NEDERLAND — Nederland officials are set on Tuesday to review a different structure for the town’s acquisition of Eldora Mountain, one that’s aimed at making the deal less risky for bondholders.
Part of the reason the Eldora deal has thus far failed to close appears to be skittishness on the part of bondholders, stemming in part from the havoc last season’s historically warm and dry weather wreaked on Colorado resorts.
The newly proposed “sale-leaseback structure” would, according to a Nederland Board of Trustees memo, work like this:
- The town would buy the resort from Eldora owner Powdr Corp. for $120 million, financed by the sale of bonds.
- Once the sale closes, Nederland would then immediately transfer “legal title to the real property and improvements to the Bond Trustee.”
- The bondholders would lease the resort back to Nederland “to continue operating the resort business and generating the revenues that support repayment of the bonds, even though the Trustee holds legal title to the land and improvements during the bond term.”
- Once the bonds are paid off, the trustee would turn ownership of Eldora back over to the town.
Under this structure, “investors benefit from two sources of security,” according to town documents. First, the bondholders would receive revenue from resort operations while it owns the property. Secondly, that property would serve as collateral if the town is unable to meet its obligations. So bondholders, in a worst-case-scenario situation, could bring in another entity to run the resort “without having to go through the traditional foreclosure process.”
Those documents do not contemplate how this sale-leaseback structure could impact the risk borne by the town and its roughly 1,500 residents. Nor has the town made public the specific terms of its bond solicitations.
Utah-based Powdr declared its intent to sell Eldora, which was founded in 1962 and has nearly 700 acres of skiable terrain just west of Nederland town limits, in summer 2024, and the town government emerged as a potential buyer late last year.
The parties reached a deal in January, but a late September public letter from Mayor Nichole Sterling to residents of the Boulder County mountain town revealed that the purchase agreement with Powdr has since expired.
“When we first began exploring the acquisition of Eldora, we knew this would be a complicated transaction,” Sterling wrote. “What we could not know at the beginning was exactly what the bond market would require from us, how financial markets would change during the process, or what we would learn after nearly two years of diligence.”
If the deal were to fall through, the town would be on the hook for about $2.5 million in “transaction-related costs,” Sterling wrote. Documents compiled for Tuesday’s Nederland Board of Trustees meeting show that the town has already spent nearly $1.2 million on efforts to push the acquisition across the finish line.
