Ruapehu Alpine Lifts' precarious financial position flagged in April
Wednesday, 12 October 2022
Ruapehu Alpine Lifts was warned in April that its financial position was so precarious its auditors had “significant doubt on the company's ability to continue as a going concern”.
The company, known as RAL, runs operations on Mt Ruapehu’s Whakapapa and Tūroa ski fields and went into voluntary administration on Tuesday after a particularly poor ski season.
According to its annual report, released on April 14 for the financial year ending November 30, 2021, an independent auditor’s report undertaken by Deloitte’s stated the “company’s current liabilities exceeded its current assets by $14.6m” and “that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern”.
In August, RAL made more than 130 seasonal staff redundant and, according to a Newsroom report, the Government has refused RAL another bailout after loaning the company $15m.
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However, local businesses and councils in the region said they would support RAL any way they could.
Among RAL’s list of creditors is the Ruapehu District Council, the Taupō District Council and, more significantly, the Tūwharetoa Māori Trust Board.
The company established “Tourism Infrastructure Bonds” to fund the Sky Waka Gondola project at the Whakapapa Ski Area and, at the end of the 2020 financial year, $13.5m worth of bonds were committed to by Tūwharetoa Gondola Partnership Limited, the Taupō District Council, the Bay Trust and two unnamed private entities.
The largest subscriber was the Tūwharetoa Gondola Partnership, which is made up of eight Ngāti Tūwharetoa commercial entities and holds $9.5m worth of bonds.
The Taupō District Council holds $1m worth of bonds, and the remaining $3m are held by the Bay Trust and the two private entities.
The Tūwharetoa Māori Trust Board and Tūwharetoa Settlement Trust declined to comment on the ongoing situation but the mayors of the Taupō and Ruapehu districts were confident that, one way or another, they would see their investment returned to ratepayers.
Taupō mayor David Trewavas said while he wasn’t surprised by the announcement, he hoped RAL would be able to “trade its way out of this”.
“It’s a great bit of infrastructure on the largest ski field in New Zealand and hopefully the administrators can look at what is working well and can turn this situation around.
“We have to be mindful of our ratepayers and that this is an iconic product and important for our tourism businesses, and we will support them any way we can.”
Trewavas said he had a “great relationship” RAL’s board of directors but the last three years had been very challenging.
Ruapehu district mayor Weston Kirton hoped the council’s $500,000 loan to RAL would be paid back but RAL’s management may require “a new broom to come and sort out some of its issues”.
“We will be trying to get back what we are owed … everyone is going to try their best to find a way forward, but this is not just a regional problem – it’s national and international – but we are not writing them off just yet.”
He said the first priority would be to engage with administrators to make sure the future of the business was sustainable.
“This brings back memories of the 1996 [Ruapehu] eruption, and we all came back from that, so we remain hopeful.”
According to RAL’s annual report, staff “have been through the proverbial wringer in the last couple of years”.
“They are up for the challenge and have an unwavering commitment to our partners and community.”
RAL received $2.2m in wage subsidies, $1m of relief on annual licence costs, and MBIE increased its $10m loan to it by $5m to fund urgent works on the Tūroa lifts in advance of winter 2022.
TCB Ski, Board and Bike managing director Ben Wiggins said it was not a good time for the region.
Describing RAL's ski fields as the cornerstone, he imagined many people who circle the maunga would be worried about what this meant for the future of their businesses.
The combination of Covid and a lack of snow this season has clearly impacted the mountain's ability to function, he said, and that it would have a massive flow on effect.
'Mount Ruapehu is obviously a big asset for the entire region,' Wiggins said.
'The major drawcard to the region is skiing and snowboarding, so if that closes down you are taking away almost a quarter of the reason people come to town.'
Fortunately, he said his business was safeguarded by the district's growing biking industry, but half of his profits would be lost without the ski field.
'If we lose that, it won't be good for anyone. It will mean less income and staff cuts, which no-one wants.'
Despite this, he said Ruapehu businesses were resilient and was hopeful things would turn around.
'Let's just hope in this next phase of the game someone or something will come to the rescue.'
Visit Ruapehu general manager Jo Kennedy said it was yet another blow for the region, but was 'too early” to assume the worst.
'They've obviously run into a really tough two years of Covid followed by a year of a lack of snow, so it's not a big surprise they are struggling.'
She feels for the team at RAL, but is pleased the Whakapapa skifield would remain open until the end of the season.
'We are fortunate this is happening in summer rather than at the start of the season.
'The town stands beside RAL, whatever that road might look like for them.'