Lenders take action against Intrawest 

Whistler Blackcomb’s parent company to go on auction block Feb. 19

Whistler Blackcomb's parent company, Intrawest ULC, was placed on the auction block Wednesday, 23 days before the Olympics begin.

But it's business as usual on both mountains, according to a Whistler Blackcomb spokesperson.

The auction of Intrawest's assets, which include nine ski resorts, is to take place Feb. 19, the day the men's Olympic super G is scheduled on Whistler Mountain.

Intrawest issued a statement Wednesday afternoon.

"There have been inaccurate and misleading media reports surrounding Intrawest today. Fortress Investment Group continues to own and control Intrawest and all its properties. Serious discussions with Intrawest's lenders are ongoing regarding refinancing and the company continues to operate 'business as usual" at all of its resort properties. Intrawest is looking forward to the success of the 2010 Olympic and Paralympic Winter Games."

The Olympic organizing committee, VANOC, stated Whistler Blackcomb will be ready to host the Olympics.

"We understandably cannot comment on Intrawest's finances beyond our continued support for their efforts to settle outstanding financial matters," Dan Doyle, VANOC's executive vice-president of construction, said in a written statement. "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 added.

Creditors of Fortress Investment Group LLC, the New York-based private equity and hedge fund that bought Intrawest in 2006 for $2.8 billion forced the auction.

Fortress missed a payment on Dec. 23 and was in talks with creditors about a restructuring of its $1.4 billion debt. However, the lenders, which include Davidson Kempner Capital Management, Oak Hill Advisors LP and the failed investment bank Lehman Brothers, were frustrated by a lack of progress in the restructuring.

According to the New York Post , the restructuring firm Alvarez & Marshal, which is handling Lehman's estate, is looking for every dollar it can find as it settles more than $1 trillion in creditor claims associated with Lehman's bankruptcy.

The Post suggested that by forcing Intrawest into bankruptcy Lehman and other creditors could raise several billion dollars by selling off Intrawest's resort assets.

Meanwhile, a source close to VANOC told the Globe and Mail that Fortress was hard to deal with so having Intrawest in the hands of lenders and the receiver acting on their behalf may be a boon.

"The receiver would appreciate the value to the asset of being a successful Olympic mountain," the Globe and Mail quoted the source, who added that Fortress seemed indifferent to the fact that Whistler was to host the Olympics.

While there was a lot media speculation Wednesday, insiders suggested nothing much will change at Whistler Blackcomb in the immediate future, including during the Olympics.

And the future may involve many more players than just the creditors.

While many of Intrawest's resorts have large real estate holdings, that is not true at Whistler. Nearly all of Whistler Blackcomb's development rights have been used. The major asset at Whistler Blackcomb, one source suggested, is the company's lease of Crown land from the provincial government.

Intrawest owns a majority of Whistler Blackcomb but is partnered with Nippon Cable, which owns 23 per cent of the company. It's believed Nippon Cable holds the first option to purchase Whistler Blackcomb.

Whistler Blackcomb also has a contract with VANOC that includes financial compensation for hosting the alpine skiing and sliding events on Whistler and Blackcomb. One report suggested that contract was worth approximately $50 million.

Last fall Intrawest sold Copper Mountain Resort to Utah-based Powdr Corp. Sources say Intrawest CEO Bill Jensen has been trying, unsuccessfully, to find buyers for individual resorts for weeks. Sunshine Village in Banff was apparently in discussions regarding the purchase of Intrawest's Panorama Resort, but those discussions ended without an agreement.

For the past couple of years there have been talks within Whistler of putting together a consortium of interests to return ownership of Whistler Blackcomb to the community. Nothing has come together to date, but those efforts may now increase.

The notice of auction placed in newspapers this week states:

"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."



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