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Mad River Glen Cooperative

Finance Committee

 Minutes of Teleconference 8/30/2006

 

Meeting called to order by Chairman Eric Schoenholz at 3:00 pm

In Attendance:

  • Committee Members: Andy Dulik, Leigh Michl and Peter Ludlow
  • MRG Staff Members: Jamey Wimble, Eric Friedman, Sharon Crawford

 

Subject of the meeting: Share redemption policy and revised share price

 

Background:

In 2006 46 shares were sold and we have 29 outstanding requests for share redemptions.The 29 shares represent a potential payout of approximately $43,500.In 2005 40 shares were redeemed and 33 in 2004.Sharon and Jamey noted that there had been a steady increase in the number of shareholders requesting redemption and that there was no particular cause that could be identified.It was the consensus of the committee that the trend would continue as the novelty of the Co-op may have worn off for some shareholders.Because of this and the significant capital requirements associated with the rebuilding of the Single and the forecasted negative cash balances anticipated until there are significant day ticket sales, the Committee reviewed and recommends changes to the redemption policy including the timing of the redemption payments.

 

After a long discussion the Finance Committee recommends the following to the Board of Trustees:

 

  1. Shares should not be redeemed unless there is a positive cash balance on the Balance Sheet at the end of the fiscal year.
  2. Shares should be redeemed on a 3 to 1 basis.

 

These recommendations are reflected in the following changes in the Share Tendering Policy.

 

Current Policy is provided for background.

 

Current Share Tendering Policy

Policy amended 2/5/05 effective 10/1/05

 

According the Bylaws of the Mad River Glen Co-operative (“the Co-op”), the Co-op is required to provide for the redemption of shares, provided that sufficient replacement capital is available.  In order to implement this provision of the Bylaws, the Co-op’s policy with respect to share redemptions is as follows:

 

       

1.        A shareholder who wishes to redeem their share should notify the Co-op Administrative Manager (currently Sharon Crawford) of their desire to redeem.  Only a written letter from the shareholder will be considered official notification.

2.        The share will be redeemed only if a new share is sold (“Replacement Share”); however, the actual share redemption and payment to the shareholder will be made on only one date per year, within 30 days of each fiscal year end (the “Annual Redemption Date”).  The share redemption will be made on the Annual Redemption Date immediately following the request, subject to the other conditions of this policy.

3.        Pursuant to Bylaws Section 9.3, a share sold on the installment plan will not be deemed a new share sold until all installment payments have been received by the Co-op.

4.        The redemption amount will be the original purchase price of the share plus any Co-op Rebate amounts that have accrued to the shareholder’s capital account.

5.        An administrative charge of $100 will be deducted from the payment of proceeds to the redeeming shareholder.

6.        A shareholder may request that their share be redeemed (and proceeds distributed) earlier than the Annual Redemption Date in situations of extreme hardship.  In these situations, the shareholder must establish, in writing to the satisfaction of the Board of Trustees that an actual hardship exists.  In these situations, an exception to the Annual Redemption Date provision will be granted; however, exceptions to Replacement Share provision will not be granted.

 

Recommended changes in Yellow

 

Proposed Share Tendering Policy

Proposal to be submitted at Sept. Co-op Board Meeting

 

According the Bylaws of the Mad River Glen Co-operative (“the Co-op”), the Co-op is required to provide for the redemption of shares, provided that sufficient replacement capital is available.  In order to implement this provision of the Bylaws, the Co-op’s policy with respect to share redemptions is as follows:

       

<![if !supportLists]>1.      <![endif]>A shareholder who wishes to redeem their share should notify the Co-op Administrative Manager (currently Sharon Crawford) of their desire to redeem.  Only a written letter from the shareholder will be considered official notification.

<![if !supportLists]>2.      <![endif]>Share will only be redeemed if there is a positive cash balance on the Balance Sheet at the end of the fiscal year, excluding advance APR payments and committed funds (i.e. single chair fund and bond redemption fund).

<![if !supportLists]>3.      <![endif]>The share will be placed on a waiting list. One tendered share will be redeemed for every three shares sold.(The rationale for 3 shares is that the value of one share should go to the Single Chair Fund, one to improve the Balance Sheet for the future, and one to replace the redeemed share.)The share will be redeemed in the order the share was tendered. The actual share redemption and payment to the shareholder will be made on only one date per year, within 30 days of each fiscal year end (the “Annual Redemption Date”).  The share redemption will be made on the Annual Redemption Date immediately following the request, subject to the other conditions of this policy.

<![if !supportLists]>4.      <![endif]>Pursuant to Bylaws Section 9.3, a share sold on the installment plan will not be deemed a new share sold until all installment payments have been received by the Co-op.

<![if !supportLists]>5.      <![endif]>The redemption amount will be the original purchase price of the share plus any Co-op Rebate amounts that have accrued to the shareholder’s capital account.

<![if !supportLists]>6.      <![endif]>An administrative charge of $100 will be deducted from the payment of proceeds to the redeeming shareholder.

<![if !supportLists]>7.      <![endif]>A shareholder may request that their share be redeemed (and proceeds distributed) earlier than the Annual Redemption Date in situations of extreme hardship.  In these situations, the shareholder must establish, in writing to the satisfaction of the Board of Trustees that an actual hardship exists.  In these situations, an exception to the Annual Redemption Date provision will be granted; however, exceptions to Replacement Share provision will not be granted.

<![if !supportLists]>8.      <![endif]>Implementation of this revised policy will only affect requests for redemptions received after the revised policy is approved by the Board.For current redemption requests it is recommended that we honor the existing policy (one redemption for one replacement) with the exception that shares will only be redeemed if there is a positive cash balance on the Balance Sheet (as defined in # 2 above) at the end of the fiscal year.Therefore, shareholders with current requests will have to wait until next year, provided there is a positive cash balance at the end of that fiscal year.

 

The committee also discussed and recommends the following changes in our share pricing.

 

Share Prices

 

Share Price Proposal

Original Price:                $1,500

Current Price:                $1,750

Proposed Price:             $2,500 (to go into effect 4/1/07)

 

Rationale for Price Increase;

  • Encourage share purchases
  • Create a deadline to spur share sales THIS SEASON
  • Reflect increased value of shares over time.
  • Adjusted for inflation the original $1,500 price is now $2,000
    With a 3% inflation factor $2,500 today was worth $1,752 in 1995 $’s

 

Downsides fro Price Increase

  • Diminished sales in subsequent years
  • Effect on share tendering? New policy will relieve any potential problems

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