8. Debt and Letter of Credit

12 Months Ended

Oct. 31, 2011

Notes

8. Debt and Letter of Credit:

8.  DEBT AND LETTER OF CREDIT:

Debt as of October 31, 2011 and 2010 consists of the following:

	10/31/11		10/31/10
Mortgage notes payable to bank, interest fixed at 6.90% payable in monthly installments of $61,769 including interest through Fiscal 2031.	$7,997,897		$8,180,380
Mortgage notes payable to bank, interest at the bank’s prime rate (3.25% at October 31, 2011) payable in monthly installments of $3,198 through January 2014.	118,320		156,698
Mortgage note payable to bank, interest fixed at 5.59% payable in monthly installments of $44,156 including interest through October 2014.	6,900,665		7,035,263
Construction and site development line of credit mortgage note payable to bank, interest at the greater of LIBOR plus 3.5% or 5.5% (5.5% at October 31, 2011) payable in installments due at the closing of each unit within the development through September 2012 or on demand.	6,156,652		7,795,423
Revolving line of credit payable to bank, interest at the greater of LIBOR plus 3.5% or 5.5% (5.5% at October 31, 2011) payable on demand.	1,197,131	1,427,386
Term note payable to bank, interest at one-month LIBOR plus 3.0% (3.25% at October 31, 2011).  Interest only payments due monthly through December 2011 at which time principal balance is due in full.	4,600,000	2,600,000
Capital lease obligation payable to bank, interest fixed at 5.23%, payable in 24 installments of $8,682 due April 2011 through September 2014.	142,455	0
Capital lease obligation payable to bank, interest fixed at 6.48%, payable in 48 monthly installments of $5,131 including interest through October 2011.	0	54,659
	27,113,120	27,249,809
Discontinued operations debt:
Mortgage note payable to bank, interest fixed at 6.75% payable in monthly installments of $7,255 including interest through May 2014.  (Now included in Liabilities of discontinued operations.)	1,010,384	1,027,645
Promissory note payable to a descendants trust, interest fixed at 7%, interest only payments of $3,908 due monthly through February 2015, at which time principal balance is due.  (Now included in Liabilities of discontinued operations.)	0	670,000
	$28,123,504	$28,947,454

   The Companies have two lines of credit with Manufacturers and Traders Trust Company (the “Bank”) totaling $12,100,000 at October 31, 2011.  The lines are as follows: a $9,000,000 line of credit mortgage note with sub-limits for construction and site development and a $3,100,000 revolving line of credit for general operations.

   During Fiscal 2011, the $9,000,000 line of credit mortgage had a site-development sublimit of $4,600,000 and a construction sub-limit of $4,400,000.  At October 31, 2011, the Companies had utilized $6,156,652 of this line which bears interest at the greater of overnight LIBOR plus 3.5% or the daily 30-day LIBOR plus 3.5%, in all cases at a minimum interest rate of 5.5% (such interest rate was 5.5% at October 31, 2011). The interest reserve account included in cash held in escrow, which was established in 2009 as security for the payment of interest on the mortgage note, and had a balance of $114,351 at October 31, 2011.  Subsequently, on December 15, 2011 the ski areas were sold. Sale proceeds of $3,062,811 were utilized to pay this line of credit and $325,000 was deposited into the interest reserve account.

   At October 31, 2011, Blue Ridge had utilized $1,197,131 of its $3,100,000 general line of credit, which is an on demand, revolving line with no maturity date. The general line of credit bears interest at the greater of the overnight LIBOR plus 3.5% or the daily 30-day LIBOR plus 3.5%, with in all cases a minimum interest rate of 5.5% (such interest rate was 5.5% at October 31, 2011).

   The weighted average short term borrowings and interest rate for the year ended October 31, 2011 were $12,629,000 and 5.04% respectively.  The weighted average interest rate at ended October 31, 2011 was 4.62%.  The loan agreement requires, among other things, that the Companies comply with consolidated debt to worth, debt service coverage and tangible net worth ratios.  The Companies have not met the required debt service coverage ratio at October 31, 2011 and 2010 and have obtained waivers from the Bank for this covenant.

  The site development sub-limit agreement enables the Companies to issue letters of credit in amounts up to $4,600,000.  During the fiscal year ended October 31, 2005, or Fiscal 2005, the Bank agreed to issue, on the Companies’ behalf, an irrevocable standby Letter of Credit to Kidder Township for the purpose of guaranteeing, as required by Kidder Township, completion of the infrastructure improvements to the Boulder Lake Village premises.  On September 12, 2005, the letter of credit was issued in the amount of $3,831,594.  As of October 31, 2011, the Companies have utilized $2,628,657 of the site development sub-limit and the net balance of the letter of credit was $1,202,937.  The amount available on the site development sub-limit as of October 31, 2011 was $479,542.

   On September 30, 2011, the Companies sold a property leased to AmRest, LLC in Fort Collins, Colorado and subsequently paid off the outstanding principal balance of $670,000 on a purchase money promissory note with The Stephen A. Grove Descendants Trust.

   On May 22, 2009, the Companies entered into a Deed of Trust and Security Agreement and Real Estate Lien Note with Barbers Hill Bank totaling $1,050,000.  The agreement encumbered certain real property located in Chambers County, Texas.  The property was leased to Jack in the Box Eastern Division, L.P. during Fiscal Year 2011 and was subsequently sold.  The note, which had a maturity date of May 22, 2014 and bore interest at a fixed rate of 6.75%, had an outstanding balance of $1,010,384 as of October 31, 2011.  On November 30, 2011, the Companies sold the property in Chambers County, Texas and subsequently repaid in full the outstanding balance under the note of $1,009,002 to Barbers Hill Bank.

   On July 29, 2010 the Companies entered into a Loan Agreement and Term Note with the Bank in the amount of $2,600,000.  The agreement encumbers, among other things, certain real property at Jack Frost Mountain Ski Area and Big Boulder Ski Area and all non-real estate assets of the Companies and is secured by the guaranty of Kimco Realty Corporation, the Companies’ majority shareholder.  The principal amount of the Loan was to be paid in full on July 29, 2011.  Effective as of July 29, 2011, the Companies entered into the Amended and Restated Note with the Bank, which increased the loan by an aggregate of $2,000,000 to $4,600,000 and extended the maturity date of the note from July 29, 2011 to December 31, 2011.  The note bears interest at a rate of one-month LIBOR plus 3.0% (such interest rate was 3.25% at October 31, 2011). On December 15, 2011 the note was paid in full with the proceeds from the sale of the ski areas.

   The Companies had a capital lease agreement with the Bank for a modular Pro Shop at Jack Frost National Golf Course.  The capital lease was payable in 48 monthly installments of $5,131 and bore interest at a fixed rate of 6.48%.  The capital lease was paid in full in October 2011.

   All properties have been pledged as collateral for debt.

 The aggregate amount of long-term debt maturing in each of the next five years and thereafter ending subsequent to October 31, 2011, is as follows: 2012   $12,392,475; 2013   $465,654; 2014   $7,896,679; 2015   $240,295; 2016   $257,410; thereafter $6,870,991.