Winter Park parent company reports $258 million in losses
March 20, 2009
The parent company for Copper Mountain, Steamboat and Winter Park ski areas this week disclosed that it lost $258 million in the fourth quarter of 2008, the latest bad news for the Fortress Investment Group.The private investment firm, which last October nearly defaulted on $1.7 billion in loans for its 2006 purchase of Intrawest Corp. before arranging a last-minute refinance deal, has been struggling with heavy debt and poor returns on investments including a ski industry undermined by the weak economy.Overall for 2008, Fortress lost $322 million, and stock prices fell 85 percent.The company, which raises, invests and manages private equity funds and hedge funds, still holds about $29.5 billion in assets, including real-estate and stock and bond holdings, but that reflects a drop of 10 percent.Fortress stated that its $140 million loss recorded under generally accepted accounting principles represents $1.50 per share. Last year, the company reported a fourth-quarter loss of $29 million, or 43 cents per share. The board of directors elected not to pay a dividend for 2008 to preserve capital, and the company recently was able to renegotiate its corporate-credit agreement, or covenant, to leave $604 million outstanding.In early December, the company suspended investor redemptions from several of its Drawbridge funds. At the time, the company said it had received requests totaling $3.51 billion in redemptions to investors for November and December. That would have nearly wiped out the funds, so Fortress stopped redemptions for those months.Analysts suggest that the company remains on shaky grounds, however, and may be troubled if more investors demand their money or if its investments fall further in value.Fortress renegotiated covenants provide near-term relief, but if conditions to continue to deteriorate, sharp declines in (assets under management) and operating margin compression leave just modest breathing room, wrote analyst Marc Irizarry of Goldman-Sachs.In this quarter, the company needs to generate about $35 million in earnings before interest, taxes, depreciation and amortization costs to stay out of further financial trouble, according to a Goldman-Sachs investment research report, and analysts believe it will clear about $40 million.The companys stock, which sold for $31 on its first trading day in 2007, closed at $1.53 on Thursday. Shares have been as high as $16 and as low as 77 cents during the past year. Officials with Intrawest were not available for comment on Thursday; its Colorado resorts laid off an unspecified number of employees in November but ski-area operators vowed to maintain the guest experience over the winter.The Steamboat Pilot & Today contributed to this report.