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Intrawest creditors agree to refinancing

Last minute deal means business as usual at Whistler-Blackcomb
Business as Usual The economic crisis hit home last week as Intrawest owner Fortress Investment Group struggled to get new financing for Intrawest's debt. A deal was reached Thursday. Whistler-Blackcomb operations will continue as usual. Photo by Brad Kasselman,

With just hours to go before a Thursday deadline Intrawest managed to re-finance $1.7 billion in debt.

While it was never likely that the flagship of Intrawest’s 11 winter resorts, Whistler-Blackcomb, would stop operations the deal is still good news for the resort.

“Earlier we had expressed concern by virtue of the fact that Intrawest and Whistler-Blackcomb are such a critical player in our resort community,” said Whistler Mayor Ken Melamed admitting he was relieved to hear the news about the owner of a key venue for the 2010 Winter Olympic Games.

“But at the same time we were confident that it would be business as usual and given the enormous value of that asset I was confident that they would be able to re-finance.”

Last week rumours that Intrawest might have to declare bankruptcy began circulating in the financial press. With the chaotic state of the markets there was some doubt that New York-based parent company Fortress Investment Group would be able to re-finance the debt.

Chief Executive Officer of Intrawest Bill Jensen admitted in a statement yesterday that the credit market was a challenging factor.

“We are very pleased to have reached an agreement with our lenders, particularly given the challenges of the global credit markets,” he said.

“The support Fortress and our lenders have shown underscores their confidence in Intrawest and will enable us to continue to execute on our long-term strategic plans.”

Intrawest is a privately held company owned by private equity funds managed by U.S.-owned Fortress.

Argus Research analyst Jackson Turner expected a deal to be reached.

“It is to no one’s advantage and no one gains from seeing Intrawest go bankrupt,” he said.

“…We don’t know the details of what the interest rate is but I suspect… that the interest rate is not going to be favourable to Intrawest and it is going to be significantly higher than what they were being charged previously.”

That may lead to cut backs in operations said Turner.

But Dave Brownlie, president and chief operating officer Whistler-Blackcomb said: “As far as will there be any impact on what we provide from a guest experience point of view, absolutely not.

“Last year we were rated the number one mountain resort in Canada for guest experience and our goal is to retain that title.”

Brownlie said he expects staffing levels to be close to the levels of past years, but there may be fewer seasonal positions.

“We have looked at a couple of areas where there may be some potential that we won’t see the volumes that we have seen so we have looked at some minor reductions in seasonal employees.

“We know here in Whistler that we are going to have some challenges with our destination market so we just have to watch all our discretionary expenditures and we just have to mange those as tightly as possible, so in fact we can channel our energy into the guest experience out on the hill because in fact that is what is important.”

Fortress bought Intrawest for $1.8 billion in 2006 and assumed nearly $1 billion in debt with the purchase.

Founded in 1998, Fortress went public in February 2007 at $18.50 per share. It closed Thursday at $3.85.