Intrawest unloads real estate to reduce its company debt |

Intrawest unloads real estate to reduce its company debt

SUMMIT COUNTY – Intrawest Corporation’s books will look a lot better as it removes $300 million in debt over the next 15 months and increases cash flow by $250 million next year.

The fiscal improvement will be possible thanks to a deal that moves Intrawest’s real estate production business into a new, independent company. Wednesday, Intrawest officers announced the formation of Leisura Developments US and Leisura Developments Canada.

In short, the Leisura partnerships will buy land from Intrawest and take over the production of real estate units from construction to sale. Intrawest will be a minority equity investor in Leisura, with the bulk of capitalization coming from unnamed financial institutions.

“It’s fair to say this is the most significant thing we’ve done at Intrawest since we decided to become a pure leisure and resort company in 1984,” said Joe Houssian, chairman and chief executive officer of the Vancouver-based Intrawest Corp. “Essentially, our challenge is, how do we grow our business, while at the same time creating a more conservative balance sheet?”

Until Wednesday, Intrawest had two basic businesses running under the same corporate umbrella. Its operations unit handled managing resorts and ski areas. Its real estate development aspect created projects such as Copper Mountain’s new village and the River Run village at Keystone.

The two businesses have different financing arrangements, however. An operating company is typically financed at a lower debt-to-capital ratio than real estate and construction; the real estate portion depends on selling the completed units and exposes the company to greater risk – something investors shy away from.

For Intrawest, it means the company can focus its capital on running the resorts without the risk involved in real estate developments, and yet still benefit from a growing number of beds at the resorts, said Dan Jarvis, Intrawest executive vice president and chief financial officer.

Jarvis said the reorganization will have little impact on Intrawest’s earnings-per-share. Intrawest released its second-quarter earnings report at the beginning of February, showing earnings of 7 cents per share despite strong ticket sales at ski areas. Higher earnings are expected later this year when several real estate projects are complete.

Intrawest officials said Leisura will assume control of 15 real estate projects at nine resorts this year. Intrawest spokesman Steven Forgacs said the projects do not involve Colorado resorts this year.

Reid Williams can be reached at (970) 668-3998, ext. 237, or

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