Riveting brinksmanship going on at 11th hour as Fortress Investment Group works frantically to refinance $1.7-billion in Intrawest debt, which expires tomorrow. Recall that Intrawest, the owner of the Whistler ski resort — which will host the 2010 Winter Olympics — was purchased by Fortress in a private equity market-top transaction back in 2006.
From what I’m hearing, there is at least one hold-out among the syndicate holding Intrawest notes. They need to agree unanimously to any debt restructuring, and that is awfully tough right now. Said debt is trading at 70 cents on the dollar, implying a 9% yield, way up from the original 6.4% at issue. That, of course, creates a nasty box for the company and its investors, especially given Intrawest’s massive exposure to busted consumers and broken resort real estate markets.
While it’s not likely we will see a bankruptcy filing here, it is possible we will see some sort of prepackaged bankruptcy-lite deal. The next 24 hours will tell. And, more broadly, this is a drama we will see play out over and over again among private equity deals funded in the 2005/06 timeframe as their mistimed short-term debt comes due.
[Update] More here.