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Questions, and some answers, about Intrawest

You could be forgiven for wondering what the heck is going on with Intrawest, parent company of Whistler Blackcomb. Rumours and reports have abounded in the past few weeks about where the resort company stands.

You could be forgiven for wondering what the heck is going on with Intrawest, parent company of Whistler Blackcomb. Rumours and reports have abounded in the past few weeks about where the resort company stands. Some say it's for sale; others that it's being foreclosed upon; still others that its status is "imperiling" Whistler Blackcomb, a key venue for the 2010 Olympic and Paralympic Games.

There's a grain of truth in some of this and many things are within the realm of possibility. But several steps would have to be taken before any significant changes occur.

Pique has contacted sources close to the situation to try and clear up what's happening with Whistler Blackcomb's parent company.

 

Q: What is up for auction?

A: A majority equity stake in Intrawest Holdings S.à.r.l.

 

Q: What does S.à.r.l. mean?

A: "Societe à responsabilité limitée." It's a French term that translates roughly as "Limited Liability Company." It means the company's liability is limited to the contributions of its members.

 

Q: What is an equity stake?

A: It's a share of ownership in the company. If you pay a certain amount to a company, you get equity and own a portion of the company and can profit from it proportionally.

 

Q: What is Intrawest Holdings S.à.r.l.?

A: A subsidiary of Intrawest that owns the following: Intrawest ULC; Intrawest U.S. Holdings Inc.; Intrawest Resorts Inc.; Blackcomb Skiing Enterprises LP; Whistler Mountain Resort LP; Intrawest/Lodestar LP; IW Resorts LP; Mont Tremblant Resorts and Company LP; Intrawest California Holdings Inc.; Intrawest Golf Holdings Inc.; Intrawest Resort Ownership U.S. Corporation; Intrawest Retail Group Inc.; Intrawest Sandestin Company LLC; Intrawest/Winter Park Holdings Corporation; Mountain Creek Resort Inc.; Mt. Tremblant Reservations Inc.; Playground LP; Playground Destination Properties Inc.; Steamboat Ski and Resort Corporation; Resort Reservations Network Inc.; Snowshoe Mountain Inc.; the Stratton Corporation; Blue Mountain Resorts Limited; Intrawest Hospitality Management Inc.

 

Q: Who is putting it up for auction?

A: Intrawest was purchased in October 2006 by Wintergames Holdings S.à.r.l., a holding company owned by a series of funds that are managed by Fortress Investment Group. Fortress financed the purchase by contributing $1.375 billion in cash equity and $1.5 billion in debt to the investment groups Lehman Brothers, Deutsche Bank and Bear Stearns (now JP Morgan). Those three lenders, along with Davidson Kempner and Oak Hill Advisors LP, have contracted Wilmington Trust FSB, a Delaware-based commercial bank, to hold an auction for a stake in Intrawest Holdings S.à.r.l. on Feb. 19.

 

Q: Why is this happening?

A: Essentially, Fortress cannot repay the $1.5 billion debt they took on to purchase Intrawest and has been looking for a way to repay its lenders for some time. The company's debt was initially restructured in October 2008 to give them more time to pay it back. The debt repayment deadline was then extended for a year, through October 2009. The restructure provided an additional six-month extension, subject to the debt being reduced to a particular level. Intrawest was not able to get its debt down to that level and could thus not get another extension. The loan matured on Oct. 23, 2009 and lenders gave Intrawest an additional 60-day extension to let the company work on refinancing of one of its resort assets that could generate cash to repay the debt. The company was unsuccessful in doing this. Lenders tried to negotiate a restructuring with Fortress prior to Oct. 23 but could not reach a resolution. The lenders - some of which face huge debt repayments of their own - now feel there is no choice but to go to auction.

 

Q: How much is Intrawest Holdings S.à.r.l. worth?

A: That's something that's in dispute between Fortress and its lenders.

 

Q: What equity stake is concerned here? A stake in Intrawest or just a stake in Intrawest Holdings?

A: A stake in Intrawest Holdings S.à.r.l. is what's up for auction.

 

Q: What happens if someone buys the company through the auction?

A: A successful bidder in the auction would indirectly own property and equity assets under Intrawest Holdings S.à.r.l.

 

Q: Who can participate in the auction?

A: Any financial institution or other entity that has the financial ability to purchase the interests with immediately available funds on the auction's closing date.

 

Q: When will the auction be held?

A: Feb. 19, 2010 at 11 a.m. EST (8 a.m. PST).

 

Q: Where will the auction be held?

A: One World Financial Centre, Suite 3900, New York City.

 

Q: Why would anyone want to buy this?

A: The ski industry is expected to be more profitable in the coming years, according to some analysts.

 

Q: What could a buyer do with an equity stake in Intrawest Holdings S.à.r.l.?

A: Just about anything they want - including selling off assets that belong to the Intrawest subsidiary.

 

Q: Is Whistler Blackcomb for sale?

A: Not on its own. No one can enter this auction and say, "I want to buy Whistler Blackcomb for X amount of dollars." It is one of many assets under Intrawest Holdings S.à.r.l.

 

Q: What's happening with Whistler Blackcomb in the meantime?

A: Business seems to be going on as usual. All indications are that it will continue as such.

 

Q: Is it being foreclosed upon?

A: No, not according to an Intrawest spokesman. An auction and foreclosure are two very different things.

 

Q: Why is information coming from unnamed sources?

A: The players are involved in very sensitive negotiations and as such are unwilling to comment about them in the media.