Intrawest to be auctioned off: report

David Burke dburke@whistlerquestion.com

Intrawest Holdings, which owns Whistler Blackcomb (WB), has been seized by banks after the company missed a big debt payment late last year, and the banks plan to auction off the company in the middle of the Olympic Games, according to a published report.

The Globe and Mail, citing “a notice placed in major newspapers” and a person said to be familiar with negotiations between Intrawest and its lenders, said lenders Lehman Brothers and Davidson Kempner Capital Management LLC “plan to auction off the ownership of Intrawest on Feb. 19.”

The lenders served notice of the foreclosure on Jan. 8, and the timing of the purported auction date was unrelated to the Olympics, the Globe reported. The Games are set to run from Feb. 12 to 28.

The published notice cited by the Globe said in part, “Each qualified bidder must be a financial institution or other entity that has the financial wherewithal to purchase the membership interests in immediately available funds on the closing date.”

Reports related to Intrawest’s future as a company, and even of the Games themselves, have been swirling all week. In spite of that, Bill Jensen, Intrawest’s chief executive officer, insisted as late as Wednesday morning that talks with lenders were ongoing and that it was “business as usual” for the company and its resorts. Late Wednesday, the company issued a statement calling media reports about the company “inaccurate and misleading,” adding, “Fortress Investment Group continues to own and control Intrawest and all of its properties.”

Officials with the Whistler Blackcomb (WB) parent company, which is owned by New York-based hedge fund firm Fortress Investment Group, have been negotiating with lenders after missing a $524 million debt repayment last October. Quoting unnamed sources, though, the New York Post on Wednesday reported that the sides were no longer talking.

Creditors were planning to foreclose on Intrawest, a possibility that “cast a shadow on the resort (WB), which will host the alpine events of the 2010 Winter Olympics,” the Post reported. It quoted one unnamed source as having said the foreclosure would “probably happen within 10 days.”

By forcing Intrawest into bankruptcy, the creditors could raise several billion dollars by repossessing Intrawest and selling off its resorts, the Post reported.

Citing another unnamed source, the Post reported that because of issues surrounding agreements between Vancouver 2010 organizers and Intrawest, the Canadian federal government was threatening to pull a purported $50 million guarantee made to Intrawest.
“That, the source said, has compelled (Fortress head Wesley) Edens to privately say he has a legal right to keep the Games from taking place at Whistler,” the Post reported.
In an emailed statement, Jensen disputed the claim that negotiations between Intrawest and its lenders had broken off.

“Intrawest is in ongoing discussions with our lenders regarding refinancing. Our company is generating strong cash flow from its resorts. It’s business as usual,” Jensen said.

Of the 2010 Games, Jensen said, “We have a 2002 agreement with VANOC to host the Winter Olympics and have every confidence that VANOC will honour its financial commitments. Intrawest is looking forward to a successful Games.”

Whistler Mayor Ken Melamed said that while he couldn’t comment on Intrawest’s financial situation, people in the resort are “focusing on the job at hand, which is to welcome the world here in a couple of weeks.

“I do know that having worked so many years and so successfully on the resort… nobody can visualize a scenario in which Whistler Blackcomb would stop operating. It’s just not possible.

“Obviously people are going to be talking about this and trying to understand, but we’re going to carry forward and have a successful Games.”

On Monday (Jan. 19), Business Week reported that Intrawest creditors “are pushing for an equity stake” in the company as one possible outcome of negotiations.

Citing “three people familiar with negotiations,” the online version of the magazine reported that Fortress officials had presented lenders, including Davidson Kempner Capital Management LLC and Oak Hill Advisors LP, with a plan to swap the $1.4 billion loan made to Intrawest in October 2008 for new debt maturing in 2015, with the stipulation that the lenders could convert some of the debt into equity within five years.
The lenders rejected the proposal, Business Week reported. “Some lenders want equity now so they can benefit if Intrawest’s business rebounds,” the magazine reported.

A WB spokesman on Wednesday told The Question that Dave Brownlie, WB chief operating officer, did not intend to comment on the Post report. The spokesman referred calls to Ian Galbraith, Intrawest manager of investor relations, who provided Jensen’s comments.