April 16, 2009 - Intrawest - Fortress Investment Group LLC, Vancouver Canada

Squeezed by debt, Intrawest eyes asset sale

Mont Tremblant resort could go on the block as company looks to pay down $1.7-billion loan

Squeezed by debt, Intrawest eyes asset sale

Mont Tremblant resort could go on the block as company looks to pay down $1.7-billion loan

Intrawest ULC, the heavily indebted owner of 2010 Winter Olympics co-host Whistler Mountain, is considering selling assets as it negotiates with lenders to refinance and pay down a $1.7-billion (U.S.) loan.

Options include breaking up the resort operator's business, with Quebec's Mont Tremblant being established as a separate, self-financed company. "It is a difficult global environment and Intrawest is considering all of the strategic options available to us to ensure our long-term business success," said company spokesman Ian Galbraith, who declined to discuss which assets are on the block or any details of the options.

"We continue to have constructive discussions with debt holders regarding the ongoing refinancing of our term loan."

The talks with lenders are taking place against a tough backdrop: Intrawest's real estate business is moribund and its destination ski resorts have been hit by the recession.

The Vancouver company was bought in 2006 for $2.8-billion, cash and debt, by private equity and hedge fund firm Fortress Investment Group LLC, which did the leveraged buyout with a $1.7-billion loan. When that loan came due last October, in the middle of the financial meltdown, Intrawest was forced to the brink of creditor protection before Fortress managed to refinance at the last moment.

"Getting any piece of financing done in this market is challenging," Fortress chief executive officer Wesley Edens told investors in March.

New York-based Fortress, which has seen its own stock drop about 80 per cent in the past year, said in the March conference call with investors that it is in talks with lenders to pay down the Intrawest loan in an effort to refinance the emergency one-year extension granted last year.

This week, Intrawest CEO Bill Jensen told the Colorado-based Summit Daily News that debt reduction is his company's priority. "We have to take every step to survive," said Mr. Jensen, who declined requests for an interview.

He told the Colorado paper that "some assets" are key for Intrawest and also said that Mont Tremblant, north of Montreal, could become a standalone company. Mr. Jensen added that many Intrawest assets, particularly in real estate, are hard to sell for a good price in the current depressed market.

In 2006, Intrawest made two-thirds of its profit from real estate, and Fortress bought the company at the peak of the real estate market. Intrawest owns 10 winter resorts and one golf resort, all of which sell real estate, and it also has real estate-only plays in places such as Hawaii and California.

But sales of resort real estate have collapsed in the recession, and Intrawest's key ski mountain properties have been battered because its best ones, led by Whistler, are destination resorts. More than half of Whistler's guests in 2007-08 came from outside Canada.

The Steamboat Springs ski resort in Colorado is another key destination site; Intrawest bought it in late 2006 for $261-million, backed by the then-deep pockets of Fortress.

"Does it surprise me that they're struggling right now? No, not at all," said analyst Hayley Wolff at Rochdale Securities LLC in Stamford, Conn. "By far their biggest property is Whistler and it's a pure destination resort."

And unlike competitor Vail Resorts Inc., Intrawest relies far more on real estate than its skiing operations for profits, Ms. Wolff said. Fortress was largely attracted to Intrawest for its real estate business, to complement Fortress's many investments in that sector. Operating ski areas wasn't among Fortress's skills, which is why, in mid-2008, it hired Mr. Jensen, previously a senior executive at Vail Resorts.

Mr. Galbraith, the Intrawest spokesman, said the company's cash flow is "strong" and has sufficient working capital to finance its daily operations and its interest payments. The company has laid off staff since the economic crash, mostly on the corporate level.

Fortress did not respond to calls for comment.

Intrawest was started in the 1970s as an urban real estate developer, led by Joe Houssian. In 1986, it bought Blackcomb Mountain and by 1996, when it bought Whistler Mountain, Intrawest had morphed in to a resort real estate firm and ski-area operator. Its performance ebbed and flowed with the economy and when Mr. Houssian sold in 2006, the company was under pressure to perform better. In retrospect, he sold at the perfect moment.

The Whistler resort has had a tough winter, even without the recession. In December a gondola tower snapped, injuring a dozen people and stranding more than 50 for several hours, generating a flurry of bad publicity.

At the time, the mountain was mostly bare of snow and significant accumulations didn't come until mid-February.

As for next winter, Whistler is battling the perception the mountain will be cut off from average skiers because of the Olympics. Whistler hosts the downhill ski races and sliding sports such as bobsled, and ski jumps are nearby. While the resort says 90 per cent of the terrain will be open, the two-hour journey to the mountain from Vancouver will be difficult in February and accommodations during the Games will be expensive and hard to get.

Original Story - Globe and Mail

Update - April 22, 2009

Sandestin for sale?

Destin developer says he is ‘hopeful' as negotiations continue

Local developer Tom Becnel says he is negotiating with Sandestin’s parent company for a buyout of the resort.

Rumors have persisted for weeks about an impending sale of Sandestin Golf and Beach Resort, and it appears there is a possible deal in the works — at least according to one of the parties seeking to purchase the resort giant in Walton County.

As late as last week, Laurie Hobbs, director of public relations at the resort, said “that is definitely a rumor,” and denied on behalf of the parent company Intrawest and Sandestin that the resort was for sale.

However, Becnel confirmed this week that he is in negotiations with Intrawest. He declined further comment saying, “It would be premature to comment at this time as we are still in discussions.”

The developer of Destin landmarks like Silver Shells and the Palms said he is “hopeful” he will be successful in his offer but that “it is a complex transaction with several challenges.”

When asked about Becnel’s comments, Hobbs said, “At this point it’s unfortunate there has been so much misinformation in the community and it is very unfair to speculate,” she said.

Hobbs would not say what misinformation she was referring to and refused further comment.

Intrawest, which also operates resorts in Canada and other U.S. states, is considering the sale of many of its assets as it negotiates with lenders to refinance and pay down a $1.7 billion loan, according to newspaper reports published last week.

The local resort giant has been a part of Intrawest since July 1998, when the Canadian-based company finalized the $130 million buyout and took over ownership of the resort from the Malaysian-based Sime Darby Berhad.

Closer to home, Becnel’s negotiations do not seem to be a secret within the area business community.

In an address to the Sandestin Lions Club on Monday, Peter Bos alluded to Becnel’s attempt to purchase the resort when he was questioned about his intentions toward the property by a Sandestin resident.

Bos is the original developer of Sandestin but sold it in 1991.

“I was not consulted in this latest deal,” Bos told the audience. “I hope he (Becnel) is the successful bidder.”