Intrawest New Partnership Strategy

27th Feb 2003

Toronto, February 26, 2003 - Intrawest Corporation, the world’s leading operator and developer of
village-centered resorts, announced a new approach to its business strategy for real estate development
activities. Intrawest is separating the bulk of its production-phase real estate business into independent
companies through two new partnerships. Intrawest’s production-phase real estate business includes all
activities from groundbreaking to delivery and sale of final real estate units. If Intrawest were already
employing this approach, the current portion of its production-phase real estate that would move into
these new companies has an asset value of approximately US$380 million.
By placing the production-phase real estate business in separate and independent companies, Intrawest is
achieving several objectives: significantly reducing the capital requirements of its real estate business;
significantly reducing debt levels; and implementing separate and appropriate capital structures for
Intrawest’s resort business and real estate business.
“For several years now Intrawest has been migrating from a capital-intensive business towards a business
model where our reputation, our expertise and our customers are the basis for future growth,” said Joe
Houssian, Intrawest’s chairman, president and chief executive officer. “Our recent and successful
introduction of several new expertise-based businesses is compelling evidence of this direction and
today’s announcement regarding our real estate division is a dramatic step forward in our evolution.
“As importantly, this new business model will generate significant free cash flow to support our growth in
our various divisions while at the same time creating a more conservative capital structure for Intrawest,”
Houssian said.
Intrawest has partnered to create the new companies: Leisura Developments US and Leisura
Developments Canada (collectively “Leisura”). Beginning this spring, Leisura will acquire land parcels
at fair market value from Intrawest and the first projects will commence construction in April 2003. The
Leisura companies will carry the business through to completion and final sale of the resort homes, which
is generally 12 to 18 months depending on the type of project. During 2003 the Leisura companies are
expected to take on 15 projects from nine resorts. In the future, the bulk of the production-phase
development at Intrawest’s resorts is expected to be carried out in a similar fashion.
Intrawest will have a minority equity investment in each company. The other partners are major Canadian
and US institutional investors. The Leisura companies will establish financing on their own credit with
no guarantees or other financial support from Intrawest or the other investors. The capital commitments
for the Canadian company have been finalized with a closing yesterday, February 25. Commitments for
the US company are being finalized with an expected closing within 60 days.
Intrawest will realize the fair market value for its land as parcels are sold to the Leisura companies.
Consideration for this land will be 75 per cent in cash with the balance in a land note. In addition,
Intrawest will continue to participate directly in the earnings and cash flow of the projects developed by
Leisura through its investment interests. It will also earn fees for its development services provided to
Intrawest expects the overall impact on earnings per share to be roughly neutral in the near term and
modestly positive in the longer term.
Leisura will purchase the land parcels from Intrawest for each project prior to the start of construction.
Consequently, Intrawest will continue to retain long-term control of the remainder of the land at its resorts
and will benefit from the long-term appreciation in land values.
By separating its production-phase real estate business into independent companies with an appropriate
capital structure, and by limiting its involvement in these new companies, Intrawest expects to derive the
following benefits:
?Intrawest’s capital requirements for the real estate business will decline significantly. Coupled
with expected operating cash flow, this will result in Intrawest generating about US$250 million
in free cash flow in its 2004 fiscal year after providing for the ongoing capital requirements of its
operating business;
?Intrawest expects that as a result of the decline in capital expenditures and the increase in free
cash flow, net debt will be reduced by approximately US$300 million from December 31, 2002 to
June 30, 2004;
?Intrawest’s capital investment to support future growth in Leisura will be limited to its minority
share of any new capital required; and
?Intrawest’s credit ratios will move into line with those of conservatively financed hospitality
“This completes an investment picture that combines a unique and compelling growth story with a
business model based more on expertise and reputation than on capital,” said Daniel Jarvis, executive vice
president and chief financial officer.


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