After announcing last week that it has completed the sale of its Blue Harbor Resort in Sheboygan, Wisconsin, Great Wolf Resorts, Inc. (NASDAQ: WOLF), enjoyed share prices surging as much as six percent to $2.20 per share from $2.18 late last week. Following the announcement, prices have settled as low as $2.14, although average ten-day volume remains nearly ten times higher than the usual volume for the past three months.
Chief Executive Officer of Great Wolf Resorts, Kim Schaefer, commented on the recent transaction, stating, “The sale of the Blue Harbor Resort is another step in the execution of our strategy to increase our financial flexibility and to focus our efforts on expanding our company through management and licensing arrangements rather than direct ownership of real estate.”
Great Wolf announced the sale of the 182-room resort to Claremont New Frontier Resort LLC for $4.2 million. In addition to the sale, Great Wolf Resorts has also made a payment of $2.5 million to the City of Sheboygan. This payment relieves the company of all obligations under the terms of its original agreements with the City, consisting of minimum guaranteed amounts of room tax payments to be made through 2028, and real and personal property tax payments to be made through 2018. The carrying value of the liabilities associated with those minimum payment obligations was $11.6 million as of December 31, 2010.
Schaefer continued, “We remain focused on unlocking the full value potential in our Great Wolf Lodge(R) brand and our range of proprietary amenities. Just as importantly, we have further improved our balance sheet and liquidity position by eliminating nearly $12 million of debt.”
Madison, Wisconsin-based Great Wolf Resorts, Inc. is North America’s largest family of indoor water park resorts, and the sale of Blue Harbor Resort is part of a long-term strategic plan to strengthen financial flexibility, to help the Company grow through management and licensing arrangements instead of direct ownership of real estate. Additionally, it aims to maximize shareholder value for the reason that a higher concentration of franchise fees reduces earnings volatility and provides a more stable growth profile.