MADISON, WI-Great Wolf Resorts Inc., based here, has said in a statement that the sale of the company announced Tuesday will not alter operations at the firm’s 11 locations. New York City-based Apollo Global Management LLC said it will pay $703 million for the resort company, including the assumption of outstanding debt, after Great Wolf’s stock languished for three years following the recession.
Apollo said it will pay $5 per share for Great Wolf, which started in 1997 and as of 2004 was trading at more than $20 per share. The stock price dropped in half in 2005, when losses were reported steadily per quarter, and dropped to almost nothing at the market crash in late 2008. The price had climbed back up to just under $5 per share before Tuesday’s announcement.
The company is seen as the leader in the indoor water park resort area, a trend that began in the mid-1990s and was dominated by Great Wolf. According to company’s statement, the takeover plan “will have no material impact on our business operations on our business operations or the day-to-day activities at our resorts.”
In the public announcement, Apollo partners agreed, with promises to continue efforts at the parks. An Apollo spokeswoman tells GlobeSt.com that the firm did not want to comment further, including about whether the name of the resorts will remain. If the takeover goes through, Great Wolf’s public status will end.
Also Tuesday, Great Wolf’s Board of Directors announced it has created a “poison pill” option in case another company tries to bid on the firm. The company declared a dividend of one preferred stock purchase right on each outstanding share of the company’s common stock as of March 23, that would entitle stockholders to buy 1/100th of a share of a new series of junior participating preferred stock at a purchase price of $5. This will only be enacted if another company other than Apollo tries to take over Great Wolf.
Per Great Wolf’s quarterly reports, the company has struggled for some time since the recession. In the first quarter of 2008 the company recorded a net loss of $2.3 million, and a loss of $4.1 million in the second quarter. By the first quarter of 2009, the company’s losses were at $5.6 million, and the firm said it would halt all planned developments. The company had said it would move forward with a partnership plan with other entities for more resorts, but this never happened.
As fourth quarter 2010, the net losses had risen to $29.2 million. The firm reported a net loss of $14.4 million this past fourth quarter 2011, with projections of increased demand at the resorts and better discipline on expenses. However, the company decided the buyout option was best, according to CEO Kim Schaefer in a statement.
Standard & Poor said Tuesday that stable “B” rating would not be affected by Apollo’s action. “Despite slow economic growth and relatively weak consumer confidence, Great Wolf performed well in 2011, likely benefiting from its business position as a value-orientated, drive-to family vacation alternative,” according to S&P in a statement. “For 2012, we expect RevPAR at the company to grow in the low-single-digit percentage area, incorporating our expectation for 3% to 6% growth for the overall lodging industry.”
The company operates 11 water parks throughout the country and in Canada. The locations are in Concord, NC; Mason, OH; Grand Mound, WA; Grapevine, TX; Kansas City, KS; Pocono Mountains, PA; Sandusky, OH; Traverse City, MI; Williamsburg, VA; Wisconsin Dells, WI and Niagara Falls, Canada.
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