Park Place Lodge

Fortress Investment Group LLC (FIG-N4.060.020.50%) is planning to brave the skittish IPO market to offer public shares in the continent’s premier ski destination, Whistler Blackcomb, after attempts to find a buyer fell short.

The company hopes to take advantage of the global spotlight of the Vancouver Olympics with an initial public offering. A filing with regulators in preparation for a share sale is expected soon, sources said.

Fortress, a U.S. investment firm that bought Whistler owner Intrawest for $2.8-billion (U.S.) in cash and assumed debt in 2006, has hired bankers to explore options. The financiers have been running what’s known as a dual-track process to sell assets – looking at both an outright sale to a corporate buyer and an initial public offering.

Potential purchasers who looked at Whistler and passed included Murray Edwards, the oil mogul who owns Fernie Alpine Resort, and Ontario Teachers’ Pension Plan, said one person familiar with the situation.

Sources said that Whistler has been widely shopped to potential buyers since the Winter Olympics. One disincentive for buyers was the company’s lack of diversification.

But the well-known name of Whistler may be an easier sell for an audience of retail investors, especially after the successful Olympics at the site last winter. As a result, an IPO is now the favoured option, sources said.

“They didn’t like the valuations they got [from other buyers] so they will try the IPO market,” said a second person familiar with the situation.

Gordon Runté, a Fortress managing director, declined to comment.

Fortress struggled with the debt taken on to pay for the Intrawest acquisition. During the Winter Games, lenders threatened to seize and auction Intrawest assets to settle the obligations. Fortress managed to avoid that by refinancing the debt.

Whistler is a trophy asset given its size and its consistent ranking in polls as the best ski destination on the continent. The resort also is busy in the summer as a mountain-biking destination, with daredevils taking lifts to the top of the runs and riding down.

The site boasts the most ski-able terrain in North America, with more than 200 trails and 38 lifts. The assets slated for inclusion in the sale process include the leases on the hills, the lifts, parking lots and lodges. The bigger real estate developments around the resort are not part of the package, sources said.

One of the issues that has deterred an outright sale is that while the ski hill alone is a good asset, it’s not growing much, sources said. That makes it hard to pay top dollar, they added.

Another hurdle is the lack of diversification. When Intrawest was a public company, investors who bought shares got part of a resort operator with multiple locations, such as Mont Tremblant in Quebec and Blue Mountain in Ontario, and a real-estate development business that could smooth out earnings. Whistler’s ski assets by themselves are potentially more volatile.

Finally, Fortress will have to overcome the skittishness of the IPO market. A record amount of IPO deals have been postponed so far in 2010. Thomson Reuters figures put the value of postponed IPOs in the first nine months of the year at just shy of $70-billion (U.S.), as more than 150 deals were delayed.

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