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.
"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.