Great Wolf Resorts, Inc. (NDAQ:WOLF) has recently drawed some confusion from investors after an August 15th 13D filing made by Hayground Capital. The confusion arose when Hayground - the Wolf's largest shareholder - announced the the company had contacted him seeking advice regarding a possible sale of the company:

"On August 9, 2006, Bruce Neviaser,  Chairman of the board of directors (the "Board") of the Issuer,  called Mr. Ader to elicit Mr. Ader's views  regarding a possible sale of the Issuer.  Mr. Neviaser  expressed his belief that the Issuer has a worth of at least $16 per share of Common  Stock  and  sought  Mr.  Ader's advice as to which  investment  banking firm to contact and how best to go about an  organized a sale of the Issuer as a way to maximize  the value of the Common Stock for all  shareholders.  Mr.  Ader  expressed  his strong  support  for the Issuer's  engagement of an investment  banking firm to explore a sale and stated that any one of a number of major investment  banks could add substantial  value in conducting an organized sale process."

The stock immediately jumped from $11 to $12 on this announcement. (Side note: The next day, at around 2pm, there was a Form 4 filed with the SEC by Bruce Neviaser - the same man who had interest in a possible sale of the company and insisted it was worth at least $16 - announcing a sale of 3,500 shares he owned. Moreover, this same man had told Mr. Ader that he intended to sell 200,000 additional shares on the open market, despite the buyout proposition.) A day later, the company then released a press release via an 8K filing (PR) saying the following:

"Great Wolf Resorts, Inc. (NASDAQ: WOLF), America’s leading family of indoor waterpark resorts, today said that the company has no plans to sell the company or engage an investment banking firm to explore the possible sale of the company. Yesterday, the company received a letter from Hayground Cove Asset Management LLC, a shareholder, in which Hayground encouraged the company’s Board of Directors to engage an investment banker to explore a sale of Great Wolf Resorts."

If the board wasn't interested in a sale of the company, why did they contact Mr. Ader? Apparently, the board of directors "routinely discusses prospects for Great Wolf Resorts", which included a possible sale of the company. That's fine, but just how serious is Hayground in seeking a sale of the company? Well, they had this to say in the 13D filing:

"By letter  dated  August 14, 2006 to the Board,  Mr. Ader  reiterated the highlights of his August 9 discussion with Mr. Neviaser and articulated his view that at this time shareholder value would be maximized by a sale of the Issuer. He encouraged the Board to take immediate steps to unlock long-term  shareholder value by retaining an investment banking firm to explore the sale of the Issuer. Mr. Ader noted that the Issuer's two  significant earnings  shortfalls in 2005 caused serious damage to  management's  credibility  and the Issuer's  overall reputation  with  investors, resulting  in  the  Common  Stock trading  at  a significant  discount to underlying  asset value.  Mr. Ader requested a meeting with the Board to discuss the Reporting  Person's views  regarding  valuation of the  Issuer." (A copy of the letter can be found attached to the filing link above)

With less than 9% of the float, Mr. Ader might have some difficulty starting any kind of proxy battle; however, if he did manage to get ahold of more shares he might be able to convince enough investors to force a sale, especially given the company's poor performance in recent quarters. This stock is definitely a good one to keep on the radar as this story unfolds.

Related Companies
Morgans Hotel Group Co (Q:MHGC)
Interstate Hotels and Resorts, Inc. (N:IHR)
Lodgian, Inc. (A:LGN)