Intrawest debt for sale
Reports of auction churn after ads appear in national newspapers
January 20, 2010
Steamboat Springs — 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.