Debt looms for Fortress
Economic turmoil hits owner of Intrawest, which owes $1.68B
October 18, 2008
Steamboat Springs — Nine months after outgoing Intrawest chief Alex Wasilov said Fortress Investment Group was prepared to infuse Steamboat Ski Area’s parent company with large amounts of capital, Intrawest faces an Oct. 23 repayment deadline on $1.68 billion in loans.
Fortress, a publicly traded private equity firm and hedge fund, paid $2.8 billion for Vancouver, B.C.-based Intrawest in late 2006. In addition to Steamboat and Whistler Blackcomb, Intrawest has interests in resorts including Copper Mountain and Winter Park.
Fortress is in a struggle to protect its $1.37 billion equity stake in Intrawest, according to a report published in London’s Financial Times on Thursday. The article reports Fortress has approached existing lenders and potential new lenders in an effort to refinance $1.4 billion in senior debt. Intrawest’s debt already is trading at 70 cents on the dollar.
The efforts by Fortress to refinance the debt come duringwidespread reports that large financial institutions are holding capital tightly.
Wasilov, who remained on Intrawest’s board after he stepped down from the position of CEO, spoke to 200 airline executives gathered in Steamboat Springs in January. He told his audience at Steamboat Ski and Resort Corp.’s airline summit that the purchase of Intrawest by Fortress signaled a new growth phase for the company.
“We’re just pleased that we have (Fortress) on board, because they have a hell of a lot of capital, and they’re putting it behind us, and it’s going to be our fuel to continue to grow and prosper,” Wasilov said at the time.
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Ian Galbraith, Intrawest’s director of corporate communications and media relations, said his company’s executives were not in a position to comment about Thursday’s report, and he deferred questions to Fortress.
“It’s a matter that involves Fortress,” Galbraith said. “Our executives work closely with Fortress executives on a daily basis.”
Lilly Donohue, director of investor relations for Fortress, also declined to speak on the record Friday. Ongoing discussions with lenders made it essential that she withhold comment, she said.
Financial Times writer Henny Sender cited a Fortress letter to investors that indicated discussions with lenders have been “constructive.”
The New York investment research firm Keefe, Bruyette and Woods recommended in late September that Fortress Investment Group shares be downgraded from expectations that it would out-perform the market to “market perform.”
Streetinsider.com reported Sept. 26 that Fortress had filed with the SEC its intent to sell as much as $1 billion in shares to possibly refinance indebtedness, as well as to access working capital and for general corporate purposes.
The report in the Financial Times said Fortress already had injected $100 million of capital in Intrawest to prop up its equity in the company.
Wasilov came to Intrawest to restructure the resort operator from a public company to one that is privately held. While in Steamboat in January, Wasilov said restructuring freed up $100 million of the capital needed for Fortress to back the March 2007 purchase of Steamboat Ski Area for $265 million.
Wasilov was succeeded as Intrawest’s CEO by former Vail COO Bill Jensen in June.