Resort developer hopes to evaluate financing, possible partnerships
Bruce Constantineau
Sun
Vancouver resort developer Intrawest Corp. is exploring mergers, partnerships and other “business combinations…
Vancouver resort developer Intrawest Corp. is exploring mergers, partnerships and other “business combinations” to fund global growth and enhance shareholder value, a move that saw investors drive up shares nearly $3 Tuesday to close at an all-time high of $36.19 on the Toronto stock exchange.
Intrawest chief executive officer Joe Houssian said the announcement does not mean Intrawest is for sale. He said the company wants to evaluate its future financing options and has hired New York investment banker Goldman, Sachs & Co. to assist in the review.
“We’re not announcing that Intrawest is for sale,” Houssian said in an interview. “We’re looking at all kinds of strategic partnerships, relationships, business combinations et cetera to fund our growth and take us to the next level.
“We have strategies in place to become a much larger worldwide leisure travel player but how are we going to finance it all and what’s our financial structure going forward?”
Intrawest has interests in 10 North American mountain resorts, including Whistler/Blackcomb, and is currently developing or planning new village housing projects in France and Switzerland. The company also operates Sandestin golf resort in Florida and holds a majority interest in luxury adventure travel company Abercrombie & Kent, with operations in more than 100 countries.
Intrawest reported net earnings of $32.6 million US last year on revenues of more than $1.6 billion US. Share values have increased by about 50 per cent in the past year but they took a minor hit three weeks ago when the company cut its 2006 earnings forecast by $14 million US due largely to a drop in the number of U.S. visitors to Whistler/Blackcomb.
Houssian said Intrawest has never been in better financial shape so maintaining the status quo and financing future growth through traditional borrowing remains “very much a possibility.”
“But is it the smartest thing to do in the context of what’s best for our shareholders?” he said. “That’s what we’re going to research.”
Houssian said possible future partners for Intrawest could include developers, private-equity firms and other resort operators and leisure travel companies. He said the end result might be a combination of different deals with different partners.
“We might handle our European village development in one way and handle our expansion of Abercrombie & Kent another way,” Houssian said. “Everything is being considered.”
He said Intrawest’s biggest asset is its base of seven million loyal customers and he feels many leisure travel companies would like to develop a strategic relationship with Intrawest so they could sell their products to that client base.
Houssian said the major catalyst for the strategic review has been the company’s international growth in the past two years, noting it now operates in five different locations in Europe and is actively looking to develop ski resort operations in China.
“We’ve been invited by various governments in China and various industry players there to take our intellectual expertise in the ski resort industry and apply it in their country,” he said. “We have a team that’s currently in China as we speak.”
Intrawest is the No. 1 ski resort operator in North America and in a quirk of timing, the number two operator — Vail Resorts Inc. — announced Tuesday a major shuffle in its senior executive ranks, with former chief executive Adam Aron being replaced by Robert Katz. Aron announced a month ago that he would leave on June 28 but those plans were accelerated.
A Vail Resorts spokesman said it would not be appropriate to comment on the new management team’s possible interest in making a deal with Intrawest. Houssian also said he can’t speak about any specific organization being a potential future partner.
“But we are taking a very broad-brush approach to what our options are,” he said.
“So people that are in our industry or in the lodging industry or in any related leisure travel industry would be people we’d like to hear from or talk to.”
Pacific International Securities analyst Sheila Broughton said Intrawest has often spoken about enhancing shareholder value so the announcement of a strategic review doesn’t come as a total shock.
“By announcing that they are working with Goldman Sachs, it really puts it on the table that this is a priority for them,” she said in an interview.
“It’s not just something they’re discussing and may happen within a few years. They’re working on something.”
Houssian said that whatever happens, it will have absolutely no impact on the 2010 Olympics, which is holding several events at Whistler/Blackcomb.
“None whatsoever,” he said. “Let the games begin.”
INTRAWEST: IN PLAY:
Surging stock markets are prompting resort giant Intrawest to hire Goldman, Sachs & Co. to examine a possible capital structure review, mergers or “business combinations.”
Here’s some of what the $1.77-billion company brings to the table:
– Owns or is involved in 14 mountain resorts in North America and Europe, including Whistler Blackcomb, a host venue for the 2010 Winter Olympic and Paralympic Games. Other ski resorts include:
– Panorama Mountain Village, B.C.
– Blue Mountain, Ont.
– Tremblant, Que.
– Mammoth Mountain, Calif.
– Copper, Colo.
– Winter Park, Colo.
– Mountain Creek, N.J.
– Snowshoe Mountain, W.Va.
– Stratton, Vt.
– Owns Canadian Mountain Holidays, the largest heli-skiing operation in the world.
– 67% interest in Abercrombie & Kent, a luxury adventure-travel company operating in more than 100 countries.
– Owns Sandestin Golf and Beach Resort, Fla.
– Owns Club Intrawest — a private resort club with nine locations throughout North America.
Sells fractional ownership at:
– At Nature’s Door, Whistler
– Tonopalo, North Lake Tahoe, Calif.
– Sanctuary, Aspen-Snowmass, Colo.
– Storied Places, Tremblant, Que.
– Inspirations, Sandestin, Fla.
Has village developments at:
– Lake Las Vegas, Nev.
– Keystone, Colo.
– Snowmass at Aspen, Colo.
– Squaw Valley USA, Calif.
– Les Arcs, France
Plans future developments at:
– Honua Kai Condominium Resort, Hawaii
– Village of Imagine, Orlando, Fla.
– Verrado, Buckeye, Ariz.
– Napa Riverbend, Napa Valley Calif.
– Flaine Montsoleil, France
– Verbier, Switzerland
Source: Intrawest, Vancouver Sun
© The Vancouver Sun 2006
