The owner of Whistler Blackcomb, co-host of the 2010 Winter Olympics, has sold one of its Colorado ski resorts as the company grapples with a heavy debt load.
Intrawest ULC, which owns Whistler and nine other winter resorts in North America, said Tuesday it has sold Copper Mountain to Powdr Corp., based in Park City, Utah, and one of the larger ski resort operators in the United States. The price was not disclosed.
Based in Vancouver, Intrawest has been hurt badly by the recession. Its high-end resort real estate business has suffered and visitors to its expensive resorts are down significantly. In 2006, the company was acquired for $1.8-billion (U.S.), mostly financed by debt, at the peak of the real estate market. The buyer was New York private equity firm and hedge fund manager Fortress Investment Group LLC .
Fortress has told its investors that the value of Intrawest has fallen 71 per cent, Bloomberg News reported in October.
A year ago, Intrawest refinanced $1.7-billion of short-term debt. Fortress and Intrawest recently extended the loan again, according to industry analyst Hayley Wolff at Rochdale Securities LLC in Stamford, Conn.
Intrawest wouldn't say whether it was going to pay down debt with the Copper proceeds.
"It's a private company, I can't say," company spokesman Ian Galbraith said Tuesday.
Fortress could not be immediately reached for comment.
"Fortress bought a good portfolio of assets, they just overpaid," Ms. Wolff said Tuesday. "They've pushed out the debt maturities a little bit but they need cash. It's a step in the right direction. It's unfortunate they've gotten to this stage, where they're overleveraged and not investing in the properties."
Whistler Mountain, one half of the Whistler Blackcomb resort two hours north of Vancouver, the main Olympics host, is the site of the alpine skiing events in February. Sliding events such as bobsled will happen on a track on Blackcomb. South of the resort in the Callaghan Valley, not connected with Intrawest, Nordic events such as ski jump will take place.
Stock of Fortress is up by about one-third in the past year to around $4 a share but it remains down more than 80 per cent since its initial public offering in early 2007. On a quarterly conference call this month to discuss its financial position, the new chief executive officer, Daniel Mudd, who replaced Wesley Edens in the summer, said the company has refinanced $6.1-billion of debt among Fortress's other holdings in the past year.
However, the Intrawest debt situation is more difficult, Mr. Mudd said.
"We are working on that," he told investors and financial analysts.
Fortress has called Intrawest the "most challenging" investment in its Fund IV private equity portfolio. In a letter to investors of the fund, which Bloomberg News reported on in October, Fortress blamed the "ongoing deterioration of the global economy" and a rainy start to the season at Whistler Blackcomb last year, which produced a "difficult" winter for Intrawest's most profitable resort.
This winter has started extremely well - Whistler opened last weekend, two weeks early - but hosting the Olympics means business will be down this year. In February, generally the most important month, only 6,000 or so skiers are expected to be on the mountains, two-thirds fewer than normal, even though 90 per cent of the resort will be open.
The problem is that there will be no public day parking, and rooms, if available, will be expensive. In response to what it calls the "Olympics aversion factor," Intrawest cut the price of its season pass almost 30 per cent to $1,100 (Canadian), the lowest in a decade for a resort routinely ranked No. 1 or No. 2 in North America and well known as one of the best destinations in the world.
It is not clear what risk the Olympics face because of Fortress/Intrawest's money problems, but the Vancouver Organizing Committee for the Olympics said it is making "solid progress in our planning with [Intrawest]for the skiing and sliding sport events."
"While we monitor the financial environment of the facility's owners, we're not directly involved in the broader matters involving Intrawest's debt," Dave Cobb, deputy CEO of VANOC, said in a statement to The Globe and Mail. "Any financial issues Intrawest is engaged in with Fortress are matters for those two parties to resolve."
Intrawest and Fortress have been almost completely silent on the financial difficulties.
In a rare comment in April, Intrawest CEO Bill Jensen told a Colorado newspaper: "We have to take every step to survive."
Intrawest bought Copper Mountain in 1996, one of its first major expansions when the then-owner of Blackcomb and some real estate also bought Whistler Mountain to start building the resort empire that exists today. Intrawest spent hundreds of millions of dollars to build up the base areas with hotels and retail and on-mountain facilities at Copper Mountain and Whistler Blackcomb.
Mr. Jensen said in April Copper Mountain was an asset Intrawest specifically did not want to sell but added, "we're exploring all the options."
Another of the options was to establish Mont Tremblant north of Montreal as a separate, self-financed company.
Charles Massicotte, president of the resort, quit his job this month to take another role elsewhere, Intrawest said on Nov. 6.
Intrawest spokesman Mr. Galbraith on Tuesday would not say whether more assets will be sold. He said the reason Intrawest sold Copper Mountain is because the new company strategy is to focus on nine winter resorts rather than 10.
Intrawest also owns a beach-and-golf resort in Florida called Sandestin, as well as a collection of smaller holdings.