Intrawest braces for impact of slowing economy
CTV has obtained an internal memo sent from Intrawest to all its employees warning that economic times are tough and the company that owns the ski operations in Whistler, B.C. must adjust accordingly.
The memo says the company is looking at cost-cutting measures, including: suspending performance bonuses for every division of the company, and a hiring freeze that will affect all but critical new hires and limit work-related trips to "essential only travel."
News of the belt-tightening measures comes on the heels of a report in a financial newspaper that raising concerns about the ability of Fortress Investment Group to meet its obligations in relation to its Intrawest operations and Olympic Village construction in British Columbia.
The Financial Times reported that Fortress is approaching potential and existing lenders in order to maintain the value of its investments in Intrawest, a ski resort company with $1.68 billion in debt due on October 23.
Intrawest's flagship assets are its ski operations in Whistler.
"Whistler has to be concerned because Whistler/Blackcomb is the biggest employer in Whistler, they are core to our business, we lose our identity if Whistler Blackcomb stops operating,'' said Whistler Mayor Ken Melamed.
As mayor, Melamed recently supported a move to give Intrawest nearly $1 million in tax breaks over the next five years to help it build the Peak to Peak gondola.
The gondola is a $51 million project that will connect the peaks of the Whistler and nearby Blackcomb mountains, using a world record setting unsupported span, designed to lure tourists before and after the 2010 Winter Olympics.
It's scheduled to open December 12th.
In a statement to CTV, a spokesman for Intrawest insisted that there is no reason why it won't open on time.
The company spokesman said Intrawest operations are operating in a business-as-usual manner. He said Fortress is working to acquire financing for a debt financing. This is a regular term note that is due Friday, Intrawest said.
In addition to owning Intrawest, Fortress plays a major role in one of Vancouver's high profile Olympic projects, -- the Olympic Athletes village in Vancouver -- and that project is facing its own financial concerns this week
The village is part of a $1 billion, 1,100 unit project on Vancouver's southeast False Creek. And like most major developments, Millennium has been hit by significant cost overruns.
As CTV News reported earlier this month, the project is between $60 million and $80 million over budget.
Fortress Credit Corp. is financing Millennium, and so far, the local developer has been able to use its own assets to cover cost overruns.
But the company has been discussing a separate financing agreement with Fortress and the city of Vancouver to cover a contingency reserve.
Those discussions have been held behind closed doors.
Vancouver City council candidate and developer Michael Geller doesn't think Vancouver taxpayers should be concerned.
"This is a project that the city has been watching very very carefully. It's a very very capable developer. It's a very very competent team of contractors, contractors I've worked with personally,'' said Geller.
"I think because it's so important that this be done, and be done on time, it's getting full attention," he said.
While the credit crunch might make people nervous, Geller sees the involvement of Fortress as a good thing.
"I think having a large international company with a lot of experience is an asset, not a liability,'' said Geller.
With reports by CTV British Columbia's Sarah Galashan and Mike Killeen.