Wednesday, January 20, 2010 | 8:05 AM PT CBC NEWS:
A fight between Wall Street financiers could push the Whistler Blackcomb ski resort into insolvency and threaten the Vancouver Olympics, a U.S. newspaper report suggests. According to a story in Wednesday's New York Post, creditors who have loaned $1.4 billion US to the ski resort's owners, Intrawest ULC, are threatening to foreclose on the company and effectively seize control of the resort. Among numerous ski resorts in Canada and the U.S., Intrawest owns the Whistler Blackcomb resort, which is set to host all the ski events at the Winter Olympic Games next month. 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. According to the Post report, the creditors have rejected Fortress's repayment proposal and may be moving to foreclose on the company within 10 days. New York firm Alvarez and Marsal are handling Lehman's restructuring.
Typically, lenders are willing to work with borrowers to avoid foreclosure. But since Lehman itself is dogged by as much as $1 trillion in creditor claims against it, Alvarez and Marsal have an incentive to push Intrawest into bankruptcy and sell assets to raise funds, the Post story says. The Post report says Vancouver Olympic organizers are considering pulling their financial backing of Intrawest as a result of the kerfuffle. But Fortress CEO Wes Edens believes he has a legal right to keep the Games from taking place at Whistler if that happens, the Post story says. "We have a 2002 agreement with VANOC to host the Winter Olympics and have every confidence that VANOC will honour its financial commitments," the Post quotes Intrawest CEO Bill Jensen as saying. "Intrawest is looking forward to a successful Olympic Games. Calls to Fortress Investment Group LLC, Intrawest ULC and Alvarez & Marsal were not immediately returned.
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