Financing lifts by their renewal date

In late 2022 we faced three funding needs at once. A CHF 50 million bond would mature in September 2024, CHF 35 million was drawn on a floating facility, and replacing our 1987 aerial cableway with a ten-seat gondola would cost CHF 58 million over three years. The Swiss central bank had raised its policy rate several times that year and was expected to continue. Our early winter had little natural snow, and EBITDA for the year was heading towards CHF 29 million.

I proposed fixing most of the borrowing at once. The chair of the audit and risk committee disagreed: she expected rates to peak within a year and preferred to stay floating until then. The chief executive wanted to keep facility headroom free for a possible purchase of a third hotel in the village. Both positions were reasonable. My concern was that a second poor winter during construction, with floating rates still climbing, could take net debt above our covenant of 5.25 times EBITDA at the moment we were most committed.

In February 2023 the board approved an eight-year loan of CHF 85 million from our two lending banks, drawn in two parts: CHF 35 million at once and CHF 50 million when the bond matured. Swaps fixed the all-in cost of both parts at 3.05 per cent from signing. We kept a CHF 60 million SARON-based facility for the seasonal trough and the remaining gondola payments. The hotel purchase was not pursued, and another buyer acquired the property in 2024.

Net debt peaked at 4.6 times EBITDA in April 2023, inside the covenant, and the gondola opened in December 2025. Rates then fell faster than I had expected. By mid-2025 a comparable fixed loan would have cost about 1.9 per cent, so the certainty has cost us close to CHF 1 million a year. I would change one thing. Fixing the amount in three tranches over twelve months would have kept most of the protection while reducing the price of being early.

Our lowest ski sector, Schattenegg, runs from 1,180 to 1,720 metres. Its 1991 four-seat chairlift and two drag lifts served 14 kilometres of pistes, including most of our beginner terrain. In the 2000s the sector averaged 118 operating days a winter; over the eight winters to 2023 it averaged 68. The chairlift's concession was due to end in spring 2024, and a replacement would cost about CHF 21 million. Extending snowmaking would add CHF 9.4 million and needed water we had no rights to.

The operations director proposed a simpler fixed-grip chair for CHF 12 million. The municipality, our largest shareholder, wanted the sector kept open, as did the ski school, the hoteliers' association and the managers of our own two hotels. I argued that neither lift could earn back its cost on the days the sector now achieved. The carrying value of its assets was CHF 16.8 million, and our impairment test, discussed with the auditors before the year end, supported CHF 5.6 million.

In February 2024 the board decided to end winter operations at Schattenegg when the concession lapsed that spring and recognised an impairment of CHF 11.2 million in the accounts for the year to April 2024. Beginners moved to a new learning area beside the upper station, and we carry ski-school children up free, forgoing about CHF 0.4 million a year in tickets.

Transport revenue in winter 2024/25 fell 1.6 per cent, against our forecast of 3.8 per cent, and maintenance costs fell by CHF 0.85 million. The village hotels lost some family bookings, and one of ours had its weakest February in a decade. The municipality voted against the board's discharge at the 2024 general meeting, though the resolution passed. I would change the order of events. The municipality first met the closure as an accounting figure in a board paper. It should have seen the operating-day record and the replacement cost a year earlier, before any write-down was attached.

In 2022 our two village hotels, the summit inn and the valley station burned about 410,000 litres of heating oil. The hotel boilers were over twenty years old, and fuel prices had risen by almost half within a year. The technical team proposed ground-source heat pumps for both hotels, a connection of the valley station and staff housing to the municipal wood-chip heating network and solar panels on the station roof. The programme would cost CHF 14.6 million over two years, with public building-energy subsidies of CHF 1.1 million.

The gondola had already committed most of our borrowing capacity. I proposed funding the programme from operating cash and suspending the cash dividend of CHF 2.40 a share, about CHF 1.82 million a year, for two years. Two directors argued that the dividend was a commitment to local shareholders and that a green loan with a margin discount was the better route. I showed that the loan would take net debt to 4.9 times EBITDA in a poor winter, too close to the covenant, and that the margin discount was worth less than the headroom we would lose.

The board proposed the suspension, and the general meetings of September 2024 and September 2025 approved it, the first with 71 per cent of the votes cast. We left the shareholder benefits on ski passes unchanged. The share price fell 7 per cent in the week after the announcement.

Oil use fell to about 55,000 litres in the year to April 2026; the summit inn keeps an oil boiler as back-up. Energy costs are about CHF 0.74 million a year lower at 2025 prices. The September 2026 general meeting approved a resumed dividend of CHF 1.60 a share for 2025/26, under a policy we published in 2025. I would publish such a policy before needing it. Shareholders read the suspension as a one-off judgement by management, when it could have been seen as the application of a stated rule.