Intrawest to buy Steamboat |

Intrawest to buy Steamboat

Steamboat Springs — Intrawest ULC has agreed to buy the Steamboat Ski Area and related assets for $265 million, American Skiing Co. CEO B.J. Fair announced today. — Intrawest ULC has agreed to buy the Steamboat Ski Area and related assets for $265 million, American Skiing Co. CEO B.J. Fair announced today.

— Intrawest ULC has agreed to buy the Steamboat Ski Area and related assets for $265 million, American Skiing Co. CEO B.J. Fair announced today.

The deal will bring an end to ASC’s 10-year run as the ski area’s owner. Included in the sale are the resort and all resort-owned operations, all of Steamboat’s resort-owned real estate assets, the commercial core of the Steamboat Grand Hotel and Condominiums and the company’s interest in the Walton Pond Apartments complex.

“The proceeds of this transaction will reduce outstanding debt and allow us to focus on opportunities in our portfolio of resorts and their related real estate,” Fair said. “We look forward to working with the entire Intrawest team to ensure a smooth transition and a continued outstanding resort experience for our guests.”

Intrawest, which was acquired by Fortress Investment Group in October, is expected to close on the Steamboat deal by March 31. Fortress is a rapidly growing hedge fund and private equity fund managing $26 billion in assets. Fortress purchased Intrawest, which is based in Vancouver, British Columbia, in a $2.8 billion deal. Intrawest has an interest in 10 North American mountain resorts including Copper Mountain and Winter Park in Colorado and Whistler-Blackcomb in British Columbia.

“The acquisition of Steamboat represents another milestone in our long-term strategy to develop, market, operate and provide our customers with access to the world’s premier network of experiential destination resorts,” said Alex Wasilov, president and chief operating officer at Intrawest. “This acquisition marks the resurgence in our strategy to grow through acquisitions and to leverage our platform to enhance value for our customers throughout the Intrawest network of resorts.”

American Skiing announced in July that it had hired an investment banking firm to explore the sale of Steamboat. Fair said the decision was driven by ASC’s responsibility to realize maximum value for the company’s shareholders.

American Skiing is controlled by Texas equity investment firm Oak Hill Capital Partners, which owns a majority of the company’s preferred shares and has the right to seat a majority of the company’s directors.

Significantly, it was Intrawest’s sale of an 85 percent interest in Mammoth Mountain Ski Area in California one year ago to Starwood Capital for $365 million that helped to pique the interest of institutional investors in ski resorts.

Today’s sale marks the second time in five years American Skiing prepared itself to part with Steamboat. But today’s announcement is different from the last time around.

American Skiing announced in February 2002 that it had signed a contract to sell the ski area to Triple Peaks LLC led by Tim and Diane Mueller of Vermont for $91.4 million. On closing day, ASC walked away from the deal, selling Heavenly Ski Resort in California to Vail Resorts instead.

Today’s announcement is for significantly more money and includes more assets.

There had been indirect signs in recent filings with the Securities and Exchange Commission that ASC was preparing for a change of ownership at Steamboat. The filings have to do with compensation agreements for executives and a restructuring of a particular kind of bonus.

On Nov. 11, the Steamboat Pilot & Today reported that longtime Steamboat Ski and Resort Corp. President Chris Diamond had signed a new contract running through the end of July. In addition to setting Diamond’s compensation at $284,313, the document specified that in exchange for giving up his participation in a company equity plan, Diamond would be paid a $400,000 to $725,000 bonus, depending upon the sale price of the Steamboat Ski Area.

Then, last Friday, ASC announced changes to an executive bonus plan in a filing with the SEC. The company’s “phantom equity plan” was adjusted so that bonuses would only be paid out if $300 million in assets were sold. Most reports had pegged a sale price of Steamboat at less than $300 million.

At the time that Fortress announced its acquisition of Intrawest, one of its principals indicated his company would work with existing management at Intrawest to help it take the necessary steps for it to reach its goals in the vacation industry.

“Fortress has a disciplined strategy of acquiring asset-based businesses with high quality platforms and Intrawest is truly unique in this regard,” said Wesley R. Edens, principal and chairman of the management committee of Fortress Investment Group LLC. “We have a great opportunity to continue Intrawest’s evolution into a leading global leisure player and look forward to working with its management team, employees and partners.”

Fortress itself is in the midst of taking its company public, a move that will make its financial data more transparent than previously. The company filed in early November for a $750 million stock offering.

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