Drama and Conjecture ahead, please brake for Foreclosures.
As we reported in the previous story, Intrawest spells ‘Trouble’?, through a 2006 buyout by Fortress Investment Group, Intrawest was piled high with debt, and is currently in default on a $524 million payment to its main lender. Their main lender, Lehman Brothers, is in bankruptcy, making the situation much more precarious, as they need the money right now; thereby reducing the number of channels for negotiations to refinance the debt.
Well, someone call Perez Hilton, because the drama and conjecture machine has just been turned to overdrive.
But I just bought red mittens!
The New York Post is reporting this morning that Intrawest is nearing foreclosure … within the next 10 days … just as all the athletes are arriving for the Olympic games. If this is true, nothing could be a worse sign for Intrawest and Olympic organizers as a whole. Dear New York Post, you can’t be serious? What is going on?
Lehman Brother’s, Intrawest’s main lender, wants/needs its’ money to help settle up more than $1 trillion in creditor claims associated with its own bankruptcy. But, Intrawest/Fortress Investment Group doesn’t have their money, and wants to renegotiate the debt, to stay in the driver’s seat of Intrawest. However, Lehman Brothers, their creditors, and their restructuring team don’t seem to like that idea, and talks have apparently broken off. read: Lehman really really wants/needs their money!
Minestrone Plot Soup : The plot thickens
But, here’s the new twist, Fortress is also in a spat with Vanoc and Canadian officials over who is paying for what.
“The Vancouver Olympic Committee (Vanoc) guaranteed that it would make Intrawest whole for the time that its events take place at its resorts[that is normal]. But now, according to a source, Canadian officials are threatening to pull that roughly $50 million guarantee[that is abnormal, at least at this point in the process]. That, the source said, has compelled Edens [read:Fotress Investment Group] 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.”(*1)
Stefano! Stefano! (Days of Our Lives reference. Anyone? Anyone?)
This is fun and all, but there is so much drama going on here, that it seems irresponsible to even pretend this could all happen. Obviously, the Olympics is a very large leveraging chip, available to all sides in the fight over missed loans payments and moneys owed. Would Vanoc/Canadian government really try to renegotiate payments to Intrawest in the last seconds before the Olympics? I seriously doubt it, at least the way it has been presented thus far. Moreover, would Fortress really be willing and able to ‘keep the Games form taking place at Whistler’, even though a failure of these Games would more than likely reduce Intrawest’s ability to renegotiate their debt obligations? And, for the same reason, would Intrawest’s creditors really push it into foreclosure during its’ shining moment? … Actually, the last one could happen, and in that case, Fortress would not actually have the ability to stop the Games happening at Whistler. The Game would continue, but, operating money would have to come from somewhere else, more than likely, read: taxpayers.
This is juicy. But, lets be clear, this is not the end of the story. There is certainly more posturing to come! But, would someone please turn down the conjecture machine. More straight facts needed.
[It's happened! Follow up Foreclosure post, Buy a Ski Resort Campaign : INTRAWEST IN FORECLOSURE!]
[This story further continues, "Intrawest ULC has sold its Panorama Mountain Village", in Tricks are Turning, Intrawest assets go Freestyle]
Sources:
1. Intrawest foreclosure a threat to Olympics, New York Post, Jan.20, 2010