BILLINGS, Mont. – The Yellowstone Club, a Montana resort that counts Bill Gates among its members, could be sold for $100 million to a Boston financial firm, under a deal outlined in court documents.
Documents filed by club attorneys show an affiliate of CrossHarbor Capital Partners LLC has agreed to pay $30 million in cash and $70 million in a promissory note for the 13,600 acre club near Yellowstone National Park.
CrossHarbor also has agreed to invest an additional $50 million in capital improvements at the club and $25 million for other expenses.
That $175 million investment comes up far short of prior appraisals of the club, which has been valued at anywhere from $310 million to $780 million.
Club spokesman Bill Keegan said Wednesday that other offers were still being sought. He called the Crossharbor agreement a "benchmark from which to start."
The club counts Dan Quayle and Bill Gates among its 340 members, yet had been only partially developed when it fell more than $400 million in debt last year.
The deal is contingent on court approval and other purchase proposals.
An attorney for creditors still owed money by the club said Wednesday that he was reviewing the CrossHarbor offer.
Thomas Beckett with the Unsecured Creditors Committee said any deal would have to protect members who ponied up deposits of $250,000 to $300,000 to join the club. It also would need to repay the dozens of local contractors and other vendors still owed money.
"The committee will aggressively seek to improve the terms of any plan that doesn't provide for those two goals, and actively oppose it if it can't be improved," Beckett said.
The deal's dollar value aside, it offers a potential exit plan for the Yellowstone Club that would avoid a fire sale of the club's assets.
That prospect was floated earlier in the bankruptcy proceedings by the club's primary creditor, the financial firm Credit Suisse. But it has been fiercely opposed by club members who don't want to lose their mountain retreat, with its gated access and multimillion dollar homes scattered at the base of a members-only ski hill.
In hopes of attracting "higher and better offers" than the CrossHarbor deal, club attorneys on Wednesday asked U.S. Bankruptcy Judge Ralph Kirscher to push back the deadline for the club to come up with its reorganization plan. Now due at the end of March, the plan would not have to be confirmed until the end of April under the attorney's request.
That would give the club time to hold an auction in search of a better offer.
"They clearly hope to get more, but at least they have a firm offer in hand and would expect to do better as the bidding process gets under way," said club spokesman Keegan.
If no better offers are made, the club would ask Kirscher to approve the CrossHarbor deal.
Court documents show a dozen parties have displayed interest in the club, but so far only CrossHarbor and one other party have entered "meaningful acquisition negotiations."
That second party is not named in the documents. An inspection trip to the club was planned by the unnamed party sometime this week, according to the documents.
CrossHarbor is controlled by club member Sam Byrne, who in late 2007 and early 2008 came close to purchasing the Yellowstone Club for a reported $455 million.
Within months of that deal falling through, the club's owners, Tim and Edra Blixseth, signed a divorce settlement that left the club in Edra's hands. That also left Edra responsible for paying off a $375 million loan to the club from Credit Suisse in 2005.
Most of the money from that loan was later transferred out of the club. Tens of millions went into private bank accounts controlled by the Blixseths. Millions more were used to pay off Blixseth-owned properties and to buy vehicles and airplanes used by the couple.
Credit Suisse is still owed $307 million. Other lenders, club members and dozens of contractors who did business with the club are owed an additional $83 million.
Attorneys for Tim Blixseth have said that he is not obligated to repay the money since it was transferred through a corporate entity, BGI, now controlled by Edra.
Meanwhile, Edra Blixseth is trying to raise money to repay at least some of BGI's debts by putting up for sale a castle in France for more than $60 million. Keegan said the castle and a BGI-owned estate in Scotland were not included in the CrossHarbor deal.
In a separate court action, the Unsecured Creditors Committee filed a complaint Wednesday asking Judge Kirscher to issue an injunction barring Edra Blixseth from taking out loans using BGI assets as collateral.
The complaint says that since August, Edra Blixseth took out loans "for personal expenses" totaling $49.4 million. Offered for collateral against those loans were BGI properties including Blixseth's 230-acre estate, Porcupine Creek, in Rancho Mirage, Calif.