Whistler-Blackcomb going public

Whistler-Blackcomb, owned by Intrawest, filed to go public on the TSX. The salient numerical details, such as the total amount of the offering (rumoured to be $300 million) and pricing of the company’s stock remains to be seen.

Intrawest used to be public, but was taken private in 2006 and is now owned by Fortress Investment Group.

Although I have not completely read the document (and won’t until the issue has a price), of note is that the public entity will hold 75% of the Whistler-Blackcomb partnership (page 128); the corporation will have an additional $261 million in debt taken out; and the entity will generally have historically made about $50-60 million in income from 2007, 2008 and 2009. Note that because the corporation has a 75% interest in the partnership, that some accounting rules will kick in and subtract the 25% minority interest, so the net income figure will be lower.

This offering is being touted in the media as an income play, which is likely why the company is going public right now – to get out while the premium paid for income-bearing securities is red hot.

I have a paper napkin valuation which will likely be lower than what the actual selling price will be. I also think there are a whole host of risks that this venture are correlated to – including the resort real estate business, and BC tourism in general. I believe the company is using the elevated 2010 numbers from the Winter Olympics to tout their equity, which will be a mistake for investors to depend on. The 9 months ended 2010 show a $52 million income year, compared to $58 million the year before. Note the last quarter of the year is a money-loser.