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The recent announcements by the local ski areas to begin operations as a result of the early season snowfall has created a substantial amount of inquiries as to the status of Hemlock Valley ski area for this season. We would like to offer the following comments:
In August 2003, Hemlock Valley Resorts entered into a long term (50 year) agreement with the Province of BC for the operation and development of the ski area. That agreement included, among other things, a requirement for the resort to undertake a number of key, but expensive items within the initial period of the agreement (specifically a requirement to either upgrade the existing lifts or install a new lift.) The time lines for those requirements were, from our perspective, unreasonable. Nevertheless, since August 2003, we have continued to move ahead on completing many of the obligations, as set out in the agreement with the Province.
Unfortunately, despite everyone's best efforts, the inability of the resort to open up during the winter of 2004/05, due to poor snow conditions, further hampered our ability to address the requirements in our development agreement. Over the last several months, we have worked diligently to identify a new investor or purchaser for the resort that would move forward with the future development and operation of the resort. To date, those discussions have not identified a new investor or purchaser, although discussions remain ongoing.
Over the last few months, the Province has grown increasingly impatient with their request to have the resort complete the obligations in the development agreement, and in October of this year, the resort was given a 60 day notice to either comply (have the requirements completed) or the agreement would be terminated effective December 11,2005. The resort has expressed significant reservations to the Province regarding this decision, saying this notice will not assist in bringing forward a new investor or purchaser. One of the key consequences arising from this decision is our inability to sell season passes, which provides critical revenue related to getting the resort open for the winter. The Province has specifically directed us to not have any season pass sales while the 60 day notice is in place.
So, where do we go from here? In the event the agreement with the Province is terminated, effective Dec. 11th, the Province has stated it will not operate the resort for this winter, and over the winter and into the spring, they will work toward identifying a new operator through a competitive bid process.
In terms of Hemlock Valley Resorts, we are not in a position to allocate funds to get the resort open, nor would we, given the potential for the Province to terminate within 30 days.
We remain committed to finding a new investor or purchaser, and if that can be accomplished within the next 30 days, we will make our best efforts to move forward to get the resort open as soon as possible, and hopefully in time for the Christmas holiday season. Keep in mind that any new purchaser will require the approval of the Province before any decision is made to open the resort.
We are excited about the early season conditions and would like nothing more than to announce that we are moving forward to an early opening date.
We want to thank all of our supporters for their continued patience and understanding in this difficult, but exciting time of transition. We remain cautiously optimistic that a decision on opening the resort can be realized very soon.
Management and Staff
November 10,2005
