Opinion » Editorial




In 1964 a disparate group of Vancouver businessmen, who shared a common love of skiing, called on their friends and family members in an attempt to raise the outrageous sum of $800,000 - the money needed to put the first lifts on Whistler Mountain and get Garibaldi Lifts Ltd. up and running.

For $500 you could buy 500 shares in the new company, but it was a significant leap of faith to invest that kind of money in a proposed ski area at a mountain that wasn't even accessible by a paved road. Try as they might the early believers couldn't raise more than $500,000. The launch of the company was postponed a couple of months.

And then, at the 11 th hour, Montreal's Power Corp. bought the last $300,000 worth of shares, allowing Garibaldi Lifts Ltd. to open Whistler Mountain in 1966 with the gondola, Red Chair, Blue Chair, two T-bars and no debt.

This week Whistler Mountain and Blackcomb became, for the third time, a publicly traded company. Apparently.

After a couple of weeks of rumours and speculation the new Whistler Blackcomb Holdings Inc. reportedly raised $300 million in an initial public offering. Shares sold for $12 each, less than the initially forecast $14-$15 per share but the key is the total raised. If the entire $300 million is raised it will service some of the debt parent company Fortress Investment Group assumed when it bought Intrawest and Whistler Blackcomb in 2006.

More importantly, it will separate Whistler Blackcomb - a consistently profitable operation - from other Intrawest resorts, some of which relied on Whistler Blackcomb's profits to stay afloat.

The sale should bring some certainty to Whistler Blackcomb's operations, at least in New York and Toronto. Locally, there was never much concern that Whistler Blackcomb was going to shut down during the Olympics or that Russian oligarchs were buying the operations. But strategically-leaked rumours from anonymous sources in the financial centres generated a lot of speculation and uncertainty at key times.

Some of it was understandable. Fortress borrowed heavily to buy Intrawest at its peak and then watched the value of its investment decline steadily and rapidly. Repaying that debt and rebuilding the value of Intrawest has been a problem for Fortress. Several resorts were sold in the last year to try and address those problems. But Intrawest's problems are Fortress's problems, and no longer Whistler Blackcomb's.

Raising the entire $300 million, particularly in this economy, is not an insignificant show of faith in Whistler Blackcomb. If that in fact is what happens that has to be good for all of Whistler.

But who put up all that money and what are their interests in Whistler Blackcomb? The feeling last week, when the share price was rumoured to be $14-$15, was that institutional investors were only in for about $100 million of the $300 million Fortress sought. Relying on individual or "retail" investors for the final $200 million was thought to be a long shot. So the share price dropped and suddenly the initial public offering appears to be successful.

Although we don't know the identities of the new investors it's not likely that any one investor has enough of Whistler Blackcomb Holdings Inc. to significantly influence the company. Nippon Cable continues to own 25 per cent of Whistler Blackcomb. Whistler Blackcomb Holdings Inc. owns the remaining 75 per cent and Fortress continues to own about 34 per cent of Whistler Blackcomb Holdings. The new investors collectively own 66 per cent of Whistler Blackcomb Holdings, sort of like Vancouver businessmen did 45 years ago when Whistler Mountain was started.

More practically, what the successful sale should mean is local representation on the board of Whistler Blackcomb Holdings. That may prove to be the most significant part of the whole restructuring.


For the record

Statements made in the Oct. 14 Opening Remarks column statements regarding the Pemberton bus service costs were not accurate.
According to Peter DeJong, Transportation and Risk Manager for the Squamish-Lillooet Regional District, the Pemberton Valley Transit System is comprised of both local service and commuter service to Whistler. The total costs of both local and commuter services is close to $400,000. After BC Transit pays its share of about 47 per cent, the local government share (approximately 53 per cent) is reduced by fare revenue and the net amount of approximately $100,000 is split between the Village of Pemberton (40 per cent), the Lil'wat Nation (40 per cent) and the SLRD-Area C (20 per cent).

In rough terms, the transit customer pays about 25 per cent of the true cost of their ride. With the continually rising costs of delivering transit services, along with public demand for increased services, finding and maintaining appropriate levels at which these costs are to be shared and funded is one of the key challenges faced by communities throughout the Sea to Sky corridor.