At the height of its Olympic glory, Whistler — the ski resort hosting glamorous Alpine events at the Winter Games — may be headed for the auction block.
It's owned by a New York hedge fund that is reportedly behind on a $524 million loan payment, the result of flagging resort business and plummeting property values.
Creditors want their money back, and they're playing hardball — calling an auction to put Whistler and other property up for sale Friday, the same day Bode Miller is scheduled to compete for his second Olympic medal in the men's super-G.
The backstory is a parable of our economic times: high-stakes hedge-fund gambles, the collapse of Lehman Brothers and the possible bankruptcy of a company that owns some of North America's most prestigious resorts.
If Whistler does get sold — meaning the slopes, the lifts, the property, all of it — some locals worry about an uncertain future.
"We don't know what these new guys want to do with the mountain. It can change your whole life, right?" said Ian Ribera, manager of Castro's Cuban Cigar Store in Whistler village.
The story begins in the distant days when Wall Street was on a seemingly unstoppable roll. Fortress paid $2.8 billion for Intrawest, which operates Whistler and other elite resorts in North America.
It borrowed about half the money from big investors like Lehman. Analysts say the idea was that soaring property prices would turn Intrawest into a massive profit machine.
Fast-forward to the 2010 Winter Games, and the world is a different place: Resorts are struggling and property prices have plunged, making it difficult to raise money in credit markets to meet loan commitments.
Analysts say Whistler, one of the premier ski resorts in North America, should have no trouble attracting suitors if the auction does go ahead on Friday.
One analyst, Will Marks of JMP Securities, estimated the resort could fetch as much as $250 million, with Vail Resorts — which owns resorts in Vail and Breckenridge, Colo. — one possible buyer.
A sale is far from a certainty. Fortress could avoid an asset sale if it puts Intrawest into bankruptcy, a strategy that would buy time and allow it to continue to operate as control shifts to a trustee. A last-minute refinancing deal also remains possible.
Intrawest spokesman Ian Galbraith declined to comment on the financial difficulties of Intrawest. Calls to Fortress went unanswered.
The 2008 collapse of Lehman Brothers, reportedly Fortress' chief creditor, added additional pressure because the fallen company is desperate to recoup as much money as it can as disentangles its financial commitments.
A healthy lender might be more willing to work out a new debt deal. "If the business was performing well, it would not be a challenge," said Daniel Fannon, a hedge fund analyst at Jefferies & Co.
He called the timing of the auction during the Olympics a "marketing tool" aimed at fetching the best price for Whistler while the world's attention is fixed on the games.
When news of the auction broke in January, there was concern that the war between Fortress and its creditors would put the games at risk. The worry was that the hedge fund could threaten to refuse access to facilities unless it received a government bailout. Those fears proved unfounded, and the Canadian government has denied ever considering bailing out Intrawest.
As the drama plays out, locals are expressing frustration at being caught in the middle of a battle waged hundreds of miles away in New York.
"They're holding the Olympics hostage because a bunch of Wall Street guys aren't getting fat enough," said Ryan Watts, an employee at the Whistler Alpine Guides Bureau.
In public, at least, Whistler officials are showing no sign of being flustered by the bankruptcy saga: "It's business as usual," said Lisa Landry, general manager of economic viability for Whistler municipality.
The New York Post has reported that Vancouver organizers could pay tens of millions of dollars to help Intrawest cover losses incurred in the period before the Olympics, helping it meet its debt requirements.
VANOC said in a January statement that it cannot comment on Intrawest's finances but expressed "support for their efforts to settle outstanding financial matters."
Intrawest has sold several of its resorts recently in an apparent attempt to raise enough cash to pay off its creditors.
Whatever the outcome, many people who live here are confident that Whistler has a strong future under any ownership, especially considering the international exposure it is receiving from the Olympics.
"People feel life will go on, somebody will step in," said real estate agent Jeremy Anthony Jones.
But he added: "It's a little irresponsible to stick it in front of us during the Olympics."