Wednesday, January 20, 2010

Intrawest's troubles threaten Olympics: report – CBC News

A fight between Wall Street financiers could push the company that owns the Whistler Blackcomb ski resort into insolvency and threaten the Vancouver Olympics, a U.S. newspaper report suggests.

A New York Post report suggests the resort's owners could soon be insolvent, which may threaten the Vancouver Olympics.Back-country skiers descend Blackcomb Mountain. A New York Post report suggests the resort's owners could soon be insolvent, which may threaten the Vancouver Olympics. (Randy Lincks/Associated Press)

According to a story in Wednesday's New York Post, creditors who have loaned $1.4-billion US to the ski resort's owners, Intrawest ULC, are threatening to foreclose on the company and effectively seize control of the resort.

Among numerous ski resorts in Canada and the U.S., Intrawest owns the Whistler Blackcomb resort, which is set to host major ski events at the Winter Olympic Games next month.

In 2006, Wall Street hedge fund Fortress Investments LLC bought Intrawest in a $2.8-billion US deal. Fortress recently missed a $524-million debt payment connected to that purchase.

The primary lender on the Intrawest deal in 2006 was defunct investment bank Lehman Brothers. According to the Post report, the creditors have rejected Fortress's repayment proposal and may be moving to foreclose on the company within 10 days.

New York firm Alvarez and Marsal are handling Lehman's restructuring.

Typically, lenders are willing to work with borrowers to avoid foreclosure. But since Lehman itself is dogged by as much as $1 trillion in creditor claims against it, Alvarez and Marsal have an incentive to push Intrawest into bankruptcy and sell assets to raise funds, the Post story says.

The Post report says Vancouver Olympic organizers are considering pulling their financial backing of Intrawest as a result of the kerfuffle.

Fortress CEO Wes Edens believes he has a legal right to keep the Games from taking place at Whistler if that happens, the Post story says.

On Tuesday, a notice of a public auction to be held Feb. 19, 2010, was published in multiple newspapers in Canada and the United States that solicited bids for a membership interest in Intrawest Holdings. Among the assets in the notice were "partnership interests in two resort properties located in Canada (Whistler and Blackcomb)."
Three-month stock chart of Fortress Investments on the NYSE.Three-month stock chart of Fortress Investments on the NYSE. (CBC)

“We understandably cannot comment on Intrawest's finances beyond our continued support for their efforts to settle outstanding financial matters," VANOC president Dan Doyle said. "What we can confirm is that Whistler Blackcomb is an important partner in the staging of the 2010 Games and we continue working in very close partnership with them to finalize overall preparations and readiness for the skiing and sliding sport events."

"We look forward, with them, to welcoming the world in 23 days," Doyle said.

For its part, Intrawest poured cold water on the report. "We have a 2002 agreement with VANOC to host the Winter Olympics and have every confidence that VANOC will honour its financial commitments," Intrawest CEO Bill Jensen said. "Intrawest is looking forward to a successful Olympic Games.

Jensen said Intrawest is in discussions with lenders regarding refinancing.

"Our company is generating strong cash flow from its resorts. It’s business as usual," Jensen said

Calls to Fortress Investment Group LLC were not returned. A spokesman for Lehman Brothers had no official comment.
Behind-the-scenes efforts expected

Bill Singer, a securities lawyer with RRBD Law in New York, predicted efforts will be made behind the scenes to avoid foreclosure, at least until the Olympics are over, given the amount of money invested in the Games and their high international profile for Canada.

"I can't imagine that it will ultimately mean much," he told CBC News, "because I would assume between [Canadian] government interest and the Olympic Committee there would be something that would be accomplished just to forestall any kind of foreclosure.

"More importantly, assuming that there was some effort to put the properties into foreclosure or bankruptcy, again, I would assume that given the size of the transaction that vested interests would try to find a way to extend and drag out the process," he said.

Singer said the bigger issue is what motivation the lender would have to foreclose.

"What do you do with a ski resort in this economic market? Who would be envisioned as likely becoming a buyer for these distressed properties when the reports all over the United States as well as in Europe and other areas where there's skiing is that … traffic to both golf and ski resorts is down?"


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I have been a resident of Coldstream since 1976. I have had 15 years of experience on Council, 3 years as Mayor. As a current Councillor I am working to achieve fair water and sewer rates and to ensure that taxpayers get fair treatment. The current direction regarding water supply is unsustainable and I am doing all I can to get the most cost effective water supply possible.