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Great Wolf Resorts Fourth-largest Shareholder Wants the Company
 to Add New Directors, Evaluate the Strategic Alternatives
By Tom Daykin, Milwaukee Journal SentinelMcClatchy-Tribune Regional News

Jan. 24, 2008 - Madison-based Great Wolf Resorts Inc. needs some new directors, and the company's board should consider selling the indoor water park resort operator, according to a regulatory filing by one of Great Wolf's largest shareholders.

Investor Eric Hovde expressed those thoughts in a conversation last Friday with John Emery, Great Wolf's chief executive officer, according to the Securities and Exchange Commission filing on Tuesday. Hovde is president and CEO of Washington, D.C.-based Hovde Capital Advisors LLC, and controls a 5.2% stake in Great Wolf.

This marks the second time in recent years that an investor has sought a sale of Great Wolf. The company operates 10 water park resorts in Wisconsin, Ohio, Michigan, Pennsylvania, Ontario, Virginia, Texas and Kansas, and has two others under construction in North Carolina and Washington.

Hovde wants Great Wolf to replace two or more of its eight directors with directors who are "representative" of the company's "significant shareholders," the filing says. At least one of those two new directors should be nominated by Hovde, the filing says.

Also, Hovde "expressed concerns" about Great Wolf's performance, and he wants the company to "fully evaluate the various strategic alternatives that may be available," the filing says.

Typically, such "strategic alternatives" include a sale of the company. Hovde, a Madison native and University of Wisconsin graduate, declined further comment.

Emery could not be reached for comment Wednesday. Great Wolf closed at $8.62 a share, up $1.03 a share, or 13.6%. The stock price had hit a new 52-week low on Jan. 15, at $6.92. Great Wolf lost $1.9 million, or 6 cents a share, on revenue of $145.6 million, through the first three quarters of 2007.

Hayground Cove's moves

In August 2006, New York-based hedge fund manager Hayground Cove Asset Management LLC, which owned 8.7% of Great Wolf, clamored for a sale. In an SEC filing, Hayground Chief Executive Officer Jason Ader said Great Wolf's then-chairman, Bruce Neviaser, told him he believed Great Wolf's stock was undervalued.

Neviaser, a Great Wolf co-founder, resigned his chairmanship one month later. Hayground has since reduced its stake to 2.9% of Great Wolf's shares, as of Jan. 9, according to an SEC filing.

Hovde became Great Wolf's fourth-largest shareholder in October. According to SEC filings, the top three shareholders are New York-based Baron Capital Group Inc., with a 9.7% stake; the State of Wisconsin Investment Board, with a 6.7% stake; and New York-based Springbok Capital Management LLC, with a 5.7% stake.

Great Wolf began trading publicly in December 2004 at $17 a share. That price had a one-day plunge of 31% in July 2005 after reporting a quarterly loss that was more than double what the company had expected.


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