Owners of Whistler Ski Resort Face Financial Crisis

Ski operations likely to continue no matter what happens to Whistler-Blackcomb’s parent company
Pique Newsmagazine, Oct 23, 2008

By Clare Ogilvie

Today (Oct. 23) is the deadline for Fortress Investments Group to raise $1.6 billion in re-financing for Whistler-Blackcomb’s parent company, Intrawest.

In recent days there has been plenty of speculation about how Fortress is dealing with the re-negotiation of its term loan against a background of global credit uncertainty, which is making it challenging for any private equity or hedge fund to get money.

Reports on Wednesday, quoting financial analysts, suggested that Fortress was close to a deal to refinance its debt, with just one lender holding out.

Fortress controls Intrawest, which it purchased in 2006 for $2.8 billion, through a $1.37 billion equity stake.

The U.K.-based Financial Times, which broke the story on Oct. 17, reported that there was only a slight chance that Intrawest may file for Chapter 11 bankruptcy protection. In that case operations would continue while financial deals with creditors and so on are worked out.

Intrawest owns 10 ski operations and 15 vacation resorts around North America.

Whistler Mayor Ken Melamed is watching the situation closely.

“My reaction is one of immediate concern, but not worry,” he said earlier this week.

“At the end of the day what makes me confident is that Whistler-Blackcomb, being the flagship of the operation, is always profitable.”

Melamed described the Whistler-Blackcomb operations as “critical to our business in our current model.”

Whistler Chamber of Commerce President Fiona Famulak said: “On the basis that Whistler-Blackcomb has confirmed that it is business as usual I am reassured.

“The resort as a whole is in the middle of a volatile marketplace and we know that and we at the resort have to deal with that and that comes down to promoting Whistler, its products, and ensuring that we give the absolute best value to our customers this year.

“I don’t think this detracts at all from our plan, which is to give superior visitor experience this year.”

Tourism Whistler’s Breton Murphy echoed that sentiment.

“We can’t speak to the specifics of the re-financing,” he said. “But (Whistler-Blackcomb) have been very clear and confident that it is business as usual and that as well the visitors won’t be impacted.

“So for us our focus is continuing to work with Whistler-Blackcomb and all our members and keeping our eye on this upcoming season and how we are going to work together to combat some of the challenges that we are facing with respect to the economic situation.”

Professor Jim Brander of the Sauder School of Business at UBC said the current financial situation globally is making it tough for private equity funds and hedge funds, like Fortress, to get financing.

However, he said: “I think they will get financing.”

But if they didn’t, Fortress would sell off investments as needed.

“If Fortress was unable to get financing it would owe money right away and it would have to start selling off its investments,” said Brander.

“But there is no question about Intrawest not operating. Whistler-Blackcomb is going to stay open, don’t worry about the ski season.”

There is a slight chance that Intrawest might claim bankruptcy but if that happened, said Brander, they would keep it operating while proceedings were dealt with.

“That would be absolutely crazy to close it,” said Brander.

“It would never happen with Whistler.”

Tourism leaders in Whistler stated recently that it is likely that visitor numbers could be down five to 12 per cent this season thanks to market woes.

Whistler-Blackcomb referred all calls to Intrawest and Fortress.

Intrawest spokesman Ian Galbraith would not comment on the $1.68 billion debt but said: “From our perspective at Intrawest, for our resorts, it is business as usual.

“There is no impact on our guest vacations or season pass product sales and all of our resorts right now are making preparations for the upcoming season and getting ready to provide our guests the best possible experiences.”

Reached in New York, Fortress said it does not comment on its investments.

Whistler is also host to the alpine events of the 2010 Winter Olympic and Paralympic Games. Organizers of the Games declined to comment on the situation.

A subsidiary of Fortress, Fortress Credit Corporation also holds a $750 million mortgage at the 1,100-unit Vancouver Olympic Athletes' Village.
Recently there have been concerns about cost overruns at the project, which is estimated to be over $60 million.

Note: Unfortuanetely, Intrawest received a last minute bail-out...