Intrawest may avoid Friday auction 

Principals of Fortress, Nippon Cable were in Whistler last week

Already delayed by one week, there were indications Tuesday the auction of Intrawest by creditors may not take place at all.

The creditors, including Deutsche Bank, Bear Stearns (now JP Morgan) and a company looking after the affairs of the bankrupt Lehman Brothers, had scheduled an auction of their equity interest in Intrawest for Feb. 19. A Bloomberg report last week stated that the lenders had agreed to delay the auction to Friday, Feb. 26.

But this week sources suggested that parties interested in buying some of Intrawest's ski areas have agreed to put up enough funds to satisfy some of the creditors. Those creditors, in turn, have apparently agreed to call off the auction.

What that may mean is that various resorts owned by Intrawest, including Whistler Blackcomb, will be sold to the parties that have put up money to satisfy the creditors.

The Globe and Mail reported last week that Nippon Cable, which owns 23 per cent of Whistler Blackcomb, is interested in doubling its stake in the resort.

The principals of Nippon Cable and Fortress Investment Group, which owns Intrawest, were in Whistler last week.

The Globe and Mail report stated that Vail Resorts Inc., which owns Vail, Beaver Creek, Breckinridge and Keystone in Colorado, is interested in buying Whistler Blackcomb and perhaps other Intrawest resorts.

The report did not name any sources but said that Vail Resorts has a standing offer for Whistler Blackcomb. However, Vail Resorts is just one of a number of bidders who may be interested in Intrawest's top resort.

Meanwhile, Bloomberg reported this week that Fortress will have to contribute $150 million to Intrawest if it wants to maintain ownership of the resort company.

Intrawest declined comment on the reports and instead offered a Jan. 20 statement that confirmed, "Fortress Investment Group continues to own and control Intrawest and all of its properties."

Both the Globe and Mail and Bloomberg reports came after Daniel Mudd, CEO of Fortress, admitted in an interview on CNBC's "Squawk Box" that talks have been difficult with the company's creditors.

"We've been having discussions, they're tough discussions," he said on CNBC. "Money's at stake, a big mountain's at stake in the papers and all that, but I think people are working pretty constructively. No one wants to see any damage done to the Olympics in the process, they're defending their interests."

Fortress bought Intrawest in 2006 at a cost of $3.1 billion. The investment company put up $1.375 million of its own money and took on $1.5 million in debt. Fortress missed a debt payment of $524 million late last year. Negotiations over the debt repayment stalled, which led to the creditors issuing notice of the auction.

The auction was originally scheduled for the middle of the 2010 Olympics, when Whistler Blackcomb was being showcased to the world on television on a daily basis.

If an auction does go ahead Friday a successful bidder would acquire a major stake - likely a controlling stake - in Intrawest Holdings S.à.r.l., a company subsidiary that includes Whistler Blackcomb among its eight resorts.

There has also been speculation that Intrawest could apply for bankruptcy protection prior to an auction. However, that would likely mean Fortress would lose control of the company.

Intrawest has sold off three of its resort properties since the beginning of 2010. It sold the Panorama resort to a consortium of local homeowners in the Kootenays; the Village at Squaw Valley to Squaw Valley USA, which runs the California ski resort; and Sandestin Golf and Beach Resort to the Becnel family of Destin, Florida.

Intrawest sold Colorado's Copper Mountain Resort to the Utah-based Powdr Corporation last fall. The company also sold its interest in French ski resorts.


- with files from Bob Barnett



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