After due notice, a meeting of the Single Chair Finance Committee of the Mad River Glen Cooperative was convened at 11:30AM on June 24, 2005 via teleconference.
Present at the meeting were Permanent Committee Members Leigh Michl, Jed Kalkstein, Geordie Hall, Charlie Tipper, Al Russell, and Jamey Wimble.Deri Meier and Roy Liu were absent.Also present were shareholders Jay Appleton, Eric Freidman, Mark Renson, and Dan Kenny.Deb Steines attended the meeting in her role as a trustee of the Stark Mountain Foundation but indicated that the SMF was a third party and had different interests than the Co-op.She indicated that she would probably not attend future meetings of the Committee, except when invited in her role as SMF President.
CALL TO ORDER:
Mr. Michl called the meeting to order at 11:35 AM.
OPENING REMARKS:
Mr. Michl welcomed participants to the first meeting of the SCFC.He indicated that the SCFC had been authorized by board on 5/28/05 and that the mission/scope approved by the board had been given to most attendees and was available on the shareholders portion of the MadRiver web site.
Mr. Michl indicated that the board had organized the Committee so that a focused group of experts could develop and recommend to the board a plan for financing the Single rebuild.The SCFC may actually do a portion of the fundraising depending on the outcome of the SCFC meetings and the desires of the board.Mr. Michl noted that the only objective of the Committee is to pay for the Single.We have nothing to do with the timeline of the work, the design of the lift, or any other aspect of the Co-op’s business.If we start to cross over into those areas, we will alert the board and get their direction on the issue.
Mr. Michl described the structure of the Committee and introduced the 8 initial permanent members.He noted that it was possible to include additional permanent members in the future; however there was a need to have a smaller group to ensure accountability and the successful completion of the project.All shareholders are welcome at meetings and, to the extent possible, participate.Mr. Michl reviewed Committee rules including Roberts rules, Committee members priority, confidentiality, conflict recusal, executive sessions, and in general a low tolerance for violations of the rules (given the importance of the task).
PROJECT FUNDING DATES:
Mr. Wimble noted the following rough outline of payment dates:
Mr. Wimble also noted that the overall project cost of $1.4 million was likely a maximum and that it could cost less.The Committee agreed that it was wise to assume the $1.4 million cost.Mr. Wimble noted the following Co-op cash availability:
<![if !supportLists]>·<![endif]>$300K present Single Chair Reserve cash
<![if !supportLists]>·<![endif]>$75K additional Single reserve cash deposited on 9/30/05
<![if !supportLists]>·<![endif]>$75K further Single Reserve cash deposited on 9/30/06 (subject to 05/06 operating performance)
<![if !supportLists]>·<![endif]>$160K pro forma cash on hand at 9/30/06 after Single reserve set aside and payment of typical annual capital projects (subject to operating performance)
<![if !supportLists]>·<![endif]>In total, $610K maximum Co-op cash availability (through 9/30/06).
The Committee noted that these funds were dependent on weather and operations and did not take into account future operating and other cash needs and, therefore, the Committee should not accept all of these funds as available.
FUNDRAISING STRATEGY:
Mr. Michl suggested that the Committee should seek bank financing (on the best available terms) for the maximum the Co-op could support so that, worst case, the project could move forward on the required timeframe.The consensus of the Committee was that the Co-op could support, depending on terms, as much as $800K of bank debt.The Committee recommended that the Co-op retain about $150K of the Single Reserve fund as a “rainy day” fund that would represent approximately 18 months of bank debt service. Therefore, in a reasonable worst case scenario, a minimum of $300K of non-debt funding would need to be raised.
The Committee appointed Al Russell, Jamey Wimble, and Roy Liu to (1) identify potential lending sources and (2) explore bank debt terms (rates, covenants, commitment fees and length of commitments, etc.).This group will also explore the availability and terms associated with debt guarantee entities such as the Vermont Economic Development Administration and the Vermont Community Loan Fund.
The Committee discussed its goals for non-bank financing sources.At the suggestion of Eric Friedman, the Committee agreed that the Co-op should seek non-bank (and non debt) funds for the full $1.4 million cost of the project.If this goal were attained, the Co-op would have a strong, sustainable capitalization for the future.Mr. Friedman noted that the exact fundraising target should be confirmed by 7/24/05 so that this information can be incorporated into his marketing plans and collateral.
The Committee discussed the availability of funding from various grant-making entities.It was agreed that these entities would likely not grant money to the Co-op directly, but could make grants to the SMF.Charlie Tipper, Leigh Michl, and Jamey Wimble agreed to follow-up with the SMF to determine the (1) extent to which the SMF could contribute to the Single project and (2) amount of capital the SMF could reasonably raise.
FUNDRAISING RESOURCES:
The Committee discussed the resources that would be required in this fundraising project of this magnitude.The Committee noted that staff involvement in the project was necessary and that this involvement may reduce the time they had available for their primary, ski area-related tasks.The Committee discussed the need to hire a fundraising consultant to assist with the actual raising of funds.It was agreed that the Committee would not recommend a fundraising firm that charged a percentage of capital raised.However, Committee members noted extensive personal experience where a consultant (charging reasonable hourly rates) had been indispensable to fundraising efforts, even though much of the actual work was still conducted “in-house” by staff and volunteers.
In an effort to explore the feasibility of this idea in greater detail, the Committee assigned Charlie Tipper, Jamey Wimble, and Geordie Hall to identify a slate of candidates that could fill the role of a consultant for the project.The committee agreed to query shareholders to see if any shareholders had these skills and might be willing to be considered for this role.The Committee agreed to discuss the list at the next meeting and to interview certain candidates to assess their time availability, cost, and fit with the Co-op’s objectives and culture.
OTHER BUSINESS:
The Committee agreed to meet via conference call every two weeks.The next meeting dates (subject to confirmation) were 7/15/05, 7/29/05, and 8/12/05.Geordie Hall agreed to arrange a conference bridge for these dates.Mr. Michl indicated that he would complete the minutes and that comments and corrections were due from Committee members by 6/28 so that the minutes could be included in the board package.He also agreed to send Committee members an “action items” email and to attend the 7/2 trustees’ meeting on behalf of the Committee.
ADJOURNMENT
There being no further business, the Committee adjourned at 1:15PM.
