Hedge fund says market doesn’t appreciate structure
Province
The largest shareholder of Intrawest Corp. is urging the resort and travel firm to put the entire company up for sale, suggesting it could be worth more than $2.2 billion US.
In documents filed with U.S. securities regulators yesterday, Norwalk, Conn.-based Pirate Capital LLC suggested the fair value for the collection of Intrawest’s businesses is at least $45 US per share, a premium to its current price because of the difficulty investors have valuing the company’s real-estate business.
The U.S. hedge fund controlled by Thomas Hudson has been slowly accumulating Intrawest shares and currently holds 11.8 per cent of the company.
Stephanie Tran of Pirate Capital wrote in a letter to the Intrawest board of directors that the market doesn’t appreciate the way Intrawest structures its real-estate business, allowing it to benefit from a sale into the joint venture while distributing the development risks to the partners.
“We believe that there are numerous potential bidders who may be willing to acquire Intrawest in a valuation range reflecting a substantial premium to the current market price,” Tran wrote in a letter to the Intrawest board.
“We urge you to fulfil your fiduciary duties to all shareholders by immediately initiating a sale of the entire company.”
The Vancouver-based company said earlier this week it has hired U.S. investment bank Goldman, Sachs & Co. to help with a capital structure review, looking at strategic partnerships or business combinations. Investors welcomed the news, sending Intrawest shares up nearly 10 per cent on speculation that the review could mean the sale of the company.
Intrawest spokesman Dan Gagnier said that while the company appreciates the input from Pirate Capital and all of its shareholders, it changed nothing about the strategic review.
“Our board is fully aware of its fiduciary responsibilities and will continue to evaluate all options for creating and delivering value to all of our shareholders,” Gagnier said.
© The Vancouver Province 2006
