Vail Resorts refinancing debt | SummitDaily.com
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Vail Resorts refinancing debt

Cliff Thompson/Eagle County Correspondent

VAIL – Like a homeowner refinancing a mortgage to take advantage of lower interest rates, Vail Resorts is doing the same with $360 million in bonds.

It is purchasing, through a tender offer, the existing bonds from bondholders and floating $350 million in new bonds, which will carry a lower interest rate. The old bonds were issued at 8.75 percent and mature in 2009. The two separate old bonds consist of $200 million and $160 million in principal.

Bonds are debt that is issued by a company that needs money for growth. The U.S. government, local governments, water districts, private companies and many other types of institutions sell bonds.

The investors who buy the bonds lend their money to the company. Sellers of bonds typically repay the principal amount of the loan at a specified time. Bond-holders also receive interest payments at set intervals through the period of the bond.

Companies such as Vail Resorts typically use bond proceeds to fund large capital development projects. In this case, the company is aiming to lower its debt service, said Leslie Ruobos, head of Vail Resorts investor relations. She said the old bonds are being purchased in part with the savings being realized from a new lowered-interest offering that will mature in 2014.

The purchase of the old bonds and the issuing of the new ones will be concurrent, she said.

The 10-year U.S. Treasury Bond rate is hovering around 4 percent. Vail Resorts has a BB- credit rating.

The company has a total of $577 million in long-term debt. In its last fiscal year Vail Resorts reported a $14.5 million pre-tax loss, its first loss in 10 years.


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