Intrawest Corporation announces sale of Mammoth Mountain Ski Area
BRITISH COLUMBIA, october 5, 2005. Intrawest Corporation announced today that an entity controlled by Starwood Capital Group Global, L.L.C. has signed an agreement to acquire a majority interest in Mammoth Mountain Ski Area (Mammoth Mountain). The selling price of the resort is based on a $365-million enterprise value with customary adjustments for debt assumed, working capital and transaction costs. Intrawest and Rusty Gregory, Mammoth Mountain's chairman and chief executive officer, will retain minority interests. Intrawest's retained interest is anticipated to be approximately 15 per cent. The operations of the resort will remain unchanged with Rusty Gregory continuing as chairman and chief executive officer and with Intrawest providing management expertise and other corporate resources under a management services agreement.
In February 2005 the shareholders of Mammoth Mountain, including Dave McCoy, Mammoth's founder and controlling shareholder, Rusty Gregory and Intrawest agreed to engage Houlihan Lokey Howard & Zukin to explore strategic alternatives to enhance the value of the company's shares, including the possible sale of shares. Prior to the transaction, Intrawest owned a 59.5 per cent interest in Mammoth Mountain.
"We joined forces with Dave McCoy and Rusty Gregory in 1995 and since that time considerable value has been created at Mammoth. It is clearly in Intrawest's best interest to monetize a portion of this value now," said Joe Houssian, chairman, president and chief executive officer of Intrawest Corporation. "We believe Mammoth Mountain represents one of the great growth opportunities in the year-round resort business in North America and therefore we will retain an equity interest in the resort and a 50 per cent interest in Mammoth Hospitality Management, our lodging company at Mammoth. Dave McCoy took Mammoth from a dream in the early 1940s to one of the premier ski resorts in North America today, and we look forward to working together with Rusty and Starwood to grow this wonderful resort to its full potential."
The proposed transaction from the sale of Mammoth Mountain will result in a pre-tax profit to Intrawest of approximately $101 million. Pre-tax net proceeds to Intrawest after estimated debt assumed, working capital adjustments, transaction costs and reinvestment in Mammoth Mountain are approximately $166 million, including a pre-transaction dividend. Although the initial use of proceeds will be to pay down debt, Intrawest is evaluating all of its options for the best use of proceeds. The transaction is expected to close within 90 days and is subject to customary closing conditions. Consequently there are no assurances that all of the closing conditions will be satisfied or that the transaction will be completed.
In addition to the Mammoth Mountain transaction, Intrawest and Starwood have entered into a preliminary agreement for a joint venture on the development of the majority of Intrawest's separately owned real estate in the Town of Mammoth Lakes. This transaction includes future development of over 1,000 residential units and 30,000 square feet of commercial space scheduled for build-out over the next five to seven years. The preliminary agreement is subject to Starwood completing its due diligence on the real estate joint venture in the next 45 days.
Mammoth Mountain Ski Area is the leading four-season mountain resort company in California, owning Mammoth Mountain, June Mountain, Tamarack Lodge, Mammoth Mountain Inn and Resort, Mammoth Snowmobile Adventures and Mammoth Mountain Bike Park. The company also operates Sierra Star Golf Club in Mammoth Lakes, California. Mammoth Hospitality Management is a 50/50 joint venture between Mammoth Mountain and Intrawest that currently manages over 380 units in the Village at Mammoth and will be the manager for future units developed on Intrawest's land at Mammoth.
Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Intrawest's actual results could differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, Intrawest's ability to implement its business strategies, seasonality, weather conditions, competition, general economic conditions, currency fluctuations and other risks detailed in the company's filings with the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. In addition, the completion of the transactions contemplated by this release are conditional upon a number of factors, many of which are outside of Intrawest's control. There is no assurance that the transactions will be completed at all or upon the same terms and conditions described above.
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