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Canada not bailing out Fortress: spokeswoman

Multi-party agreement in place, Fortress hasn’t approached federal government

The Canadian government is not bailing out Fortress Investments to the tune of $90 million, despite media assertions to the contrary.

A spokeswoman for James Moore, Minister of Canadian Heritage, confirmed to Pique that the federal government assumes "no responsibility" for any Games-related debt because it's protected by a multi-party agreement.

"In that agreement it clearly says the Government of Canada has no responsibility for any debt resulting from the Games," Deirdra McCracken said. "Therefore, based on that, we couldn't actually be asked to pay for a resort or any investment made by a company such as Fortress."

McCracken was responding to a Saturday New York Post story that said Fortress Investments LLC, the investment firm that owns Intrawest, was seeking $90 million from the Canadian government for Whistler Blackcomb hosting the Olympics or it would sue.

The story asserted that Fortress wanted to be paid before the Olympics or it would commence legal action. The New York Post did not identify any of its sources.

The government tune is a little different. McCracken said the story was inaccurate and that the federal government hasn't been approached by Fortress for any money. Thus it wouldn't be taking any action on a demand that apparently didn't exist.

Sources, meanwhile, say that the financial agreement is between Intrawest and VANOC - and not the Government of Canada. Under that agreement, the Organizing Committee acknowledged that the Games would have an impact on Whistler Blackcomb's operating revenues.

That agreement included a "make-whole" element that addressed the financial impact on Whistler Blackcomb due to the Games.

Intrawest CEO Bill Jensen said in a statement that the company has an agreement with VANOC and that it is confident the committee will "honour its financial commitments."

"This is a private agreement between Whistler Blackcomb/Intrawest and VANOC," he said. "Intrawest is looking forward to a successful Olympic Games."

The stories came amidst a flurry of reports about Fortress and Intrawest's financial woes. Resort owner Intrawest, which also owns properties such as Mont Tremblant, Stratton Mountain and Steamboat, is late on a payment of $524 million to its lenders, which include Lehman Brothers, Davidson Kempner and Oak Hill Advisors.

Intrawest missed payment of that debt and now the lenders are taking the company to auction on Feb. 19, smack dab in the middle of the Olympics.

Last week Intrawest sold two of its resort holdings, Panorama in the B.C. Interior and the village it was developing at Squaw Valley, California. Those sales followed the November sale of Colorado's Copper Mountain Resort.

Rumours about the Canadian government's involvement in Intrawest's troubles began Jan. 2 when the New York Post reported that Whistler Blackcomb was at the centre of a spat between Fortress and its lenders and said, without quoting sources, that "only the Canadian government can save the day."

Rumours have since abounded about Intrawest's status, with some saying that the fight over Intrawest is "imperiling" an Olympic ski venue and that lenders have "moved to foreclose" on the resort company.

Through it all, a spokesman for Intrawest has maintained that business will run as usual at Whistler Blackcomb now and during the Olympics. Financial experts have likewise said the Games venue will continue to operate, while others said that an auction could be averted altogether if Intrawest files for bankruptcy before the Feb. 19 auction date.

If the company files for bankruptcy it could avoid an auction and force lenders back into talks with a view to reorganizing the company. When contacted by Pique an Intrawest spokesman would not confirm whether it would file for bankruptcy. In any case it is expected that Whistler Blackcomb will continue to run.