KSL Capital Partners In Strong 2010 Finish

Firm: KSL Capital Partners

Funds: KSL Capital Partners III LP, KSL Capital Partners III TE LP, KSL CCA 2010 Co-Invest LP, KSL CCA 2010 Co-Invest LP 2

Amount raised: $27 million (just KSL Capital Partners III LP and KSL Capital Partners III TE LP)

Target: $1.5 billion, with $2 billion hard cap (just KSL Capital Partners III LP)

Denver buyout shop KSL Capital Partners LLC finished 2010 with a bang, putting three significant scores on the board since late November.

The firm, a specialist in travel and leisure businesses, disclosed in a mid-December regulatory filing that it had closed on $27 million for its KSL Capital Partners III LP, secured from two investors, and an additional $77.5 million for a companion fund, KSL Capital Partners III TE LP, to which five investors committed.

The two funds are structured in parallel because some of the investors are international, so the funds have somewhat different terms for reasons of tax efficiency, according to a person with knowledge of the deal who was not authorized to speak publicly about the arrangement. The firm has an overall $1.5 billion target and a $2 billion hard cap for the fund, from which the firm will invest on a pro rata basis from its two components.

KSL Capital Partners pursued a similar parallel structure for another pair of funds, in support of a financial reorganization of portfolio company ClubCorp Inc., the Dallas operator of golf courses, country clubs and other facilities. KSL Capital Partners raised $211.2 million for ClubCorp altogether: KSL CCA 2010 Co-Invest LP raised $182 million from a single investor, according to an SEC filing, and the firm raised an additional $29.2 million through a companion fund, KSL CCA 2010 Co-Invest 2 LP.

KSL Capital Partners bought ClubCorp and its portfolio of clubs and resorts in a $1.8 billion deal in 2006. The firm did not take a dividend out of this restructuring, but is taking advantage of low interest rates to restructure ClubCorp’s balance sheet, reduce debt and potentially position the company for a public offering.

A business unit of the portfolio company, ClubCorp Club Operations Inc., sold $415 million of senior unsecured notes in the 144a private placement market, according to IFR, a sister magazine published by Thomson Reuters. In addition, ClubCorp said it entered into a six-year term loan facility in the amount of $310 million and a five-year revolving credit facility in the amount of $50 million with a syndicate of lenders. The proceeds from the issuance of the notes, together with borrowings under the new credit facilities, were used by ClubCorp to retire some existing debt that would have matured in 2012.

According to Thomson Reuters LPC, ClubCorp’s $310 million, six-year term loan priced at LIB+450 with a 1.5 percent Libor floor. The loan is rated BB and the corporate credit rating is B+.

As of March 31, KSL Capital Partners Fund II is more than 70 percent drawn, according to the Washington State Investment Board. The LP reported a 1.14x return on the 2006-vintage fund and an IRR of 10.6 percent.

In December, KSL Capital Partners bought the Squaw Valley Development Co., which operates the Squaw Valley ski resort. Financial terms of the deal were not released, but KSL said it plans more than $50 million in capital improvements over the next three to five years. Squaw Valley, a mountain resort near Lake Tahoe in northern California, was the site of the 1960 Winter Olympics.

The firm is working with San Francisco placement agent Probitas Partners on its current fundraise. Executives of KSL Capital Partners declined comment for this article.