Saturday, January 30, 2010

Another "Billion Dollar" Lesson?

This past weak debt laden Intrawest sold off another one of it's ski resorts in an effort to avoid an auction of assets by its lenders on February 19th. Panorama Mountain Village located in southeastern BC was sold to a group of local investors that plan to continue building the facility into one of Canada's top family oriented ski resorts. Although the price was not disclosed, it is reported to be far less than the estimated $100 million U.S. Intrawest received for the sale of its Copper Mountain Resort in Colorado.
As Intrawest continues to negotiate with its lenders, no one for sure knows what will transpire come February 19th during the Olympics when the auction of assets is scheduled to take place and no one can speculate what the future outcome will be for Blue Mountain or the Village at Blue.
One thing is certain however, this is yet another example of an acquisition funded with massive debt gone bad. I am currently reading an excellent book entitled "Billion Dollar Lessons" written by Paul Carol and Chunka Mui. For those of you interested in business this is an excellent book chronicling some of the more significant business blunders of all time including acquisitions made by companies that turned into colossal mistakes.
Purchased by Fortress Investment Group LLC in 2006 for $2.8 billion U.S., Intrawest like a lot of other highly leveraged companies has struggled under a significant debt load. As long as a steady stream of cash flow continues in order to make the loan repayments, leveraged buyouts can be a success. More often than not however, many companies in this position find themselves facing changing economic times or a downturn in sales revenue that ultimately means disaster.
Many experts believe that an auction of assets in this economy at distressed prices will not benefit anyone, especially the creditors. Will Intrawest's woes be another footnote in the book Billion Dollar Lessons? I guess with February 19th fast approaching we'll soon know.

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Rick relocated to Collingwood from Toronto in 1985 through a transfer with Goodyear Canada. In 1987 Rick was recruited by a major client of Goodyear’s, managing their Canadian business based in Barrie before moving to Chicago in 1992 as Vice President of Sales & Marketing. Upon returning to Canada in 1996, Rick ran an industrial products manufacturing company in Stratford, Ontario. In 1998 Rick returned to Collingwood with his two children. Rick is a licensed real estate Broker with Royal LePAGE Locations North in Collingwood and holds his MVA designation (Market Value Appraiser-Residential). He is an active volunteer in the community serving several years on the Board of Directors with the Collingwood Chamber of Commerce as Treasurer, 6 years on the Board of Directors for the Southern Georgian Bay Association of REALTORS® of which he is the Past President (2008) and currently serves on a committee with the Ontario Real Estate Association. Rick is a diverse executive manager with extensive experience in strategic planning, manufacturing, finance, human resources and quality assurance management.