The drama at ski resort and Winter Olympics venue Whistler Blackcomb may go beyond the competition related to the Games.
Sources tell The Post that creditors holding $1.4 billion of debt on Whistler owner Intrawest are planning to foreclose on the company within the next week and a half, casting a shadow on the resort, which will host the alpine events of the 2010 Olympics. “It will probably happen within 10 days,” a source said.
The showdown comes amid an impasse between the estate of fallen investment bank Lehman Brothers, Intrawest’s largest creditor, and Intrawest owner Fortress Investment Group, the publicly traded hedge fund run by Wesley Edens.
Fortress bought Intrawest in a $2.8 billion leveraged buyout in 2006 but recently missed a $524 million debt payment. The hedge fund made a proposal to the creditors that would keep Fortress in control of the company, which also owns Stratton Mountain Resort in Vermont, but creditors nixed that proposal. According to several sources, both sides are no longer talking.
The fact that Lehman is a creditor is complicating things for Edens. While a typical creditor might be inclined to work with borrower, Lehman, through restructuring firm Alvarez & Marsal, is turning over every stone in search of cash to settle up more than $1 trillion in creditor claims associated with its own bankruptcy.
By forcing Intrawest into bankruptcy, Lehman and other creditors could raise several billion dollars repossessing Intrawest and selling off its various resorts.
In addition to sparring with Lehman, sources said Edens is also tangling with the Canadian government, whose reputation is riding on the success of the Games.
The Vancouver Olympic Committee (Vanoc) guaranteed that it would make Intrawest whole for the time that its events take place at its resorts. But now, according to a source, Canadian officials are threatening to pull that roughly $50 million guarantee. That, the source said, has compelled Edens to privately say he has a legal right to keep the Games from taking place at Whistler.
“We have a 2002 agreement with Vanoc to host the Winter Olympics and have every confidence that Vanoc will honor its financial commitments,” Intrawest CEO Bill Jensen said. “Intrawest is looking forward to a successful Olympic games.”
Fortress has already written down most of its Intrawest investment, but some of its investors have co-investments in Intrawest, making its survival still important to Edens, a source said.
INTRAWEST REFUTES FORECLOSURE RUMORS
In a statement released Wednesday, Intrawest disputed published reports about an impending foreclosure action and asserted that it remains in control of all its resorts.
“There have been inaccurate and misleading media reports surrounding Intrawest today,” the statement says. “Fortress Investment Group continues to own and control Intrawest and all of its properties. Serious discussions with Intrawest’s lenders are ongoing regarding refinancing and the Company continues to operate ‘business as usual’ at all of its resort properties.”
The release came after ads appeared in major newspapers on Tuesday announcing that some of Intrawest’s lenders, represented by Wilmington Trust FSB, would conduct a public auction to sell their interest in the company. Several news articles based on these ads ensued.
The auction of the interests represented by Wilmington Trust FSB is scheduled to take place on Feb. 19, while Whistler-Blackcomb hosts many of the events for the 2010 Winter Olympics.
Vanoc said Whistler-Blackcomb would still be ready to host the Olympics starting Feb. 12. Most Alpine and cross-country events are scheduled to take place at Intrawest’s flagship resort, Whistler/Blackcomb.
Fortress purchased Intrawest for $2.8 billion in 2006, and financed $1.8 billion of that amount. The resort operator missed a $524 million debt payment originally due Oct. 23.
