A Different Kind of Olympic Drama: Foreclosure
The Whistler-Blackcombe resort, where the Alpine events such as snowboarding and ski-jumping are being held, could go into foreclosure this week, smack dab in the middle of the Olympics, and be owned in part by the now defunct Lehman Brothers, one of its creditors.
Whistler Blackcombe is one of several ski resort properties owned by Intrawest.Others include Steamboat and Stratton. The company is in deep financial straits and missed a debt payment of more than $500 million in December. The lenders have given Intrawest a deadline of this Friday to come up with the money, or they say they will foreclose.
Intrawest is owned by Fortress Investments, a well known, private equity firm and hedge fund, which bought Intrawest in a leveraged buyout in 2006 for $2.8 billion. The rationale for the investment was that condo sales slopeside would provide cash to pay back the $1.7billion in debt they took on as a result of the deal. Then the real estate market collapsed.
The CEO of Fortress, Dan Mudd, was on CNBC today and acknowledged Intrawest is having a tough time with the real estate sales, but that the on-slope operations of the business -- life tickets, etc. -- are doing better. He says they want to manage their way through the crisis and realize the full value of the investment. He said negoations are ongoing right now with the credtiors. (See the video for his full comments).
Resort investments have been particularly hard hit in the economic downturn. On Tuesday East West Resort Development, owner of various luxury ski resorts and a Jack Nicklaus golf course near Lake Tahoe filed for bankruptcy (Read more here).