Intrawest sold
August 14, 2006
From today's New York Times:
NEW YORK (AP) -- Canadian resort operator Intrawest Corp. said Friday it has agreed to be acquired by private equity firm Fortress Investment Group LLC for $35 per share in cash, or a total of $2.8 billion.
The offer price represents a 32 percent premium over Intrawest's Thursday closing price of $26.51 on the New York Stock Exchange. Its shares rose $7.49, or 28.3 percent, to $34 in premarket activity.
Intrawest sold out! I wonder what that means for the future of SS?
For giggles, I pulled the following self-description off of Fortress's website:
Fortress manages approximately $10 billion in private equity capital on behalf of leading institutional investors and high net worth individuals. The private equity funds primarily make control-oriented investments in cash flowing businesses and asset portfolios in the United States and Western Europe.
Fortress has grown to become a leading private equity firm by acquiring attractive businesses and building them in partnership with management. The private equity funds focus on acquiring cash flowing asset-based businesses that offer (i) downside protection in the form of tangible collateral and diversified cash flows combined with (ii) significant upside potential from improvements to the operations, capitalization, and growth and strategic development of the underlying businesses. Sectors in which the Fortress private equity funds have been active investors include financial services, residential and commercial real estate, senior living, transportation, energy and power, and media/telecommunications.
The principals of Fortress's private equity funds include Wesley Edens, Robert Kauffman and Randal Nardone, who have been investing together since 1987 and who founded Fortress in 1998. The principals and their team draw upon specialized expertise in structured finance, real estate, corporate mergers and acquisitions and restructuring to pursue investment opportunities that are often outside the focus of other investment managers.
They'll just cut it up and sell of the pieces to (try) to get their money out of it, that's my take on those firms. can't see inside them... $35 per share and the debt, seems a bit overpriced to me. Good luck!
I have to agree with Kevin. There was an article in the NYT a few days ago about the slump in second home sales and Tahoe was mentioned. I think Intrawest saw the handwriting on the wall and wants out b/c they aren't going to be able to balance the books with real estate sales until the slump is over.
Locally, however, I think we will be ok. Corridor H may be the saving grace for WV skiing because it will make it easier for commuters to day trip it to the mountains and also make shorter, overnight trips easier. Given all the issues with flying, local skiing (including VT, NH, ME) is looking better and better. And I'm not just talking about security hassles, I am thinking about surcharges levied by the airlines for excess luggage weight and over-size items such as ski equipment. A driving trip to Shoe or even to Stratton is a lot more appealing to many than putting up with flying West, especially if you have two kids in tow.
Gee I'm so glad I sold my Intrawest shares two years ago at fourteen dollars (insert sarcasm here). Heaven forbid I load my portfolio up with capital gains or anything! Sheesh...
Fortunately for skiers, Intrawest was already divesting it's skiing activities, so the changes to the skiing might be minimal. Speaking of which... did anyone notice that the new lift at Snowshoe was being installed as a co-project between the new Eagle Springs Resort (or whatever it's named) and Snowshoe? Has something like that ever been done in the U.S. before- a hotel/condo resort community splitting the cost for a new lift with the larger ski resort in general? It could be an interesting new business model.
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Gee I'm so glad I sold my Intrawest shares two years ago at fourteen dollars (insert sarcasm here). Heaven forbid I load my portfolio up with capital gains or anything! Sheesh...
Fortunately for skiers, Intrawest was already divesting it's skiing activities, so the changes to the skiing might be minimal. Speaking of which... did anyone notice that the new lift at Snowshoe was being installed as a co-project between the new Eagle Springs Resort (or whatever it's named) and Snowshoe? Has something like that ever been done in the U.S. before- a hotel/condo resort community splitting the cost for a new lift with the larger ski resort in general? It could be an interesting new business model.
Roger, what is Eagle Springs getting out of the deal? What's the Quid Pro Quo?
I've also been a proponent of tax incentive financing, but none of the local areas seem to want to take advantage of this type of financing. Similarly, local governments appear reluctant to want to lend to ski areas.
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... Speaking of which... did anyone notice that the new lift at Snowshoe was being installed as a co-project between the new Eagle Springs Resort (or whatever it's named) and Snowshoe? Has something like that ever been done in the U.S. before- a hotel/condo resort community splitting the cost for a new lift with the larger ski resort in general? It could be an interesting new business model.
I don't know for sure, but I wouldn't be surprised if this was somewhat common. For example, at many resorts, there is a chairlift that goes specifically to a lodging property, providing ski-in, ski-out access to that property (and primarily only to that property). Although these lifts are usually public, they are really only convenient to guests staying at the lodging property, and serve to provide an incentive for people to stay at that property.
Some examples include the Beaver Run Super Chair Lift at Breckenridge, which goes right to Beaver Run Resort; the Cascade Village Lift at Vail, which goes directly to the Cascade Resort and Spa; and the Bachelor Gulch Express at Beaver Creek, which lands directly at the Ritz Carlton Bachelor Gulch Resort.
Again, I don't know for sure if a place like Ritz Carlton helped finance the lift that services their property, but I wouldn't be surprised if Beaver Creek and Ritz Carlton shared the tab in some manner -- that would make perfect sense.
Hi John-
It's in this news update, for one:
http://media.intrawest.com/snowshoe/media_current/Lift_Construction_2.docIt's the Soaring Eagle Lodge Development Company. Maybe Scott's right and other resorts have done this, I just haven't heard of it before. Given that developing ski terrain is a low (or negative) margin business but resort
communities benefit from having it (kind of like how neighborhoods benefit from parks or bike paths), I think deals like this make sense when the lodging is independent of the mountain ownership.
I'm not sure resorts are a good way to use TIFs, personally- and by that I mean any type of resort, skiing or otherwise. Though, it might be a good way to try to incentivize a resort to integrate lodging into an existing community. Say, for instance, Harman wanted to be the (or a) ski center for MPC. Maybe offering TIF to the resort to build a lift and several hotels and facilities in the town might make sense from an economic development and environmental preservation perspective. It could allow the resort to capitalize on existing infrastructure (sewer, water, roads), saving the county money; reduce "sprawl;" and provide some signficant economic opportunities that Harman might otherwise miss.
Rogerz, everyone knows to buy low and sell high! :-)
Seriously, all I was really whining about was the fact that we are going from a publically traded company to a investment group shrouded in mystery. We, the skiing public, will never get a say in how they manage things.
They will do whatever they think they need to do to make their money out of this...
Along those lines, I'm skeptical that they'll pull it off in a way that is "good for skiing"... but at some basic level, I guess that's really their problem.
Of course any company has at its core the value of making money, that goes almost without saying. However, at least with a public traded company the individual can have some knowledge of how things are being run, can own shares if they want, and even influence ...
