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Intrawest misses loan payment

Whistler Blackcomb ‘will continue to operate’; government bailout unlikely



Intrawest has missed a deadline to pay over half a billion dollars to lenders but it won't put Whistler Blackcomb in peril, as has been claimed in some media reports.

Whistler Blackcomb's parent company owes a total $1.4 billion to creditors, according to a Dec. 23 report by the Bloomberg news agency that quotes anonymous sources close to the company.

The debt was used to finance a buyout of Intrawest by Fortress Investment Group LLC, which purchased the company in 2006. Fortress acquired Intrawest in 2006 in a transaction that cost a total $2.8 billion, including $1 billion in debt.

A report in the New York Post last week said Intrawest is moving closer to default with its failure to pay an installment of $524 million. The payment was due Oct. 23 but a 60-day extension was apparently given, to Dec. 23.

The Post story, citing anonymous sources, claimed that talks between Fortress and a group of creditors, led by hedge fund Davidson Kempner, had come to an impasse. The anonymous source suggested the Canadian government may have to step in and bail out Intrawest.

The Post also said the discussions are "imperiling" Whistler's Olympic ski venue.

Intrawest declined to comment on the report, but a UBC expert in venture capital said a bailout is unlikely.

"It's certainly not impossible," said James Brander, a professor at the Sauder School of Business. "The government does undertake bailouts but the Canadian government unlike the U.S. government has not been involved in an extensive bailout project.

"The Canadian government has provided money for the auto industry and does make other selective support payments so it certainly has done some, but it's not like they have a big war chest sitting there that's available for that sort of thing."

Asked how the discussions could impact operation of Whistler Blackcomb during the Olympics, Brander said the company will continue to operate regardless.

"Almost certainly Whistler Blackcomb would continue to operate," he said. "What almost always happens in situations like this is the underlying asset that's generating cash, in this case the ski resort, that just keeps operating. It would be crazy for anyone to force it to close... it makes no sense to shut anything down."

Brander went on to say it's likely that Intrawest could either refinance its loans, get bankruptcy protection or even seek another buyer for its assets.

Intrawest has sold Copper Mountain resort in Colorado since the extension on the debt payment. Utah-based Powdr Corp. is believed to have paid approximately $100 million for the resort.

The money isn't enough for Intrawest to pay back its lenders but a company source said there was never a mention of the transaction's value, nor how it would be used. The sale was finalized two weeks ago.

The Bloomberg story notes that Intrawest's discussions with lenders will have "no impact" on the Olympics.

Intrawest CEO Bill Jensen issued a statement at the time of the Bloomberg report last month. Jensen stated: "Intrawest continues to be in active dialogue with our lenders regarding refinancing a term loan. Our core ski operations are off to a very good start this season and it is business as usual for Intrawest. We are continuing to provide our customers and homeowners with the memorable experiences that they have come to expect when they visit our resorts."



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