Intrawest sells Colorado ski resort

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Intrawest ULC has agreed to sell one of its big ski resorts, allowing the company to ease the severity of a debt load built up during the real estate boom.

Vancouver-based Intrawest, owner of 2010 Winter Olympics co-host Whistler Blackcomb and nine other winter resorts, said it has sold Copper Mountain in Colorado to Powdr Corp., a Utah-based resort operator. Terms weren't disclosed.

Intrawest has been trying to sell assets all year. In April company chief executive officer Bill Jensen said Copper Mountain was one he didn't want to let go. The sale of Copper Mountain is therefore indicative of the debt difficulties at the company, according to analyst Hayley Wolff at Rochdale Securities LLC in Stamford, Conn.

Intrawest owner Fortress Investment Group LLC "bought a good portfolio of assets, they just overpaid," said Ms. Wolff. "They've pushed out the debt maturities a little bit but they need cash. It's a step in the right direction. It's unfortunate they've gotten to this stage, where they're overleveraged and not investing in the properties."

While the price wasn't disclosed, it is likely the biggest deal in the winter-sports business this year, Ms. Wolff said.

This suggests additional deals may occur, as the general economic recovery draws in new buyers to pick up assets from weakened incumbents. Intrawest has said it might establish the Mont Tremblant ski resort north of Montreal as a stand-alone company, and it has been shopping its one beach-and-golf resort, Sandestin in Florida.

Intrawest's struggles go back to 2006, when the company was bought at the top of the real estate market by Fortress, a New York private equity and hedge fund firm that financed the $1.8-billion (U.S.) deal with $1.7-billion of debt, on top of $1-billion of existing Intrawest debt.

Last year, Fortress skirted an Intrawest bankruptcy filing by getting a last-minute extension for the $1.7-billion portion of the debt, a deal pulled off during the credit crisis. At the same time, Intrawest's business - high-end resort real estate and expensive ski areas - was suffering from the recession, a weight that still lingers.

Earlier this month, Fortress said it had refinanced $6.1-billion of debt among its various holdings in the past year but was still working on Intrawest, whose equity value is down 71 per cent since 2006.

Fortress has called Intrawest the "most challenging" investment in its Fund IV private equity portfolio. In a letter to investors of the fund, Bloomberg News reported in October, Fortress blamed the "ongoing deterioration of the global economy" and a rainy start to the season at Whistler Blackcomb last year, which produced a "difficult" winter for Intrawest's most profitable resort.

This winter is already much better - Whistler opened last weekend, two weeks early, with a lot of snow - but worries persist about skiers avoiding the resort during the Olympics in February.

Intrawest declined say whether it was going to pay down debt with the Copper proceeds or if more sales were necessary, and referred inquiries to Fortress, which didn't return a call for comment.

It is not clear what risk, if any, the Olympics face because of Fortress/Intrawest's financial situation, but the Vancouver Organizing Committee said it is making "solid progress in our planning with [Intrawest]for the skiing and sliding sport events."

"While we monitor the financial environment of the facility's owners, we're not directly involved in the broader matters involving Intrawest's debt," Dave Cobb, deputy CEO of VANOC, said in a statement. "Any financial issues Intrawest is engaged in with Fortress are matters for those two parties to resolve."

What would boost Intrawest's fortunes is a rebounding economy, where people are spending money on second homes at Whistler and resorts such as Steamboat Springs in Colorado. Intrawest paid $261-million for Steamboat in late 2006, as Fortress was completing the takeover. In 2006, Intrawest made two-thirds of its profit in real estate.