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Big deal for Steamboat

Canada's Intrawest acquiring ski resort for $265 million

Joanne Kelley, Rocky Mountain News

Published December 20, 2006 at midnight

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With plentiful cash from its new private equity owner, Canadian giant Intrawest has expanded its influence in Colorado with Tuesday's $265 million deal to buy Steamboat Ski Resort.

The announcement of the deal ended months of speculation about which of several deep-pocketed bidders would acquire the popular ski area from Park City, Utah-based American Skiing Co.

"It's a great mountain and a great resort . . . and it has a very loyal following," Intrawest President Alex Wasilov told the Rocky Mountain News.

Steamboat's owner, whose stock has fared poorly in recent years, put its marquee mountain on the block in hopes of capitalizing on the ski area's steadily improving financial results. Proceeds from the sale will go toward paying off American Skiing's debt.

"This is a great transaction," American Skiing Co. CEO B.J. Fair told the News. "It's the right thing to do for the company."

While American has put some money into the ski resort recently, Intrawest has the wherewithal to make far greater changes at Steamboat. And because it also owns Copper Mountain and manages the Winter Park ski area, it also could offer pass deals that draw more Denver- area skiers to Steamboat on weekends and during vacations.

"It obviously makes sense to do that, and Steamboat has a positive brand image among Front Range skiers," said Dave Belin, an industry consultant with Boulder-based RRC Associates.

Intrawest's deal to buy Steamboat is scheduled to be completed by the end of March.

The sale of a package of key real estate at the base of the ski area still is pending but could be wrapped up within a week or two.

"Now that the mountain buyer is identified, that just moves us into higher gear," said Michael Sullivan, managing director at Denver's HVS Capital Corp., which is handling the sale of the Sheraton Steamboat and a number of other slopeside lodging properties.

Sullivan described the higher-than-expected price of the Steamboat ski area transaction as "breathtaking."

American came close to selling the ski area a few years ago for about $91 million, but it backed out of that deal when it decided to sell its Heavenly Ski Resort in California to Vail Resorts Inc.

The potential for a new ski area owner has been a boon for the Steamboat Springs-area real estate market in recent months.

While American Skiing has invested some money in lifts and other ski area upgrades, -real estate experts contend the resort needs a bigger overhaul to compete with other upscale ski areas. American, which has owned Steamboat for about a decade, still owns ski areas in the Northeast and Utah.

The players

• Fortress Investment Group: This New York-based powerhouse has experienced explosive growth since its founding in 1998. It now manages $26 billion in assets, with its private equity operation overseeing about $13.6 billion and its hedge fund arm managing about $9.4 billion. It filed recently to launch an IPO, which will give it still more money to broaden its holdings.

• Intrawest Corp.: Vancouver, British Columbia-based resort operator was purchased by Fortress for $2.8 billion this fall but remains a separate company. With Fortress as a parent, Intrawest has access to lots of capital for making acquisitions and upgrading resorts where it sees a chance to boost profits. One of its best-known properties is the Whistler Blackcomb Ski Resort in Canada.

• American Skiing Co.: Beleaguered Park City, Utah-based company first suggested in July that it might try to sell Steamboat Ski Resort. The Colorado ski area, the eighth-largest nationwide for skier visits, has seen solid financial results in recent years despite its parent's dismal performance in the stock market.

• Steamboat Ski Resort: The northern Colorado ski area was founded in 1963 and is one of only a handful in the state that consistently draws more than 1 million visitors a year. The town produces an unusually large number of Olympic athletes and has a large number of redevelopment projects under way.Rocky Mountain News

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