Banks have started foreclosure proceedings against Intrawest Holdings, the owner of the Whistler ski resort that's hosting the Olympic downhill races next month, after the resort operator missed a big debt payment, and now plan to auction the company off right in the middle of the Games.
Intrawest's owner, Fortress Investment Group, is facing the prospect of losing control of its flagship resorts after it failed to make a $524-million (U.S.) payment that was due on its debt. The lenders, which include Lehman Brothers and Davidson Kempner, plan to auction off ownership of Intrawest on Feb. 19, according to a notice published in major newspapers. The first events of the Games are scheduled for Feb. 12 and the closing ceremony is set for Feb. 28.
"Each qualified bidder must be a financial institution or other entity that has the financial wherewithal to purchase the membership interests in immediately available funds on the closing date," the notice said.
Fortress could potentially forestall a sale by coming up with cash to satisfy its banks, or some other restructuring such as one that gave the lenders an equity stake. The resorts are operating as normal.
Fortress bought Intrawest for $3.1-billion in 2006, adding $1.5-billion of new debt to finance the deal. Not long after, the economic slump hit and the real estate market fell apart, hammering the North American ski industry as sales of lift passes and condominium units at resorts plunged.
Fortress's banks had been working with the company to find a solution, but that process wasn't producing the kind of results the banks were looking for. The lenders, frustrated by a lack of progress in restructuring company's debt, gave notice of the foreclosure to Intrawest on Jan. 8, said a person familiar with the talks. The timing was unrelated to the Olympics, the person said.
Should a sale go ahead, in addition to Whistler, buyers will get stakes in four resorts in Colorado, as well as properties in California, Florida and Vermont. But with the Games only weeks away, the focus is on Whistler.
"We understandably cannot comment on Intrawest's finances beyond our continued support for their efforts to settle outstanding financial matters," the Olympic organizing committee said in a statement.
"What we can confirm is that Whistler Blackcomb is an important partner in the staging of the 2010 Games and we continue working in very close partnership with them to finalize overall preparations and readiness for the skiing and sliding sport events."
A source close to the organizing committee said that Fortress was hard to deal with, so a change of ownership may be a boon.
Intrawest chief executive officer Bill Jensen said that the company is in talks with its lenders, and in the meantime "it's business as usual."