Alpensia under snowballing debts

Alpensia resort in PyeongChang, Gangwon Province

Alpensia Resort, the main venue of the 2018 Winter Olympics, has been reeling from snowballing debts as it failed to sell vacation homes built along its golf course and condominiums there.

The resort, located in PyeongChang, Gangwon Province, has been losing about 60 billion won ($55 million) annually over the past few years, despite revenue of 50 billion won, as it has to pay a substantial amount of money monthly interest.

It issued municipal bonds and took out loans from banks, totaling 1 trillion won, in order to finance the construction of a golf course, hotels and other leisure facilities. Alpensia has to pay back all the outstanding debt over the next two years, meaning it may declare bankruptcy unless it attracts a huge investment.

According to Gangwondo Development Corp., which owns and operates Alpensia, Wednesday, the resort may not be able to host the 2018 Winter Olympics if it goes bankrupt under its soaring debt.

Alpensia Resort, built on nearly 4.9 million square kilometers of land, opened its doors in July 2009 in preparation for Korea’s bidding to host a Winter Olympics.

The company said it invested a total of 1.7 trillion won to build the resort to help Gangwon Province win the right to organize Korea’s first Winter Olympics. Gangwondo received 700 billion won from the provincial government, while issuing municipal notes and taking out loans from financial firms to raise the remaining 1 trillion won.

”We pay about 120 million won in interest every day. On top of such payment, we have to redeem maturing bonds totaling 567 billion won by the end of 2013. We are facing severe financial trouble,’’ said an official at Gangwondo Development Corp. who declined to be named.

”Even if we earn about 50 billion won each year, it is not enough to cover operating costs and interest payments. We have lost about 60 billion won every year over the past few years,’’ he said.

Alpensia has been desperately seeking to draw investments from either the central government or private entities interested in operating one of Korea’s largest resort complexes.

”We have been trying to find both Korean and non-Korean investors interested in acquiring a stake in Alpensia Resort or managing it. Given the surging number of Chinese visitors, we think it would be better if Chinese capital takes over and manages the resort,’’ he said.

Gangwondo Development Corp. also wants the central government to acquire the Alpensia Sports Park where ski jumping and other events will be held in 2018.

”We spent 270 billion won to build the park for the 2018 Olympics. Given our financial standing, we think it is the best for the government to buy and manage the facility,’’ the spokesman said. The park will host the biathlon, ski jumping, cross country, bobsleigh, luge and skeleton.

However, the central government has shown a lukewarm attitude toward the proposal.

In a bid to put greater pressure on the government and the National Assembly to ease the financial difficulty facing Alpensia, the company recently established an emergency taskforce with Gangwon Provincial Government and organizations representing various businesses in the area.

”We will continue to join forces to find a solution to this growing problem engulfing Alpensia Resort. Korea should make every effort to revive the resort for the successful hosting of the upcoming Olympics,’’ the spokesman said.

When asked about whether the resort’s financial difficulties will affect the 2018 Winter Olympic Games, the PyeongChang Organizing Committee declined to comment. <The Korea Times/Lee Hyo-sik>