Thursday, January 21, 2010

Intrawest Foreclosure Rumors

On Tuesday, a notice of a public auction to be held February 19, 2010, was published in Canada and the United States, announcing that some of Intrawest's lenders, represented by Wilmington Trust FSB, would conduct a public auction to sell their interest in the company. Among the assets in the notice were "partnership interests in two resort properties located in Canada (Whistler and Blackcomb)." The auction of the interests represented by Wilmington Trust FSB was announced to take place while Whistler-Blackcomb hosts many of the Alpine and cross-country events for the 2010 Winter Olympics.
In a statement released yesterday, Intrawest disputed published reports about an impending foreclosure action and asserted that it remains in control of all its resorts. "There have been inaccurate and misleading media reports surrounding Intrawest (...) Fortress Investment Group continues to own and control Intrawest and all of 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 2010Olympic and Paralympic Winter Games", Intrawest statement said.
Fortress purchased Intrawest for $2.8 billion in 2006, and financed $1.8 billion of that amount. The resort operator missed a $524 million debt payment originally due Oct. 23.
The primary lender on the Intrawest deal in 2006 was defunct investment bank Lehman Brothers. New York debt managers Davidson Kempner and Oak Hill Advisors also helped finance the deal, and a source familiar with the process told CBC News the major creditors are united in pursuing the auction process. Typically, lenders are willing to work with borrowers to avoid foreclosure. But the lenders' inability to move the debt repayment plan along seems to have spurred this week's unexpected developments. "What the lenders are saying is that we want to get this process going", bankruptcy lawyer Richard Jones told CBC News. Jones, who worked on the high-profile restructurings of Air Canada, Olympia & York and Cadillac Fairview, suggested an application for creditor protection under the Companies' Creditors Arrangement Act could be the next step in the story, as Intrawest works to get its financial house in order.
Informed sources said that the Games are not being used as a bargaining chip, since the auction will not happen until after the Games begin.
In a statement released yesterday Vanoc board chairman Rusty Goepel said: "The board is confident the organizing committee and its partners are well prepared to meet the extraordinary day-to-day challenges of hosting one of the largest international sporting events (...) Many hurdles have been overcome in the past few months —both with ingenuity and a lot of long hours by dedicated staff, contractors and volunteers, which will make all Canadians proud".
Intrawest is a leader in the development and management of experiential destination resorts. The Company has a network of resorts at North America’s most popular mountain destinations including Whistler Blackcomb, the host venue for the 2010 Olympic and Paralympic Winter Games and Canadian Mountain Holidays, the largest heli-skiing operation in the world. Intrawest is headquartered in Vancouver, British Columbia.