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View Full Version : Intrawest struggling to pay 1.68 billion dollar debt payment



Last Tracks
10-16-2008, 06:30 PM
From Financial Times today... they own Stratton... just the continuing saga of financial companies that own ski areas..


"Fortress Investment Group, a listed alternative investor with $40bn under management, is taking action aimed at keeping two of the companies it owns afloat, according to people familiar with the situation.

Fortress’s difficulties will be followed in the troubled financial world because they herald similar problems for other private equity firms and hedge funds.

Fortress is battling to preserve the value of its investments in Intrawest, a ski resort company based in Canada that has $1.68bn in debt due on October 23, and Gagfah, a German residential real estate group that is seeking to raise additional equity to comply with the terms of its debt.

Fortress controls Intrawest via a $1.37bn equity stake. With Intrawest’s debt trading at less than 70 cents on the dollar, Fortress has approached potential and existing lenders to discuss a refinancing involving $1.4bn in senior debt. Fortress is putting in $100m of additional capital to preserve its equity’s value. Talks will be tricky since any member of the lending group can veto a deal. On October 14, lawyers for the bank group at Cadwalader Wickersham & Taft sent a note to creditors saying “the ability of the borrowers to achieve [100 per cent] consent is suspect”.

People familiar with Fortress, which operates hedge funds and private equity vehicles, say there is a low probability Intrawest will file for Chapter 11 bankruptcy protection. A letter sent to investors on October 3 said: “We are engaged in constructive discussions with the balance of the lending group.”

The Intrawest talks are complicated by the fact that a Fortress unit called Drawbridge owns debt in Intrawest. That could create a conflict of interest, since Drawbridge is obliged to cut the best deal for debt investors and Fortress obliged to fight for shareholders. But according to a person familiar with Fortress, the Drawbridge investment is so small it should not be a problem.

ski_resort_observer
10-16-2008, 06:48 PM
How much did that new interconnect lift at Whistler cost?

HowieT2
10-16-2008, 07:00 PM
How much did that new interconnect lift at Whistler cost?

That's not the issue nor is the cash flow. They didn't lock in the debt they used for the purchase. They used short term debt and are now forced to refinance in a horrible environment.

ski_resort_observer
10-20-2008, 10:53 AM
Wow, I recently read that it cost 50m, that's a chunk of change.

Last Tracks
10-23-2008, 10:34 AM
FYI From a note sent to me today, purely a rumor, can anyone confirm?...

Employees at Intrawest, the troubled ski resort operator owned by Fortress Investment Group, are gathering for an all-employee meeting today, according to a tipster familiar with the matter. The gathering could be a prelude to a bankruptcy announcement by Intrawest.

This morning, the New York Post reported that the Fortress Investment Group, the once high-flying and troubled alternative-investment firm that had to halt its quarterly dividend last month to conserve cash, may be be forced to arrange a bankruptcy for Intrawest. The immediate cause of the potential bankruptcy: some lenders are refusing to refinance the $1.7 billion of debt Fortress used to buy the Intrawest just two years ago.

Word of an all employee meeting seems to indicate that the company is preparing for a bankruptcy. Of course, it is still possible that a last minute deal with lenders could rescue the Intrawest.

A bankruptcy would be a major blow to Fortress. Intrawest represents 10 percent of Fortress’ $17 billion private-equity portfolio. Part of the problem seems to be that now bankrupt Lehman Brothers was one of the lenders in the Intrawest deal....

BushMogulMaster
10-23-2008, 11:05 AM
http://dealbook.blogs.nytimes.com/2008/10/23/fortress-said-to-face-trouble-over-ski-resort-investment/

BushMogulMaster
10-23-2008, 05:56 PM
Well, looks like they're good to go for now.




October 23, 2008

SAM Magazine—Vancouver, B.C., Oct. 23, 2008—Intrawest successfully completed an agreement to refinance a $1.7 billion loan which was due today when it received unanimous support from its existing lender group.

“We are very pleased to have reached an agreement with our lenders, particularly given the challenges of the global credit markets," said Bill Jensen, chief executive officer at Intrawest. "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. Intrawest has great assets, a sound business model and a solid track record."

Fortress Investment Group has been working to refinance $1.68 billion in Intrawest debt for the past month, but the credit crisis made negotiations with its creditors extremely difficult. Intrawest has been the most recent, and visible, resort to be caught up in the current debt crisis, but it is not the only one. And most observers predict it will have lots more corporate company before the crisis is over.

As a result of the refinancing, Intrawest will likely see a dramatic rise in the cost of its debt. The current loans have been selling at 70 cents on the dollar, suggesting an interest rate of about 9 percent, vs. the previous rate of 6.4 percent. To refinance the full $1.68 billion at the higher rate would cost about $40 million more, according to one analysis.