Why Intrawest faces an uphill battle

S

Spensar

New member
Interesting article in today's Globe and Mail financial section. fyi, this is a Toronto based newspaper.

http://www.globeinvestor.com/servlet/st ... 0/GIStory/

I was surprised to read the debt structure from the buyout. Finance 101 is to match debt to the asset, and 2 years for an Intrawest is a mismtach. It would be intereseting to know if longer term wasn't available, the company gambled that it would go short and get better terms after two years, or exactly why this was done.

The difficult business outlook pushed talks to refinance $1.7-billion of Intrawest debt to just hours before the money came due on Oct. 23, with Intrawest owner Fortress Investment Group LLC scrambling to get the deal done.

The debt was taken on in 2006 when Fortress bought Intrawest for $1.8-billion in a highly leveraged buyout, using a two-year term loan at 6.4 per cent to finance the takeover.

Details of the refinancing were not released but Intrawest's debt had been yielding 9 per cent in the market.
Click to expand...
 
CNBC reported this morning that the exclusive Yellowstone Club has filed bankruptcy. The credit squeeze is going to be a huge problem in the winter resort business where seasonal cash flow makes it absolutey necessary to have creit lines available to operate. Also, bookings are still way down for this time of year. I suspect that many families will not be traveling this Christmas. FEAR is the driving factor in this economy.
 
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