Ruapehu Alpine Lifts' biggest creditors have agreed to write off their debts – if life pass holders pay $2500 each
The operator of NZ's busiest skifields is in an "impossible" financial position, the Government says, and the only option is to wind it up.
Ruapehu's 14,500 life pass holders have been sent a letter from MBIE deputy chief executive Robert Pigou this afternoon, advising that the Cabinet has moved quickly to investigate a new structure to allow the continued operation of the Whakapapa and Turoa skifields, and the Sky Waka gondola.
MBIE and ANZ bank would write off a combined $28 million in debt – but only if the life pass holders contribute almost as much.
Pigou gives an indicative figure of $2,500 each to transfer their pass to the new company, followed by a future levy of up to $250 per year for two or three years to fund ongoing capital maintenance and development.
If every life pass holder signed up, that would raise $36 million immediately, and about another $10 million over the next three years. But government and bank officials who have hammered out the proposal with the Ruapehu Alpine Lifts' administrators are realistic: they are hoping to raise up to $20m in the first instance.
"The current estimate of the cash required to restart the skiing business and Sky Waka gondola at Mt Ruapehu is between $15 million to $20 million," Pigou says.
"This level of funding is to ensure the new entity has sufficient funds to continue to operate in the longer term, and to meet outstanding rescue finance/costs and deferred maintenance that is required for the business to continue to operate. We need to establish the likely level of financial support from life pass holders to meet this cash requirement."
On social media, life pass holders have reacted angrily to the "ultimatum". But speaking to Newsroom today, voluntary administrator John Fisk says he's had 300 emails in the first hour from pass holders keen to sign up. And he called on other New Zealanders who wanted to save the skifields to contact him to sign up as life pass holders in the new company.
Ruapehu Alpine Lifts owed $44.5m when it was put into administration. Since then, ANZ has advanced the administrators another $4.5m to keep operating while a solution is negotiated.
Talks are underway with the other bondholders: about $11 million is owed to various iwi trusts, most related to Tuwharetoa, and a $1m bond is held by Taupō District Council.
John Fisk was unable to give any assurance, at this stage, to the unsecured creditors. These are first and foremost Ruapehu District Council ($500,000) and employees ($700,000).
Speaking to Newsroom, Ruapehu mayor Weston Kirton says the council will be fighting hard to get its money back. "I can understand that ratepayers are worried," he says. "The money that they've lent to the skifields is at risk."
But at the same time, he said, locals were relieved that there was a proposal to save the skifields, which are estimated to contribute $100m a year to the local economy. "I can't ski to save myself - every time I go up there I fall down," the 67-year-old laughed. "But I might buy a pass if that's what it takes to save the skifields – I'll have to defer to my wife on that one, she holds the cheque book."
One way or another, the not-for-profit Ruapehu Alpine Lifts Ltd is now almost certain to be liquidated. The only question is whether its assets are transferred to a new skifields company, licensed by the Department of Conservation and iwi to operate the mountain – or whether everything is shut down.
If the company is liquidated without a new operator to take over, it's obligated to remove all the buildings and lifts and other infrastructure from the mountain, at at back-of-the-envelope cost estimate of more than $100m.
"Revenues have been significantly impacted by Covid-19 and then by poor snowfall," Pigou says. "The Government is acutely conscious of the immediate impact the collapse of Ruapehu Alpine Lifts would have on the communities surrounding Mt Ruapehu."
The Government also recognises that the company's collapse would adversely impact other Ruapehu stakeholders – particularly employees, co-dependent businesses, the 14,500 life pass holders and the 52 tramping and skiing clubs.
Beyond that, the wider region including Taupō, Ohakune, Taumarunui and Turangi would be affected, and many New Zealanders would no longer be able to ski if Ruapehu Alpine Lifts ceases operations.
"It is for these reasons that the Government is prepared to provide additional support to RAL," Pigou says.
"For the Government to be able to continue to support the investigation of the potential commercial transaction and the other elements required to finalise such an arrangement, it needs to understand the likely extent of life pass holder financial support for this commercial transaction."
He adds: "In the absence of an alternative structured solution, the sale of some, or all, of RAL’s assets and liquidation of the company appears highly probable."
