Whistler Olympic ski venue faces foreclosure
Intrawest assets, including the Games' skiing venue, could be auctioned off next month
January 21, 2010
Creditors holding $1.4 billion (U.S.) in debt on Intrawest ULC have begun foreclosure proceedings on some of the company's assets, including the Whistler Blackcomb ski resort, and say they plan to auction them off on Feb. 19.
The resort operator's financial woes have put Vancouver Olympic organizers in a quandary, since the sale of the company would be an unwelcome disruption to the games, which open Feb. 12.
Vancouver-based Intrawest recently missed a $524 million debt payment, prompting lenders, including investment bank Lehman Bros. and hedge-fund sponsor Davidson Kempner Capital Management, to put a notice in the Wall Street Journal and other U.S. newspapers seeking buyers for assets, including Whistler, Mont Tremblant in Quebec, Stratton in Vermont and Squaw Valley in California.
"Each qualified bidder must be a financial institution or other entity that has the wherewithal to purchase the membership interests in immediately available funds," the notice states.
Dan Doyle, executive vice-president of venue construction for the games organizing committee known as Vanoc, said legal advisers have concluded that the Games will continue as scheduled, despite the auction date. "We have a business plan to take care of any eventuality," Doyle said at a news conference Wednesday.
Asked about the possibility that an auction could affect competition, Doyle said auctions don't "happen overnight.
``There is a small chance. It's minuscule. Smaller than small," he said. "I don't think it's a problem at all."
Vanoc chairman Rusty Goepel said the Olympics will give Whistler unparalleled exposure and doesn't understand why the creditors are rushing to auction.
"You want to go around the world to find all the potential buyers if you're a creditor. You want to give them all your due diligence and information to make potentially the highest bid," he said. "If I'm a vulture fund and I own some of the outstanding debt, I'm trying to increase the value of Whistler, not decrease it."
Publicly traded hedge fund Fortress Investment Group purchased Intrawest in 2006 for $2.8 billion in a highly leveraged buyout.
Intrawest owns a variety of other mountain resorts in the U.S. and Canada, including the popular Blue Mountain resort in Ontario.
Whistler Mountain will host the alpine skiing events, while the sister mountain, Blackcomb, is the site of the sliding centre. Both are part of the Intrawest resort.
Lehman's own bankruptcy in 2008 has complicated the process, since restructuring firm Alvarez & Marsal is trying to find cash to settle the $1 trillion in creditor claims owed by the investment bank.
Meanwhile, Intrawest said in a statement Wednesday that the company is, at least for now, under the control of Fortress.
"Fortress Investment Group continues to own and control Intrawest and all of its properties," read the statement released by Intrawest spokesman Ian Galbraith. "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 2010 Olympic and Paralympic Winter Games."
Contrary to some media reports, the company's assets ``have most certainly not been seized by the banks. We continue to operate and it's business as usual,'' Galbraith told the Star
Still, the possible sale of the company, an iconic Canadian brand with a global reach, couldn't come at a worse time.
Olympic organizers are hoping to showcase their athletes and the beauty of British Columbia. Instead, it looks like the games may well be seen as a symbol of the global credit crunch.
Fortress and Alvarez & Marsal did not return calls requesting comment Wednesday. A spokesperson for Davidson Kempner declined to comment.