Thursday, October 23, 2008
Steamboat Springs Intrawest successfully refinanced $1.7 billion in debt today, staving off fears that Steamboat Ski and Resort Corp.'s parent company was heading toward bankruptcy.
Vancouver, B.C.-based Intrawest would not disclose the terms of the refinancing, spokesman Ian Galbraith said. Intrawest is a privately held company owned by New York-based Fortress Investment Group, a public hedge fund and private equity firm.
"I suspect we may not really know what the terms are going to be until the third quarter conference call with Fortress," said Jackson Turner, an analyst with New York-based Argus Research Company.
Given the current global credit crisis, Turner said the renegotiated terms are probably not favorable to Intrawest and will affect the company's ability to invest in ski resorts such as Steamboat. Turner said each percentage point increase in the debt's interest rate constitutes an additional $14 million Intrawest has to pay each year.
"I just can't imagine that the terms are favorable," Turner said. "Cutting services - I'd still say that's on the table."
In addition to Steamboat and Whistler Blackcomb, Intrawest has interests in resorts including Copper Mountain and Winter Park. Galbraith would not answer questions about whether the refinancing would affect Intrawest's future investments in its resorts.
"We are very pleased to have reached an agreement with our lenders, particularly given the challenges of the global credit markets," Bill Jensen, chief executive officer at Intrawest, said in a press release. "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 has great assets, a sound business model and a solid track record."
After trading at a 52-week high of $23.04, Fortress Investment Group's shares have plunged. Shares fell 5 cents Thursday to $3.85 in 4 p.m. New York Stock Exchange composite trading.
Turner downgraded Fortress's stock from "buy" to "sell" earlier this week.