A man carries his skis as snow melts at the limit of the ski slopes in Whistler on February 8, 2010. Whistler Creekside is the Alpine skiing venue of the Vancouver 2010 Winter Olympics.FABRICE COFFRINI/AFP / Getty Images
The owner of ski resort operator Intrawest ULC has reached an agreement in principle with creditors to restructure its debt and avoid an auction of the company's properties, a source said Monday.
Intrawest, owner of the Whistler Blackcomb Olympic ski venue, was reported to be slated for the auction block Monday.
The auction has twice been pushed back from Feb. 19 after creditors posted a notice in newspapers last month saying that a foreclosure process was to begin.
The new deal will allow Intrawest owner Fortress Investment Group LLC to inject an additional $150-million of equity into the business to pay down debt and retain control of the resort company, according to a person familiar with the negotiations.
A new $1.2-billion loan package will extend debt maturities by as long as four years and will charge a higher interest rate than for existing debt, the source said.
Fortress took on the debt to buy Intrawest in 2006 in a $2.8-billion leveraged buyout during the height of the real-estate bubble, but missed payments in December on a $1.4-billion (U.S.) loan.
Creditors, led by Lehman Brothers and Davidson Kempner Capital, had twice extended debt repayment deadlines.
The deal is now an agreement in principle and the parties have set an April 16 deadline to complete the negotiations.
Recently, Intrawest has sold off several non-core assets including Florida's Sandestin Golf and Beach Resort, the Squaw Valley ski resort in California and the Panorama Mountain resort in Invermere, B.C.
It also agreed to sell its resort at Copper Mountain, Colo., to U.S.n mountain resort company Powdr Corp. for an undisclosed amount late last year.
Fortress chief executive officer Daniel Mudd has said the rationale for taking on the debt to buy the resorts was that condo sales would help pay back the loan.
Mr. Mudd added the ski resort business is dependent on two components: real-estate sales at condos on the resorts, which are faltering, and the ski operations, which are faring well despite the economic downturn.
Analysts have said that the auction notice was likely a pressure tactic and, if the auction goes ahead, there is a good chance the lenders themselves will end up with an ownership stake in the company.
Mr. Mudd has said he does not believe the creditors chose a date in the middle of the Olympics as a negotiating tactic.
Whistler Blackcomb is the crown jewel of the Intrawest assets. Analysts have estimated Whistler could be worth as much as $500-million alone.
The resort has already attracted offers from ski resort rival Vail Resorts Inc. and a number of other bidders, which have been turned down. Japanese company Nippon Cable, which owns 23 per cent of Whistler, could also be a potential player in the Intrawest auction.
In the run-up to the Olympics, the fate of Intrawest's Whistler resort attracted international media attention as New York-based Fortress dealt with its money problems.
The City of Vancouver had to borrow hundreds of millions of dollars to complete its waterfront Olympic village project after it ran into its own financing problems with Fortress.