Intrawest

Whistler Blackcomb share price expected next week

Investors must buy minimum 1,500 shares, worth $21,000 to $22,500

By Jesse Ferreras

Investors and underwriters are evaluating the prospects for Whistler Blackcomb Holdings Inc., with the share price for the $300 million offering expected next week.

A settlement date for the public offering, which was announced last week, is expected in early November. At that time investors will take delivery and pay for their shares. Fortress Investment Group, the sellers in this offering, also have the ability to stop the public sale in advance of this date.

The share price is expected to be $14 to $15 with a 6.5 to seven per cent dividend yield.

Anyone hoping to invest in the company will have to buy a minimum of 1,500 shares, which could cost anywhere from $21,000 to $22,500 at the expected price.

No one investor, aside from Intrawest or Nippon Cable, is allowed to own more than 10 per cent of the company, as per a prospectus filed with Canadian securities regulators. It’s estimated that 37 million shares are up for purchase, with 21 million of them going out to the public.

Alexandre Heath, a chartered financial analyst in Vancouver, said this week the underwriters will likely market the company to clients who manage funds.

“This isn’t like going to your average Joe investor,” Heath said. “They’re not coming to me or my parent. They’re going to pension fund managers, insurance companies, guys who have lots and lots of money. The mutual funds, they’re going to buy $10 million worth, stick it in the fund, and then it’s just part of the portfolio.

“One meeting you’re basically seeing 10,000 investors, even though you’re seeing one guy, because he’s in charge of the fund.”

James Brander, a professor at UBC’s Sauder School of Business, said individuals can buy shares in the company after they’re listed on the Toronto Stock Exchange (TSX). Some people who purchased shares at the time of the initial public offering (IPO) will later make them available for resale on the TSX. Individuals can buy them any time after they’re listed, much as they would any publicly-traded stocks.

Brander said the stock value will change once it becomes public, adding that stock prices usually rise in the first day or two after an IPO.

Martin Pykkonen, a senior analyst with Denver-based firm Wedge Partners who normally follows Vail Resorts, said Whistler Blackcomb has a great reputation as a ski resort but that there are two things hampering its value. First is that it’s already built out from a real estate standpoint.

“A company that’s going to be owning land along with the mountain itself, there’s limited ability to add on to that. I’m saying that in contrast to Vail Resorts,” Pykkonen said. “They want to be able to develop condos and other things around it. From the base of the mountain standpoint, Whistler is pretty well spoken for.”

The other factor that could hamper share price is the weather.

“If it’s a great ski season and they get a great story to tell, that can help,” Pykkonen said. “If it’s a case of they’re not on the road until February and it’s raining there, that can create more of a problem because more people interested in buying the stock, they can say you have a lot of weather risk because you’re not having a good weather year.”

New York investment firm plans to take Whistler Blackcomb public

Resort suffered ‘adverse effect’ on skier visits because of the 2010 Olympics, company says

 
By Brian Morton, Vancouver Sun October 12, 2010
 
 

New York based-Fortress Investment Group plans to turn Whistler Blackcomb into a public company after losing an estimated $6.2 million because of the 2010 Winter Olympic Games.

In a preliminary prospectus filed Friday with securities commissions across Canada, a new company called Whistler Blackcomb Holdings Inc. will issue an unspecified number of shares at a yet-to-be determined price.

Details as to price and number of shares are regularly omitted in preliminary prospectuses and are set only after interest from potential shareholders can be gauged.

Whistler Blackcomb chief financial officer Kevin Smith refused to speak about the matter Monday, saying in an e-mail: “Given that we are in the IPO [initial public offering] process, we are not able to comment.”

The Vancouver Sun did not hear back Monday from Fortress managing director Gordon Runte.

Bruce Moore, managing director of CIBC World Markets, one of the underwriters, also refused to comment on the Fortress plan.

Whistler Blackcomb, the largest and most-visited mountain resort in North America has been saddled with debt ever since Fortress acquired Intrawest in 2006 for $2.8 billion US.

Fortress renegotiated its debt earlier this year and avoided having the facility auctioned off during the Olympics.

Fortress noted in the prospectus that the resort generated revenue of $218.7 million in fiscal 2009, including $104 million from lift operations, $40 million from retail/rental operations and $11.8 million from real estate.

In the prospectus, Fortress estimates that, despite excellent snow conditions in the 2009-10 season, “visitor aversion” related to the Olympics cost the resort $6.2 million Cdn.

But it noted that hosting the Olympics resulted in a dramatic increase in global awareness, including an increase in awareness from 19 per cent to 42 per cent in Germany and from 32 per cent to 45 per cent in the U.K.

In June, there were reports that Fortress was exploring the possibility of selling Whistler Blackcomb to Russian billionaire Vladimir Potanin.

According to a Wall Street Journal article, Potanin, the main shareholder of metals giant OAO Norilsk Nickel, expressed an interest in the resort.

His investment vehicle, Interros Co., is building a new ski resort in Sochi, Russia, home of the 2014 Olympic Games.

A survey in August concluded that the hotel occupancy rate to the end of June was lower than the recession-plagued 2009.

bmorton@vancouversun.com

© Copyright (c) The Vancouver Sun

Russian billionaire reported to be eyeing Whistler

VANCOUVER — Both Intrawest ULC and its owner, private-equity firm Fortress Investment Group LLC, are refusing to comment on media reports out of New York on Tuesday that company representatives are exploring the possible sale of Whistler-Blackcomb to a Russian billionaire.

“We’ll not comment on any aspect of the story,” Fortress managing director Gordon Runte said Tuesday about the report in the Wall Street Journal. “Our stance is going to be no comment and no background on situations like this.”

Intrawest representative Ian Galbraith concurred in an e-mail to The Vancouver Sun. “We are aware of the speculative story that appeared in the WSJ today. Our response is simply ‘no comment.'”

According to the report, Intrawest representatives have approached Russian billionaire Vladimir Potanin in recent weeks about a potential acquisition of Whistler-Blackcomb. However, the report noted it is unknown what price they have put on the resort.

The Journal said Fortress is also exploring other options for Whistler-Blackcomb, including spinning the property into a separate company and filing for an initial public offering.

Roger Freeman, a financial analyst with Barclays Capital in New York who follows Fortress Investment Group, said in an e-mail to The Sun that while he wasn’t aware of any possible sale of Whistler-Blackcomb to Potanin, it’s not inconceivable.

“Fortress would sell the property if [it received] an above-market price because it would help to minimize losses on the Intrawest investment,” Freeman said.

Potanin, the main shareholder of metals giant OAO Norilsk Nickel, has expressed an interest in the property, according to The Journal article. His investment vehicle, Interros Co., is building a new ski resort in Sochi, Russia, home of the 2014 Winter Olympic Games.

The report comes just months after Intrawest reached a deal on refinancing its corporate debt, which was due in December 2009, avoiding the possible sale of Whistler-Blackcomb during the 2010 Games. The company said in April it had repaid its prior lenders in full and completed a new loan that is scheduled to mature in 2014.

Fortress paid $2.8 billion to buy Intrawest in 2006, borrowing $1.4 billion to do so. Fortress defaulted on that loan in December, and after a two-month extension, the creditors announced that equity in Intrawest would be auctioned on Feb. 19.

By Brian Morton, Vancouver Sun 

© Copyright (c) The Vancouver Sun

Whistler resort owner Intrawest strikes refinancing deal with lenders

 

VANCOUVER — Ski resort operator Intrawest has struck a deal with lenders in a financial fight that became a public relations headache for organizers of the Vancouver Winter Olympics.

Details of the new loan were not released, but Intrawest, a unit of Fortress Investment Group, said Tuesday that all prior lenders had been repaid in full and the new loan does not mature until 2014.

Intrawest had been negotiating with lenders to refinance the $1.7 billion in debt taken on when Fortress purchased it in 2006. The earlier loans had been due in December.

Intrawest’s North American properties include the Whistler Blackcomb resort, which was used for alpine and sliding competition during February’s Winter Olympics and the Paralympics in March.

Lenders had threatened to force a foreclosure auction for the property during the Games, prompting media speculation that the event might be disrupted.

Olympic organizers discounted the threat, saying a Canadian judge would be unlikely to allow a fight between New York-based Fortress and U.S.-based lenders to disrupt an event that had Canada in the world spotlight.

In addition to Whistler, Intrawest owns Squaw Valley in California, Steamboat and Winter Park in Colorado, Mountain Creek in New Jersey, Stratton Mountain in Vermont, Snowshoe Mountain in West Virginia, Blue Mountain in Ontario and Quebec’s Mont Tremblant.

© Copyright (c) Reuters

Intrawest sells Village at Squaw Valley

Second resort asset sold in less than a week

By Jesse Ferreras

 With an Olympics-time auction fast approaching, Intrawest continues to sell off its assets.

Squaw Valley USA, which runs a resort on the north shore of Lake Tahoe in California, announced in a Jan. 29 news release that it had acquired The Village at Squaw Valley, a four-season mountain resort village from the Vancouver-based ski resort company.

“We at Squaw Valley USA are very pleased to integrate the Village at Squaw Valley with our own operations,” Nancy Cushing, company Chairman and CEO, said in the statement. “It is a reversal of philosophy as Squaw Valley Ski Corp. has not operated a lodging property for 30 years.”

Up until now, Intrawest was developing the village property attached to the resort, which served as the venue for the 1960 Winter Olympic Games. The resort opened in 1949, running a 50-room lodge that was used during the Olympics. The resort continued to grow but the lodge property ceased to operate in 1979.

In 2002 Intrawest began developing a European-style ski village near the resort that helped to develop an off-hill experience for skiers and snowboarders. The Village at Squaw Valley has a pedestrian village, not unlike Whistler’s, as well as commercial and residential properties that are all being turned over to the resort.

There are an estimated 300 one-, two- and three-bedroom condominium suites, some of which are located right next to the ski area.

The deal includes lodging operations at two condo-hotels, as well as six restaurants, 20 retail shops and a full service spa. Squaw Valley USA will oversee all day-to-day operations in the village, according to the news release, as well as its current ownership of on-mountain operations.

The release goes on to say that it’s business as usual for all resort guests despite the sale.

The sale comes as Intrawest awaits a Feb. 19 auction by creditors of Fortress, Intrawest’s parent company that has missed a $524 million debt payment.

An auction could be averted in Intrawest files for protection under Chapter 11 of the U.S. Bankruptcy Code, which would allow it to reorganize and continue to operate.

Intrawest sells second resort

David Ebner

Vancouver — Globe and Mail Update Published on Thursday, Jan. 28, 2010 1:53PM EST

Intrawest ULC has sold its Panorama Mountain Village resort, a move to fend off an auction of its assets as lenders demand repayment of debt from the company that owns 2010 Winter Olympics venue Whistler Blackcomb.

On Thursday morning, Intrawest announced it has sold Panorama, located in eastern British Columbia, 3 ½ hours west of Calgary. The buyer – price was not disclosed – is Panorama Mountain Village Inc., a new company run by B.C. real estate developer Rick Jensen and includes local Panorama homeowners and local business people.

Panorama is the second resort debt-heavy Intrawest has sold this ski season. Intrawest announced the sale of Copper Mountain in Colorado in November. The Vancouver-based company now owns eight ski resorts and one beach-golf resort in Florida.

The price of Copper, sold to Powdr Corp. of Utah, was not disclosed but estimated at about $100-million (U.S.).

Mr. Jensen, in an interview, said the Panorama price is far below the $100-million paid for Copper.

Intrawest was purchased by New York-based Fortress Investment Group LLC in 2006 for $2.8-billion at the peak of the U.S. real estate bubble. The $1.8-billion of equity was financed mostly with short-term debt. A last-minute extension on the debt was reached in October, 2008, during the financial crisis, and a shorter extension was offered last October. However, Intrawest eventually missed a $524-million payment and lenders have organized an auction of the assets for Feb. 19.

VANOC, the Olympics organizer, has said the alpine ski races set for Whistler Mountain won’t be affected.

One source close to Intrawest calls the auction “brinkmanship” and said talks between Fortress and lenders continue, though he did not say whether progress has been made.

The likely goal is to refinance the debt owed as well as pay down a portion of it, according to business professor Lindsay Meredith of Simon Fraser University. He called the planned auction by lenders a “hardball move in a game of high-stakes poker.”

Ahead of the auction, Fortress could put Intrawest into court protection from creditors – but that move would wipe out Fortress’s equity position in Intrawest.

According to a report by Bloomberg News this month, the equity is already nearly worthless, down 96 per cent from the purchase price in 2006, citing an unnamed source. Bloomberg also reported that Fortress proposed a plan in December to lenders that included Davidson Kempner Capital Management LLC and Oak Hill Advisors LP to exchange debt owed for a new five-year loan expiring in 2015.

The value of Intrawest’s debt traded this month at about 90 cents on the dollar, sources have said, which suggests lenders aren’t severely worried about the situation. Business at Intrawest’s main resort – Whistler Blackcomb – is better than expected this season.

“Fortress is cornered,” said Mr. Meredith. “The banks have pretty much had it with Fortress.”

Panorama buyer Mr. Jensen is a co-owner of New Dawn Developments Ltd., a builder based in Cranbrook, south of Panorama, in the East Kootenays. Mr. Jensen was mayor of Cranbrook from 1983 to 1990 and New Dawn started building for Intrawest at Panorama in 2000. Intrawest bought Panorama in 1993 when it was losing money and developed a Whistler-style village on a smaller scale at the base and improved the on-hill infrastructure.

Serious talks to buy Panorama started in September, Mr. Jensen said.

Last April, Intrawest CEO Bill Jensen – no relation to the Panorama buyer – said the company was looking to sell “some assets.” He suggested Mont Tremblant, north of Montreal, could become a standalone company. He also said Copper Mountain was one area the company wanted to keep, but added debt reduction was the top priority and all options were possible.

“We have to take every step to survive,” he told the Colorado-based Summit Daily News last April at a ski conference.

Rick Jensen is the largest Panorama investor in a group that includes 17 others. There are no plans to expand beyond Panorama, but Mr. Jensen does want to add more real estate at the resort. The goal is to make Panorama the No 1 destination for families in Canada. Among the first ideas is to expand the beginner terrain and possibly add a new lift for it, which would provide a better mix on a large mountain known for its intermediate and advanced runs.

Mr. Jensen said Panorama attracts about 200,000 skier visits a season. That is roughly one-eighth of the traffic at Whistler-Blackcomb.

Intrawest sold Panorama because its strategy is to focus on larger resorts like Whistler-Blackcomb, said spokesman Ian Galbraith.

“The realities of the ski business today is you need strong marketing to global regions, places like Europe and Australia, and they’ll want to visit the bigger resorts,” said Mr. Galbraith.

The International Olympic Committee said Thursday it isn’t worried about Intrawest’s financial problems.

“We’ve received comforting words from VANOC,” Jacques Rogge, IOC president, said on a conference call with reporters, according to the Associated Press. “VANOC is not preoccupied by that, and I trust that they have found good solutions. I don’t think this will affect the games.”

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.