Intrawest's debt could be auctioned off as a result of the continued financial struggles of parent company Fortress Investments. According to a notice published in several national newspapers Tuesday, the auction is scheduled to take place Feb. 19.

File photo

Intrawest's debt could be auctioned off as a result of the continued financial struggles of parent company Fortress Investments. According to a notice published in several national newspapers Tuesday, the auction is scheduled to take place Feb. 19.

Intrawest debt for sale

Reports of auction churn after ads appear in national newspapers

Advertisement

photo

Intrawest's North American ski resorts

— Speculation about the future of Intrawest and its North American ski resorts swirled Wednesday after ads published in several major newspapers announced a public auction of lenders’ financial stakes in the company.

The auction, scheduled for Feb. 19, would be for indirect ownership of property and stakes in Intrawest resorts including Steamboat Ski Area and Whistler Blackcomb, according to a Bloomberg report published late Wednesday.

In a news release disputing earlier reports that Intrawest assets would be up for auction, the company insisted that it maintains control of its resorts and that it’s “business as usual.”

“Fortress Investment Group continues to own and control Intrawest and all of its properties,” the release stated. “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.”

Ian Galbraith, an Intrawest spokesman, told The Associated Press that none of the company’s assets have been seized and that the public notice of auction that appeared in The New York Times and Wall Street Journal is standard practice for lenders during refinancing discussions.

“No foreclosure has happened,” Galbraith told the AP.

Tuesday’s notice of public auction appears to be the result of a missed Intrawest payment due last month on a $1.4 billion loan. Fortress Investment Group bought Intrawest in 2006 for $2.8 billion in cash and debt. The deal was a leveraged buyout with a $1.7 billion loan that was due in late 2008, about the time the financial crisis hit.

Intrawest has sold several assets to help make its debt payments, including the December 2009 sale of Copper Mountain. It also has sold two resorts in France.

Intrawest retains ownership interest in eight North American ski resorts, and it operates Winter Park Resort on behalf of the city and county of Denver.

Concerns in Steamboat

Intrawest bought Steamboat Ski Area from debt-ridden American Skiing Co. for $265 million in March 2007. The deal brought hope for many in Steamboat Springs that the community finally had a ski area operator with the financial means to invest in the resort. But Fortress and Intrawest have been plagued by financial problems since the time of the Steamboat purchase.

In October 2008, Intrawest refinanced $1.7 billion in debt, staving off fears at the time that it was headed toward bankruptcy. A month later, Intrawest announced staff cuts and realignments, a move that affected 16 Ski Corp. employees.

Steamboat Ski and Resort Corp. officials were tight-lipped about Intrawest on Wednesday.

“Virtually any aspect of the negotiation with Fortress is not something on which we can comment,” said Andy Wirth, senior vice president of sales and marketing for Ski Corp. “Our focus is on the Steamboat experience.”

Steamboat is playing host to the National Ski Area Association’s winter conference and trade show this week. Michael Berry, president of the NSAA, said news about Intrawest and Fortress finances generated “room buzz” at the conference, but he maintained that the ski industry as a whole remains healthy.

“The day-to-day operation of ski areas across the country continues to be a vibrant industry,” Berry said. “The individual resort, as a stand-alone entity, is doing very well.”

He said he was not seeing a trend of job loss or financial struggles at ski resorts.

“The ski area is still the asset that produces cash,” he said. “The ownership has changed in the past and will change in the future, but the resort as a destination continues to be very attractive.”

History of debt

Steamboat Springs’ resort community has ample experience in working with ski area ownership groups struggling to get out from under crippling debt.

A decade ago, American Skiing Co. and its eight ski areas were saddled with more than $400 million in debt.

The company’s ownership group, led by Maine ski operator Les Otten, bought Steamboat and the Heavenly Ski Resort near South Lake Tahoe, Calif., for about $300 million in 1997.

The seller was the debt-laden privately held Japanese company Kamori Kanko Co. Ltd.

Otten took American Skiing Co. public but struggled with his business plan of upgrading the base areas of his new flock of ski areas with large resort hotels. Otten gave up a majority share of equity in the company to Oak Hill Cap­ital Partners, a private-equity firm that took on a chunk of American Skiing Co.’s debt, but the company continued to struggle to service its debt.

Steamboat Ski Area was put up for sale in 2001, and American Skiing Co. went through a failed merger late that year that led to Otten’s departure.

After an aborted sale to a group of investors from Vermont and Steamboat, the new leadership of the company pulled back on its plans to sell Steamboat while it sought to restructure and become more fiscally stable.

American Skiing Co. fought off foreclosure on the Steam­­boat Grand in 2002 after restructuring the terms of its construction loan with Textron. Five years later, Steamboat was sold to Intrawest. American Skiing Co. dissolved in July 2007.

Comments

boater1 4 years, 9 months ago

http://www.google.com/hostednews/afp/article/ALeqM5hX5RMEOOZGWi5NqsJyb1UV5rMkig

"They now plan to auction the company off on February 19, right in the middle of the February 12-28 Olympics"

if true it show how the banks care about nothing but their pure profits. if true, they could at least let the olympics end so it's not a public spectacle. guess in the end it's one shark eating another shark.

0

boater1 4 years, 9 months ago

so does this mean yet another owner for steamboat?

0

boater1 4 years, 9 months ago

it's posted on wiki about the auction. not that wiki is the last word or anything

0

boater1 4 years, 9 months ago

maybe we'll be a vail resort by the end of this season?

0

steamboatsprings 4 years, 9 months ago

There won't be an auction anytime soon. Intrawest will file for bankruptcy protection and continue with the negotiations. No one knows how to retstructure debt better than Fortress, it is where they made their name and money. If there is a sale it won't be anytime soon.

0

greenwash 4 years, 9 months ago

Bottom line Intrawest Flayled and is poorly managed.Bring on VA.

ANy realtors looking for work......HaHAHa

0

Scott Wedel 4 years, 9 months ago

Knowing these wall street firms, some Fortress managed hedge fund will buy the debt at a discount saying what a great deal it it while the Fortress fund that owns Intrawest takes the loss.

0

bigfatdog 4 years, 9 months ago

maybe Obama can fix this too. i demand the government fix this now.

0

boatgirl 4 years, 9 months ago

Intrawest and their parent company, Fortress Group, were going to be the saviors of the Steamboat community.Hundreds of millions of dollars were invested by real estate investors after Intrawest paid $ 160million for Steamboat Ski Corp. because the Steamboat real estate market had no where to go but up. This is not the first time that outside corporate owners have taken advantage of trusting Steamboat investors. LTV, Kamori, American Ski Corp, and now Intrawest. All of these companies bought Steamboat Ski Corp. with heavily leveraged balance sheets. All of these companies milked the excellent cashflow of our ski area and then sold us as they went into bankruptcy. Steamboat 700 is the most recent "outsider' to come to Steamboat and make big promises . Steamboat 700 LLC, from Las Vegas , Neveda will be the next outsider to pull the wool over trusting Steamboat investors. Wake up everyone!! History is repeating itself!!!

0

Fred Duckels 4 years, 9 months ago

boatgirl, There should be a law. bigfatdog, Intrawest will need to unionize the work force before O pays any attention. Then he will give the assets to the union if he is true to form.

0

JLM 4 years, 9 months ago

If a borrower owes a lender $1,000,000 and cannot pay, then the borrower has a problem. A big problem.

If a borrower owes a lender $1,000,000,000 and cannot pay, then the lender has a problem. A big problem.

Intrawest (the borrower) owes its lender $1,400,000,000 and cannot pay. Intrawest's lender has a problem. A big, big, big problem.

The financial drawing of daggers that we are currently observing is just the first act in a ceremonial ritual dance in which borrowers and lenders answer the age old question --- well if you can't pay me the money you owe me what the hell can you pay me?

The lender is left with only three possible scenarios ---

  1. Sell the promissory note at a big discount to another financier and let them work the mess out.

  2. Foreclose upon the underlying collateral and get into the ski resort business. Directly or with a joint venture partner.

  3. Pretend to do either of #1 or #2 above and renegotiate the promissory note with Intrawest and alter the terms in some form (more cash, a bit of ownership, etc.) with the borrower to make it worth the lender's while to enter into a compromise of some form. Putting off the day of reckoning.

The market for defaulted debt is a very specialized and rough market. The discounts that are required to move the paper are enormous. It is like doing business with guys named "Guido".

If the lender wanted to be in the ski resort business or knew anything about it, they would never have made the loan. They would have gone into the business themselves. A joint venture partner (e.g. Vail Associates) is going to charge them a huge amount of equity for their expertise --- kind of like negotiating the fee with a heart surgeon while on the operating table with your chest sliced open.

So, look for a lot of public posturing and then one day everybody will get into a room and work it all out. The key question is going to be can Intrawest bring any new money to the table?

If not, then Vail Associates will end up operating this resort in some form or fashion and that may not be a bad thing.

0

trump_suit 4 years, 9 months ago

JLM hits this one dead on. There is simply too much at stake for this not to work out. The only way that Fortress/Intrawest loses control is if there is absolutely no way for them to pay debt service. The lender would rather work it out than take the loss.

0

housepoor 4 years, 9 months ago

I agree they will work it out. The bad part of this is the uncertainty it brings to the local market and the timing couldn’t be worse.

0

Steve Shelesky 4 years, 9 months ago

I suspect that Vail Associates has a fistful of big problems too --especially the RE division. I believe that they are getting hammered at Lionshead. Regarding the ski ops -- while those $500 Epic passes put people on the hill, it must be gutting profits.

0

JLM 4 years, 9 months ago

In the land of the blind, the one-eyed Jack is King!

As long as Vail Associates can stay solvent, it will get paid for its expertise.

The real issue here is that $100/day lift tickets in the middle of a recession are a bitter pill to swallow. Projected SBS occupancy proves that premise.

More folks are going to Mexico to drink cervezas. Mexico will be cheap again even if it is almost lawless and dangerous.

Does anybody remember that we are in a freakin' recession? They are not painless and they are not invisible but they don't last forever.

Time to get real folks. SBS will be OK but it will take a bit of humility to deal with the pricing model dilemma.

0

Requires free registration

Posting comments requires a free account and verification.