Intrawest Corp., a sub investment-grade developer and operator of ski resorts across North America with annual revenue of almost USD1 billion, is considering using over-the-counter derivatives to mitigate foreign exchange and interest rate risk related to a USD137 million bond deal it sold earlier this month. Dan Jarvis, executive v.p. and cfo in Vancouver, British Columbia, said the company is "in the throes" of examining whether to enter fx options, interest rate swaps or a cross-currency interest rate swap.
Jarvis said Intrawest sold an eight-year high-yield bond to repay Canadian dollar-denominated debt, and as a result is "now looking at our U.S./Canadian dollar debt balance to see if we want to hedge some of that back." And on the rate side, he said the company may look to convert part or all of the 10.5% coupon into a synthetic LIBOR-based floating liability because the recent deal is repaying some floating-rate debt. If Intrawest does not enter a rate swap, all of its roughly USD950 million in term debt would then be in fixed rate. Jarvis declined further comment, except to say the ski operator will make a decision on what instruments to use in the coming days.
Intrawest, which runs the Stratton Mountain resort in Vermont, among others, has used fx options and interest rate swaps before.
