Alterra Mountain Co.

Even if our forecast measure of lease-adjusted leverage declines temporarily below 6x, it is unlikely that we would raise our rating on Alterra until we are confident it will sustain leverage of less than 6x even when incorporating acquisitions. The acquisition of the company by its sponsors in July 2017 brought together well-known resorts, such as Mammoth Mountain Ski Resort in Southern California and Squaw Valley Alpine Meadows in Northern California, with Intrawest's resorts, including its Steamboat and Winter Park resorts in Colorado and Canadian Mountain Holidays in British Columbia, which provides access to helicopter skiing. Since then, Alterra has completed multiple acquisitions with an aggregate purchase price of about $650 million. These acquisitions included Deer Valley Resort in Utah

...Our adjusted leverage forecast for Alterra is high primarily because of its several years of leveraging acquisitions. However, the company's forecast leverage should provide it with a good cushion through fiscal year 2020 relative to our mid-7x downgrade threshold. Our assessment of Alterra's financial risk profile reflects our expectation that its adjusted leverage will be high at about 6x in fiscal year 2020 (ending July 2020) and in the high-5x area in 2021, although these measures still provide it with a good cushion relative to our mid-7x downgrade threshold. We also believe the company's current leverage cushion would enable it to absorb a spike in leverage caused by a financial underperformance, a poor snowfall year, or other moderately leveraging events. The company's financial risk also reflects its ownership by financial sponsors KSL Capital Partners and Henry Crown & Co. (a family office investment firm) and the potential that its sponsors will lead it to take on additional leverage...

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