foreclosure.

The deal turns over ownership of the park to a new corporate entity called American Heritage Family Parks, which was formed less than a month ago by Al Harper, who incidentally is one of Ghost Town’s current owners and primary investors. Harper is also the principal owner of the Great Smoky Mountain Railroad in Bryson City, and another excursion railroad in Durango, Colo.

Harper is one of three partners that chipped in to buy Ghost Town in 2006, but is the only one emerging with an ownership stake under the new entity. CEO Steve Shiver, who will remain at the helm as day-to-day operations manager, hopes the park will open for the season by July 1.

Shiver called a meeting of Maggie Valley business owners on Monday to share details of the plan and answer questions. He acknowledged that the outcome isn’t ideal but is the best option on the table.

“There are some of us in the room that if the plan is allowed to move forward would lose a substantial amount of money, but it would allow Ghost Town to open,” Shiver said. The deal was indeed approved the next day by the bankruptcy court.

The alternative was foreclosure, which was scheduled for the end of the month if Harper’s deal didn’t go through. Ghost Town would have been auctioned off to the highest bidder. Whether there were interested buyers waiting in the wings — particularly one willing to pay more than $7 million — will remain a mystery. But Ghost Town’s supporters feared no one else would be willing to keep operating it as an amusement park.

“I don’t see anybody else stepping forward,” said Randy Bryan, a Ghost Town employee and supporter.

Ghost Town faced a perfect storm that knocked it off its feet in 2008. The nation was beset by a recession, gas prices soared, and vacation travel plummeted.

Shiver estimates that the park needs 150,000 visitors a year to be profitable. But the park only had 129,000 visitors in 2008 and 71,000 in 2009, he said. The park lost money both years.

After a 40-year run, the park had been shut down for five years until new owners came along in 2006 to resurrect it.

But they discovered the infrastructure of the 1960s-era theme park was decrepit, requiring an unexpected and substantial burn of capital to make repairs and upgrades.

“We have done our damn best,” Shiver said of the park’s struggles. “It has been a challenge to say the least.”

Who loses

Those left holding the bag under the new deal are numerous, from local business owners owed money to mudslide victims — even town and federal taxpayers will cough up money due to Ghost Town’s failings.

First come the more than 200 businesses collectively owed more than $2.5 million who will never see their money. The list includes local plumbers, electricians, contractors, building suppliers, and vendors of everything from fuel oil to advertising.

“It is very difficult for me personally to look someone in the eye I owe money to,” Shiver said. “But we have to more forward and open the park. That is our vindication.”

Shiver said the businesses aren’t the only ones not getting paid.

“Nor do any of the investors, nor do any of the bondholders. That’s just the way the cookie crumbles in the bankruptcy world,” Shiver said.

Shiver said he’s one of the losers in that sense. While he will keep his job as CEO of the park, he will no longer have an ownership stake to show for the investment he’s made, Shiver said.

“I am wiped out like everybody else,” Shiver said. “I lose a substantial amount of money. I make no bones about it. Millions.”

While some of the businesses left out in the cold by the deal may harbor ill will, locals who invested their money in Ghost Town say they aren’t angry.

“You have never heard me say a word about losing the money,” Brenda O’Keefe told Shiver at the meeting. “I want the park open. I want the park open for Maggie Valley. The poor guy who gave his 401K, now that’s a different story.”

That guy, however — Ghost Town employee Randy Bryan — said he isn’t mad either. He cashed in his 401K of more than $200,000 to invest in the park — money that he will now lose. But Bryan said his satisfaction is to see the park keep going.

“If I was ever going to give up on something, this would have been it. But I refuse to quit. I refuse to lose,” Bryan said. “I believe too much in it.”

Alaska Pressley, another Maggie Valley resident who invested a substantial sum, said she has no ill will either. Her only desire is to see Maggie Valley prosper, and the way to prosperity is through Ghost Town’s survival, she said. Pressley said she was happy to contribute to that.

“Any price is worth it to help our area,” Pressley said.

Federal taxpayers could be left holding the bag on $2.5 million of Ghost Town’s bad debt still owed to BB&T but backed by a federal loan guarantee. Ghost Town owes BB&T $9.5 million on a mortgage dating back to 2006. But only $7 million will be paid off under the current deal with Harper. The U.S. Rural Development agency had backed a portion of the loan back in 2006. The loan guarantee was intended to convince BB&T to underwrite the purchase of Ghost Town, which was otherwise considered a risky loan to make.

The U.S. Rural Development staff that made the loan guarantee wouldn’t reveal the terms — namely how much federal taxpayers may have to cough up. Richard Tucker of the commercial credit department with BB&T would not say either, citing “financial privacy,” and adding that the loan guarantee was between BB&T and the Rural Devleopment office, despite the fact that the public would be the one paying up.

And then there’s the mudslide.

Taxpayers with the town of Maggie Valley will foot at least $25,000 of the bill for the clean up and stabilization, and possibly more if costs exceed initial estimates.

Homeowners downhill of the mudslide may also be without recourse for damage to their property. (see article above).

Who wins?

Business owners in Maggie Valley seem to be pleased with just about any scenario that means Ghost Town will remain an amusement park and hopefully open sometime this summer.

“It’s a great day for Maggie,” Mayor Roger McElroy said. “The only thing I feel sorry about is anybody who is going to lose any money in the deal.”

Ghost Town today is nothing like its heyday in the 1970s and 1980s when more than 250,000 people a year funneled through Maggie Valley. But it is still a tour de force when it comes to filling motel rooms in the valley, according to Larry Debuke, owner of Tanglewood Motel for 14 years.

The county and town of Maggie Valley will also finally get their taxes. Ghost Town owes $65,000 in town and county property taxes from 2008, which will be paid when the deal goes through, and another $75,000 in property taxes from 2009, which is supposed to get paid as well.

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