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February 01, 2010

Intrawest Defaults on Loans, Lenders Start Foreclosure Process (h/t Mark)

A reader sent me this story from CBC regarding Intrawest's financial problems:

Wall Street financiers say they are going to put the Whistler Blackcomb resort up for sale while the facility is hosting Winter Olympic events next month.

Creditors who have lent $1.4 billion US to the ski resort's owners, Intrawest ULC, have effectively seized control of the company and are attempting to auction off its assets.

Whistler Blackcomb, one of numerous ski resorts Intrawest owns in Canada and the U.S., is set to host major ski events at the Olympic Games next month.

On Tuesday, a notice of a public auction to be held Feb. 19, 2010, was published in newspapers in Canada and the United States, soliciting bids for a membership interest in Intrawest Holdings. Among the assets in the notice were "partnership interests in two resort properties located in Canada (Whistler and Blackcomb)."

In 2006, Wall Street hedge fund Fortress Investments LLC bought Intrawest in a $2.8-billion US deal. Fortress recently missed a $524 million debt payment connected to that purchase.

The primary lender on the Intrawest deal in 2006 was defunct investment bank Lehman Brothers. New York debt managers Davidson Kempner and Oak Hill Advisors also helped finance the deal, and a source familiar with the process told CBC News the major creditors are united in pursuing the auction process.

Typically, lenders are willing to work with borrowers to avoid foreclosure. But the lenders' inability to move the debt repayment plan along seems to have spurred this week's unexpected developments.

Most of these issues are symptoms of the economic meltdown. Especially the meltdown in real estate values. There is more fallout coming.

Posted by Justin at February 1, 2010 09:21 AM