Ski resort giant and Copper Mountain owner Intrawest refinances
Summit County correspondent
Summit County, CO Colorado
SUMMIT COUNTY, Colorado ” Intrawest, the parent company of Colorado’s Copper Mountain and other ski areas across the West, reached a last-minute deal late Thursday to refinance its $1.7 billion loan that had come due, staving off bankruptcy threatened by the global credit freeze.
The company says it has received unanimous support from its existing lender group after the Fortress Investment Group ” the New York-based private-equity firm that controls Intrawest ” restructured the loan used to acquire the resorts.
Intrawest CEO Bill Jensen, the former chief operating officer of Vail Mountain, said in a written statement his company was pleased to reach the agreement, “particularly given the challenges of the global credit markets.”
The company, which made the announcement Thursday afternoon, had scrambled to refinance the debt amid the chaos of the tight credit markets and plunging stock markets. The company also is struggling as high-end tourism and real estate are suffering because of the weak economy.
The credit market was a challenging factor, Jensen said.
“The support Fortress and our lenders have shown underscores their confidence in Intrawest and will enable us to continue to execute on our long-term strategic plans,” he said in the company statement.
But the terms of a new loan will be more costly for Fortress and could result in a cash crunch for Intrawest, according to Jackson Turner, who tracks Fortress for New York-based Argus Research Group.
The refinancing may affect Intrawest’s ability to make capital investments and provide services, Turner said.
“They’re going to have higher debt costs. That will take more dollars out of a shrinking pie,” he said.
Paying more to service the debt leaves less money available for other expenditures, Turner explained.
The financing is important not only for Intrawest’s capital expenses, but also for operational expenses, he added.
“Intrawest may have to severely curtail capital investments and services because Intrawest and Fortress don’t have a lot of capital on hand,” Turner said. “I would say severe and noticeable cutbacks are a given.”
Fortress officials did not return calls Thursday.
But Intrawest officials in Canada and local officials with Copper Mountain said the corporate-financing issue won’t affect day-to-day operations.
“It’s business as usual,” Copper spokeswoman Lauren Pelletreau said Wednesday. “It’s not going to affect the guest experience or our plans for the 2008-2009 season.”
Pelletreau declined to comment on press reports that Intrawest is considering a company-wide hiring freeze that may include Copper Mountain. An online report at http://www.whistlerquestion.com referenced an internal Intrawest memo that discussed the potential hiring freeze.
According to the New York Post, the company’s stock value has dropped 80 percent this year.
But Fortress executives have told investors that the company has $300 million in free cash and that it has been able refinance most of the debt used to buy companies during the past several years.
Lehman Brothers, which disintegrated during the recent financial crisis on Wall Street, was one of the companies involved in the original financing of the loan.
Fortress acquired Intrawest two years ago in a heavily leveraged buyout that included $1.67 billion in debt. The New York-based company manages private equity, hedge funds and real estate-related investments.
Intrawest operates Copper Mountain, Winter Park and Steamboat ski areas in Colorado and Whistler in British Columbia, which will host the 2010 Winter Olympics.
The $1-billion, 1,100-unit Vancouver athletes’ village is also being financed by Fortress, and recent cost overruns at the project have raised concerns about the development’s financial health.
The Toronto Globe and Mail and the Vancouver Sun contributed to this report.
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