(VANCOUVER, BC) -- The ill-fated Winter Olympics, already experiencing the death of an athlete and the embarrassing sloppy surface of its ice rink, now faces possible closure of its highly-touted ski resort at Whistler, BC, just outside of the Olympics main site at Vancouver.
Whistler Blackcomb is in the center of a $1.4 billion foreclosure fight, the New York Post reports.
Sources tell The Post that creditors holding $1.4 billion of debt on Whistler owner Intrawest are planning to foreclose on the company within the next week and a half.
That action would cast a shadow on the resort which will host the alpine events of the 2010 Olympics. The 17-day Olympics schedule ends Feb. 28.
"It will probably happen within 10 days," an unidentified source in a position to know told The Post.
The Post reports the showdown comes amid an impasse between the estate of fallen investment bank Lehman Brothers (Pink Sheets:LEHMQ) Intrawest's largest creditor, and Intrawest owner Fortress Investment Group (NYSE:FIG), the publicly traded hedge fund run by Wesley Edens.
Fortress bought Intrawest in a $2.8 billion leveraged buyout in 2006 but recently missed a $524 million debt payment, The Post reports.
"The hedge fund made a proposal to the creditors that would keep Fortress in control of the company, which also owns Stratton Mountain Resort in Vermont, but creditors nixed that proposal," according to The Post.
Both sides are no longer talking, several sources in a position to know tell The Post.
"The fact that Lehman is a creditor is complicating things for Edens," The Post states.
" While a typical creditor might be inclined to work with borrower, Lehman, through restructuring firm Alvarez & Marsal, is turning over every stone in search of cash to settle up more than $1 trillion in creditor claims associated with its own bankruptcy."
Wes Edens
In addition to sparring with Lehman, sources told The Post Edens is also tangling with the Canadian government, whose reputation is riding on the success of the Games.
The Vancouver Olympic Committee (Vanoc) guaranteed that it would make Intrawest whole for the time that its events take place at its resorts, according to The Post.
But now, according to The Post's source, Canadian officials are threatening to pull that roughly $50 million guarantee.
That, the source said, has compelled Edens to privately say he has a legal right to keep the Games from taking place at Whistler.
"We have a 2002 agreement with Vanoc to host the Winter Olympics and have every confidence that Vanoc will honor its financial commitments," Intrawest CEO Bill Jensen told The Post. "Intrawest is looking forward to a successful Olympic games."
Fortress has already written down most of its Intrawest investment, but some of its investors have co-investments in Intrawest, making its survival still important to Edens, a source familiar with the parties told The Post.
Fortress representatives, Canadian government officials and Lehman spokes persons didn't offer comments on the controversy to The Post.
Leave a comment