Peak Resorts announced this week that it's opened a $15 million line of credit to buy more ski resorts. The publicly-traded company owns 12 resorts and operates 13 in the Northeast and Midwest. Led by Royal Banks of Missouri, the credit agreement has an option to increase to $20 million if more banks are found to participate. In announcing the line of credit, Peak Resorts CEO Timothy D. Boyd said it will give the company more flexibility to implement its growth strategy, which includes resort development and acquisitions.
Peak Resort's new line of credit is for a 12-month period, but unused portions may be renewed or converted into a three-year balloon loan, which would involve smaller payments during the life of the loan and one big balloon payment at the end of three years. The interest rate on the line of credit will be prime plus 1 percent per year with an upfront fee to secure the loan equal to 1 percent of the total amount.
This line of credit is being secured by Peak Resorts properties that aren't already committed as collateral. On the news of the line of credit, Peak Resorts (SKIS) share price dropped a little to $7 per share and hasn't yet fully recovered. Peak Resorts has a market cap of about $98 million.
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