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Intrawest could sell more assets, experts say

But sale of Whistler Blackcomb unlikely



The liquidation of Intrawest assets may not be over despite reports of a restructuring deal with its lenders.

Richard Houlihan, a Chicago-based bankruptcy expert whose former firm is working with Fortress Investment Group on a restructuring of the company's assets, told Pique that reports of a financial restructuring at Intrawest could mean the company may yet sell more properties.

"Restructuring can mean anything," Houlihan said. "It can be anything from selling everything, which is in essence liquidation, to going into bankruptcy for that matter. Restructuring is a very encompassing word and we used to have more select names back in the days when we started this."

The most recent reports about Intrawest have said parent company Fortress has reached a deal with creditors to restructure the company rather than send it to auction. Sources have said the auction is off for now but even with that development there's a possibility that Intrawest will sell more assets.

Intrawest, the parent company of Whistler Blackcomb, has already sold four properties in less than three months. Last November it sold Copper Mountain Resort in Colorado to Powdr Corporation in Utah. In January Intrawest sold Panorama Mountain Resort near Invermere and the Village at Squaw Valley. It sold Florida's Sandestin Golf and Beach Resort in February. Earlier last year Intrawest sold its stake in a French ski area.

The company has sold these assets as parent company Fortress is trying to refinance a loan and debt repayment to lenders such as Davidson Kempner and bankrupt financier Lehman Brothers. Fortress took on approximately $1.5 billion in debt from these lenders to buy Intrawest back in 2006 for about $2.8 billion. It put up $1.375 billion of its own money to buy the company.

Fortress appears to have been struggling to hold on to Intrawest and Houlihan said it may be tough for the company to keep all of its assets. News reports have stated that Fortress has to inject another $150 million into Intrawest to maintain its equity in the company.

"What Fortress is into now is what's called chase capital," he said. "That's when you're trying to keep something alive by feeding it more and more of that broccoli.

"They appear to be more in a process of (what I would call) liquidation and they are liquidating what appears to be very good assets in order to maintain some payment on this debt and other things."

While it's possible Intrawest could sell more properties to repay the company's debt, another expert said it's unlikely that Whistler Blackcomb would be one of them. Grant Manny, a senior associate attached to Houlihan Smith and Company, another of Houlihan's firms, said the Olympic resort isn't likely to be sold off.

"There's serious doubts they would sell big assets, particularly Whistler Blackcomb," he said. "Whistler Blackcomb, if they were to sell that, it would basically be the death of Intrawest. (Intrawest CEO) Bill Jensen has no desire to sell Whistler, that's a staple of Intrawest. It's sort of like Vail (Resorts) selling Vail."

Houlihan went on to say the restructuring deal will extend Fortress's debt under different terms for another four years.

Intrawest spokesman Ian Galbraith did not return a request for comment on whether the company would sell more properties.