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Wednesday, 21 April 2010 17:37

Ghost Town charts course to walk away from debt

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A primary owner of Ghost Town in the Sky wants to buy the amusement park out of bankruptcy. But there’s a catch.

The owner would walk away from more than $5 million in debt, yet continue to own the park — only this time under a new corporate name.

More than 200 businesses still owed money by Ghost Town would be left holding the bag, including local contractors and laborers who did work for the park and were never paid. Myriad Ghost Town supporters in Maggie Valley coughed up cash to help the amusement park get off the ground when it reopened. They were promised a stake in the company in exchange for their investment, but they, too, would be left with nothing.

Employees who were sent home at the end of last season still owed two weeks of pay may be out of luck as well under the deal.

The deal is merely a proposal and would have to pass muster with the bankruptcy court. A hearing is scheduled for Tuesday, May 4. Ghost Town has asked the court to approve the sale to the new entity.

The timing is no mistake. Foreclosure of the park is scheduled to begin May 31. The plan put forward would avoid a forced auction of the park on the courthouse steps.

The bankruptcy court could opt to let the auction go forward in order to determine if there are any other prospective buyers willing to pay more.

The deal

The 1960s-era theme park was once a cash cow for Maggie Valley, raking in tens of thousands of visitors each year.

But attendance declined throughout the 1990s and the park was eventually shuttered in 2002.

It was purchased by a trio of new owners in 2006, including Al Harper, the owner of Great Smoky Mountains Railroad in Bryson City and other railroad tourism ventures, including the Durango Silverton Narrow Gauge Railroad in Colorado.

Harper formed a new LCC just two weeks ago called American Heritage Family Parks — the entity that is now trying to purchase Ghost Town out of bankruptcy. The name of the new entity is similar to the umbrella corporation for his railroad ventures, American Heritage Railroad.

The LLC was just created by Harper on April 8, apparently for the express purpose of buying the park. The registered agent is Jon Schlegel, the former general manager of the Great Smoky Mountains Railroad. The address listed for the new LLC is the same as the Great Smoky Mountains Railroad headquarters in Bryson City.

The public face for Ghost Town for the past two years has been CEO Steve Shiver. It is unclear from court filings or incorporation papers what, if any, role he would have in the new park.

“It is an unfortunate situation for all of us,” Shiver wrote in an email. He directed further requests for comment to Harper. Harper did not immediately return phone calls or emails requesting comment.

When Harper bought the dated theme park in 2006, he got an aging facility that needed millions of dollars in costly repairs and modernization. Coupled with the economic downturn, the park lost money and after just two years of being open landed in bankruptcy a year ago. It owes a total of $13.5 million. CEO Steve Shiver pledged the park could regain its footing and become profitable again, eventually paying off what it owes and pulling out of bankruptcy.

Bankruptcy court requires a detailed plan spelling out exactly how a turnaround will be achieved. Shiver was unable to put together an acceptable plan.

BB&T, which holds more than $9.5 million in debt on the property, was given the green light to proceed with foreclosure. The park was slated to be auctioned off to the highest bidder as early as June.

The entity is offering to buy the park for $7.5 million, although Ghost Town has more than $13.5 million in debt.

BB&T would get $7 million and back taxes would be paid — and that’s about it. The plan calls for paying back $300,000 in select debt, though it doesn’t say to whom.

Financial filings show past due bills of more than $400,000 still lingering from last year — racked up on top of the debt Ghost Town carried with it into bankruptcy. Last year’s past due bills include everything from property taxes to utilities, which were cut off due to failure to pay at the end of the season.

Current owners had been trying to find financing to bail themselves out of bankruptcy and open the park for the summer season. Ghost Town is urging the court to quickly approve the sale to the new entity so that it can still try to open the park by summer.

However, Ghost Town is still plagued by unstable remnants of a landslide that makes the mountain unsafe, according to state geologists. Stabilization will not be completed by the start of summer.

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