Intrawest goes into survival mode
CEO Bill Jensen: All options on the table for refinancing company's debt
April 16, 2009
Breckenridge — When Bill Jensen left Vail Resorts for Vancouver, B.C., last spring to take the helm as chief executive officer for rival Intrawest, the ski industry was flying high on its way to a record year of skier visits.
Since then, the U.S. economy dived, and the fortunes of the Canadian resort and real estate company took a turn for the worse.
Jensen, in Breckenridge this week for meetings at Intrawest’s Copper Mountain Resort, said future financing for the highly leveraged company could require selling some assets.
Before taking over at Intrawest, Jensen served a successful stint with Vail Resorts, first in Breckenridge, then in Vail as head of that mountain and later all the company’s Colorado resorts. He also headed up the National Ski Areas Association as chair for a few years in the mid- and late-1990s.
Intrawest now is owned by New York-based Fortress Investment Group, a public hedge fund and private equity firm that’s taken a drubbing in the past year. The company came close to a last-minute deadline before reaching a one-year deal to refinance $1.7 billion in debt last October. According to Bloomberg News, the company took another hit earlier this month, when it claimed it lost $125 million to alleged Ponzi schemer Marc Dreier.
Jensen said Copper Mountain and Winter Park performed well given current economic conditions, as did several of Intrawest’s Eastern resorts.
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The season was strong until Presidents Day, Jensen added, when destination visits declined dramatically.
Despite a relatively strong winter performance by the company’s ski resorts, Intrawest has been in survival mode this season, Jensen said.
“The reality is, in this global economic challenge, that we have to take every step to survive. We’re looking at all the options to reduce our debt,” Jensen said, asked to address rumors that Copper Mountain is for sale.
“Copper is not one we want to sell,” Jensen continued. “There are some assets that are core to our business. … But we’re exploring all the options.”
Another path could be to finance some of the company’s various businesses independently, Jensen said. For example, Intrawest’s Quebec assets could be financed separately in Quebec, he explained.
Real estate hit hard
But real estate and development, which has been a huge part of the company’s business, is bogged down, with a tremendous amount of investment in non-resort properties, Jensen said.
Intrawest, for example, owns undeveloped land at Copper that was highly valued just 12 months ago. But the extremely tight credit market has hit those holdings hard.
“The parcels we have have a relatively low value. It’s hard to get value for it,” Jensen said, explaining how the company’s cash is tied up in land. In the current market, it’s hard to monetize those assets, he said, and Intrawest will scramble. But he added that the company will continue to meet its obligations, financial and otherwise.
That includes an agreement with Summit County to end the practice of parking along Copper Road by the start of next season. Jensen said Intrawest will move ahead with some planned improvements at the Corn Lot, east of Highway 91, to reach that goal.
And before moving ahead with any of the real estate plans approved by the county last summer, Copper will study its employee housing obligations.
“That would be our first brick-and-mortar project,” Jensen said.
Intrawest also plans to move ahead with a $7 million gondola at Steamboat Ski Area to move skiers from Wildhorse Meadows to the base of the mountain.
And while Intrawest cut staffing this winter, the biggest reductions have come at the corporate level, Jensen said. There haven’t been cuts in grooming, ski school or in safety programs, he said, careful to explain that the budget-saving measures have not affected the guest experience.
“We’ve put the numbers on the wall for our employees,” Jensen said, explaining that the company has tried to make it clear to workers that it is doing what it can to ride out the economic storm.