Word: skiing
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...empire based on the odd combination of meatpacking and television stations, much of it financed by the junk bonds of Drexel Burnham Lambert, led by the now infamous Michael Milken. Drexel pumped out high-risk securities the way snowmaking machines create instant winter. Gillett, a Wisconsin boy, loved to ski, and he loved to ski at Vail, a powdery paradise in the Colorado Rockies. So he bought the joint...
Fast-forward to 1997, when the ski industry, not to mention the junk-bond industry, has come full circle. Gillett the Bankrupt has had "little" difficulty raising $162.5 million in investment capital, and he is assembling another empire, this one built around medium-size properties near big cities to capture the day trippers and weekenders who account for nearly half the ski business. He bought back his old meatpacking operation in 1994 and added adornments such as a barge business in the Pacific Northwest and a group of golf courses in Montana. Have the bankers lost their marbles again...
Gillett personally relishes skiing "steep and deep," which is not a bad metaphor for his investment style. Like his earlier Vail venture, Gillett II rests on a mountain of junk securities, although these cost a mere 12.5% interest, well below the nosebleed rate for his last go-round. And this time he has two big partners: the John Hancock Mutual Life Insurance Co., which owns 50% of the ski operations, and the Canadian Imperial Bank of Commerce, which has 10%. Says Gillett, who has a hard time containing his optimism: "The demographics are with us. Skiing is at the same...
This time around Gillett is taking precautions, separating his various ventures so that a mishap in one can't pull down the others. Running ski resorts has become a family affair, with Gillett drawing on the active participation of his wife Rose and their four sons, ages 22 to 27. Still, he confides his weakness for sometimes moving too fast and buying too much. "I've lived my dreams, but then I blow them up." How comforting that must be to his bond holders...
Soon the only place you'll be able to find a pair of traditional skis will be at a yard sale. So-called shaped skis--a.k.a. parabolic, side-cut cyber--have revolutionized the sport, making the trip downhill easier and safer. Not since metal and fiber glass replaced wood have skiers gained so much from an improvement in equipment. The industry badly needs the boost. The number of skiers and ski-resort visits has been flat for a decade, while the number of skis sold has fallen 40%. Meanwhile, snowboarding has blossomed...