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Intrawest reduces stake in Whistler Blackcomb

Company allots shares for underwriters



Intrawest is reduced to the status of quarter-ownership in Whistler Blackcomb after selling $45 million in shares to its underwriters.

The company announced in a news release on Tuesday that banks including CIBC World Markets, RBC Capital Markets and Scotia Capital Inc. have purchased 3,750,000 common shares in Whistler Blackcomb Holdings Inc. at a price of $12 a share.

With the purchase closed, Intrawest is left with about 24 per cent of common shares in the Whistler Blackcomb Holdings, or about 10 per cent less than its stake in Whistler Blackcomb before the underwriters picked up their share.

Public investors and the underwriters now collectively hold 76 per cent of the company, leaving Intrawest as the biggest shareholder but a far cry from majority shareholder in North America's premier ski resort.

The underwriters were granted an option to buy these shares when they were contracted to help sell the company as it was being put up for sale on the Toronto Stock Exchange. They had 30 days to exercise the option to buy the shares. The proceeds of the sale will go to Intrawest, as Whistler Blackcomb Holdings pointed out in a news release that it would not profit from the over-allotment.

Though it makes clear the stake that Intrawest still holds in the resort, the latest development muddies an already-murky picture of who actually owns Whistler Blackcomb. The 76 per cent that was put up for public sale could be owned by any number of investors.

In Whistler, longtime realtor Pat Kelly has come forward to say he owns shares in the resort but few others have emerged to confirm any ownership of the company. The ownership picture may not become clear until the end of companies' fourth quarter financial statements, when they have to disclose their holdings to shareholders. That comes at the end of this year.

James Brander, a professor at UBC's Sauder School of Business, said with the sale of these shares Intrawest ends up owning "significantly less" of Whistler Blackcomb Holdings than was originally planned.

"This does of course reduce the influence of Intrawest in controlling Whistler Blackcomb," he wrote in an e-mail. "I assume that Intrawest is still by far the largest shareholder but, with only just under one quarter of the stock, Intrawest will have a smaller role on the Board of Directors and could be outvoted."

Brander went on to say that the underwriters could sell the shares to their clients but could also keep them for a while. Typically, he said, underwriters take advantage of an over-allotment of shares when they expect strong demand for them.

In a week of trading on the Toronto Stock Exchange, Whistler Blackcomb Holdings has fluctuated around its original $12 per share price, reaching a high of $12.50 on its first day of trading and a low of $11.90 the very next day before levelling off just over its initial asking price.



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