Salar posted on February 08, 2010 05:07
Western Canada has the reputation of being one of the most beautiful places in the world, and Whistler, where all our holidays depart, has won the reputation as North America’s finest resort (as rated by Snow Country Magazine for the past six years).
However, Owner Intrawest is facing foreclosure over a $524 million payment on loan of $1.4 billion that came due last year. Now a group of US hedge funds has announced plans to auction off the financially troubled owner of the ski resort.
Intrawest Holdings, which also owns Whistler Blackcomb (WB), has been seized by banks after the company missed a big debt payment late last year, and the banks plan to auction off the company in the middle of the Olympic Games, according to a published report.
The Globe and Mail, citing “a notice placed in major newspapers” and a person said to be familiar with negotiations between Intrawest and its lenders, said lenders Lehman Brothers and Davidson Kempner Capital Management LLC “plan to auction off the ownership of Intrawest on Feb. 19.”
The lenders served notice of the foreclosure on Jan. 8, and the timing of the purported auction date was unrelated to the Olympics, the Globe reported. The Games are set to run from Feb. 12 to 28.
The Winter Olympics start soon in Canada but behind their scenes there is concern about the ownership of Whistler, one of the key ski event resorts. The auction is due to be held on 19 February, right in the middle of the two week Winter Games, which draw worldwide attention every four years.
Intrawest’s owner, Hedge Fund Fortress Investment Group of New York, is being pushed to surrender control to creditors said to include Davidson Kempner Capital Management, Oak Hill Advisors and failed investment bank Lehman Brothers. Intrawest was acquired in 2006 for $1.8 billion by Fortress, shortly before the financial crisis
A spokesman for the Vancouver Organizing Committee for the Games conceded there is a small chance the Olympics could be disrupted if Intrawest is unable to come to an agreement with its creditors and the auction goes ahead.
Whistler is due to stage alpine ski events, bobsled, luge, skeleton, biathlon and cross-country skiing. ‘Never say never, but I don’t think it will be a problem at all. We looked into all the actions that could happen and they take time. They don’t happen overnight,’ said Dan Doyle, a VANOC executive vice president.
In recent days lenders represented by Wilmington Trust FSB ran adverts announcing the sale of Intrawest assets, including Whistler, Colorado's Steamboat ski area, Mont Tremblant Ski Resort in Québec and about ten other resorts. Intrawest said no foreclosure process has yet begun.
‘Fortress Investment Group continues to own and control Intrawest and all of its properties,’ a spokesman said, adding that it is in ‘serious discussions’ with its lenders regarding a potential refinancing. Meanwhile, resorts including Whistler are still operating as usual.
Located about two hours north of Vancouver, Whistler is one of the premier ski resorts in North America and a key driver of the regional economy.
If the Whistler auction were to proceed on schedule, it would at the very least be a blow for the provincial government, which has invested billions of taxpayer dollars in the Games and can ill afford to see them become a public relations circus.
According to a report in the New York Post the government will opt to bail out Intrawest rather than face a foreclosure when Whistler is in the public eye. ‘What’s going on here is the creditors are in charge and they’re calling the shots,’ said Lindsay Meredith, a business professor at Simon Fraser University.
In the wake of the financial crisis, hedge funds and banks everywhere are hunting for cash so the Olympics represent an opportunity for the Intrawest lenders to use the event to maximize public attention on the sale and bring in more potential buyers.
‘Politically, this gives everyone a little shake because it provides a hell of a lot of world coverage of the kind you don’t want,’ he added.