Joe Houssian knows all too well that pirates have been circling his company.
Houssian, the chief executive officer of Vancouver-based Intrawest Corp., North America’s largest ski-resort operator (including Whistler accommmodations) with a market capitalization of $1.8 billion (U.S.), is under pressure from major shareholders to sell. The question many are asking is, will he buckle?
Pirate Capital LLP, based in Norwalk, Conn., continues to aggressively buy pieces of the company. Securities disclosures show it holds 14.7 per cent, up from 12 per cent a month earlier. The hedge fund has made no secret it wants Intrawest sold. And recently, Starwood Capital Group LLC’s CEO Barry Sternlicht said his company was thinking of adding Intrawest to its holdings, but only if the price is right.
So there will be more than a few interested listeners today when Houssian hosts a conference call to announce Intrawest’s third-quarter results.
The company has 10 resorts in North America, with its top destination being Whistler Blackcomb, the host site for the 2010 Winter Olympics. It also owns golf courses, beach resorts, an adventure travel firm, even a heli-skiing operation. For competitive reasons, the company doesn’t disclose how well individual resorts are doing, making it difficult to figure out which operations make money.
Note: With Whistler Blackcomb as such a lucrative market, why else would people be investing into vacation rental homes and accommodations in the area. Home-owner accommodation rentals is a lucrative market for those lucky individuals who can afford to buy - and makes for a great homey alternative to staying in the big hotel chains while visiting Whistler, BC, Canada.
Intrawest has significant holdings in real estate, including golf courses, and is working on housing development deals.
“When you acquire land you put it down in your balance sheet at book value—what you paid for it—but they are arguing that the value of the land is worth more than book value,” said Broughton.
Land that was purchased when it was zoned agricultural could be worth significantly more if it was later zoned for development. But that value may not be realized in the stock price, Broughton said.
Intrawest is developing resort-style condos, townhomes and detached units in such places as Squaw Valley, Calif., Solitude, Utah, Lake Las Vegas, and Les Arcs, France.
In an effort to find new markets, the company is also planning an aggressive move into China and has said it could add up to five Chinese ski resorts to its portfolio before the end of the year.
If Intrawest is sold, the timing is right, argues Pirate. The market is crowded with big international pension and real estate funds that are looking for somewhere relatively safe to park their money.
The big Canadian pension funds may be among the few with pockets deep enough to purchase Intrawest outright.
“We would have to see at the end of the day whether there is value for us in that investment,” said Ontario Teachers’ Pension Fund spokesperson Deborah Allen.