Letter quashes rumors about Railway sale
GCNAE says price is too high
An Aug. 30 Grand Canyon Railway letter to employees has officially cleared up one of the biggest rumors concerning the pending sale of the popular attraction.
In the letter, GCR President Dave Chambers writes, "At this point in time, I will put to rest the many rumors that have been circulating regarding Grand Canyon Northland Amusements & Entertainment, LLC (GCNAE). GCNAE is not included in the final group of potential buyers."
When approached by the News, GCNAE Chairman Mike Morgan and his group responded, saying the asking price was too high.
"The multiple that the Grand Canyon Railway wanted for the company was ridiculous," Morgan said. "So, we gave them a market-reasonable bid with a drop-dead date, then we walked away."
Morgan went on to say he'd like to disclose information regarding the bid process and the $500,000 he says was spent on the project, but would have to get a release on the confidentiality agreement from the GCR before doing so.
Due to those agreements, the Grand Canyon Railway is not disclosing any details on how much its operation will go for but so far, both local residents and business owners have wildly speculated that the price tag could be anywhere from $50 million to $200 million.
The letter states GCR had initially contacted 200 potential buyers and that more than 25 percent of those entered into the sale process. Less than five are now being considered as serious prospects.
"The process was to receive letters of interest which disclosed what they expected the price to be," Chambers explained in a later interview. "We received 13 letters of interest. From those, we have selected these final few to submit final letters of intent."
Chambers said the decision-makers will evaluate those few based on finances, quality of the organization and long-term plans.
The buyers are being filtered into two categories ‹ financial buyers with a large sum of capital who are interested in a solid investment and strategic buyers who are already part of the hospitality/travel industry and are looking to expand.
Local residents, city officials and business owners are wondering what the change over will bring, whether the railway will continue operating as it has and whether or not the new owners will be as community oriented as GCR leaders are now. Many have credited the railway with helping economically save Williams after Route 66 was bypassed by Interstate-40 in the mid-1980s.
"We have a good working relationship with the current administration at the railway and hope that it remains the same," Williams Mayor Ken Edes said. "The relationship between the community and the railway is vital and it took us a while to get there."
Chambers said he doesn't think the city and its residents will have much to worry about.
"I think that the city officials and the city residents will be very excited and happy with whoever the end buyer is," Chambers said.
GCR officials still aren't saying exactly who those buyers might be, but confirmed the importance of choosing a buyer who will continue operations in the same tradition as original owners Max and Thelma Biegert.
"Each buyer brings different strengths and advantages to it," Chambers said. "All of the buyers that we're dealing with are very substantial companies. At least three of them have extensive backgrounds in the hospitality business."
He offered that although nothing is set in stone, none of the GCR staff ‹ including Chambers himself ‹ have reason to suspect any type of personnel change.
"I'm fairly confident that our operations will stay pretty much as-is," Chambers said. "We're not the typical takeover where there's massive amounts of overhead to be saved by merging two telephone companies or two automobile companies or something like that."
Chambers went on to explain that the majority of the buyers lack the infrastructure to run the operation with their own people.
As far as what the current mood between GCR employees is, Chambers admitted that the buyout does bring the typical amount of uncertainty about the future, but stressed his confidence that things will most likely remain the same.
One solid change for the new owners will be the projected need for another 200 hotel rooms some time in 2008 ‹ an issue that has been made part of the sale proposal. Additionally, six different possible growth opportunity plans have been submitted as well. The decision on where to go with the railway will rest with the buyer(s).
The potential parties have also been notified of the plans by Al Richmond and others regarding the future Arizona State Railroad Museum.
Final letters of intent from the potential buyers are due on Sept. 14 and the final agreement is expected to be negotiated by the end of October. Because the railway offers service to the Grand Canyon, agreement documents will then be passed on to the National Park Service for approval. Chambers could not say how long the NPS approval process would take.