<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF NOVEMBER 1997
------------------------
INTRAWEST CORPORATION
(REGISTRANT'S NAME)
200 BURRARD STREET, SUITE 800, VANCOUVER, BC V6C 3L6 CANADA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [ ] Form 40-F [X]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- .
================================================================================
<PAGE> 2
This short form prospectus constitutes a public offering of these securities
only in those jurisdictions where they may be lawfully offered for sale and
therein only by persons permitted to sell such securities. No securities
commission or any similar authority in Canada has in any way passed upon the
merits of the securities offered hereunder and any representation to the
contrary is an offence. These securities have not been and will not be
registered under the United States Securities Act of 1933, as amended, and,
subject to certain exceptions, may not be offered or sold within the United
States or to U.S. persons. See "Plan of Distribution".
Information has been incorporated by reference in this short form prospectus
from documents filed with securities commissions or similar authorities in
Canada. Copies of the documents incorporated herein by reference may be obtained
on request without charge from Ross J. Meacher, Corporate Secretary, Intrawest
Corporation, Suite 800, 200 Burrard Street, Vancouver, British Columbia, V6C 3L6
(telephone number: (604) 669-9777). For the purposes of the Province of Quebec,
this simplified prospectus contains information to be completed by consulting
the permanent information record. A copy of the permanent information record may
be obtained from the Corporate Secretary of Intrawest Corporation at the
above-mentioned address and telephone number.
New Issue November 7, 1997
LOGO
INTRAWEST CORPORATION
$125,000,000
6.85% DEBENTURES DUE 2002
(SENIOR UNSECURED)
To be dated November 17, 1997 To mature December 2, 2002
The 6.85% Debentures (the "Debentures") will mature on December 2, 2002.
Interest on the Debentures will be payable semi-annually in arrears on June 2
and December 2 of each year, commencing on June 2, 1998.
The Debentures will be redeemable, at the option of Intrawest Corporation (the
"Company"), in whole at any time or in part from time to time, at a price equal
to the greater of the Canada Yield Price (as defined) and par, together with
accrued and unpaid interest to the date fixed for redemption. See "Details of
the Offering -- Redemption".
In the opinion of counsel, the Debentures will not be precluded as investments
under certain statutes as set out under "Eligibility for Investment".
<TABLE>
<CAPTION>
PRICE TO UNDERWRITERS' FEE NET PROCEEDS TO
THE PUBLIC AND DISCOUNT THE COMPANY(1)(2)
-------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture(3)............................................ Non-fixed $16.35(4) $983.65
Total....................................................... Non-fixed $2,043,750 $122,956,250
</TABLE>
- ---------------
(1) Before deducting estimated expenses of this offering of $200,000 which,
together with the Underwriters' fee, will be paid from the general funds of
the Company.
(2) Plus accrued interest, if any, from November 17, 1997 to the date of
delivery.
(3) Per $1,000 principal amount of Debentures.
(4) Consists of the Underwriters' fee of $15.00 per $1,000 principal amount of
Debentures and a discount of $1.35 per $1,000 principal amount of
Debentures.
The Underwriters have agreed to purchase the Debentures from the Company at
99.865% of their principal amount, plus accrued interest, if any, from November
17, 1997 to the date of delivery, subject to the terms and conditions set forth
in the Underwriting Agreement referred to under "Plan of Distribution".
The Debentures will be offered to the public at prices to be negotiated between
each purchaser and the Underwriters. Accordingly, the price at which the
Debentures will be offered and sold to the public may vary as between purchasers
and during the period of distribution of the Debentures. The Underwriters'
overall compensation will increase or decrease by the amount by which the
aggregate price paid for the Debentures by purchasers exceeds, or is less than,
the aggregate price paid by the Underwriters to the Company for the Debentures.
The Underwriters, as principals, conditionally offer the Debentures, subject to
prior sale, if, as and when issued by the Company and delivered to and accepted
by the Underwriters in accordance with the conditions contained in the
Underwriting Agreement referred to under "Plan of Distribution" and subject to
the approval of certain legal matters by McCarthy Tetrault on behalf of the
Company and by Stikeman, Elliott on behalf of the Underwriters.
ONE OF THE UNDERWRITERS IS A SUBSIDIARY OF A CANADIAN CHARTERED BANK WHICH IS A
LENDER OF DEBT TO THE COMPANY, A PORTION OF WHICH DEBT IS TO BE REDUCED ON AN
INTERIM BASIS THROUGH THE INITIAL APPLICATION OF A PORTION OF THE NET PROCEEDS
OF THIS OFFERING. CONSEQUENTLY, THE COMPANY MAY BE CONSIDERED TO BE A CONNECTED
ISSUER OF SUCH UNDERWRITER. SEE "USE OF PROCEEDS" AND "PLAN OF DISTRIBUTION".
Subscriptions will be received subject to rejection or allotment in whole or in
part and the right is reserved to close the subscription books at any time
without notice. It is expected that the closing of this offering will take place
on November 17, 1997, or such other date as may be agreed upon by the Company
and the Underwriters, but, in any event, not later than December 19, 1997, and
that Debentures in definitive form will be available for delivery on closing.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
------ ------
<S> <C> <C> <C>
Documents Incorporated by Reference...... 2 Credit Ratings........................... 21
Eligibility for Investment............... 3 Plan of Distribution..................... 21
Summary of the Offering.................. 4 Risk Factors............................. 22
The Company.............................. 6 Canadian Federal Income Tax
Use of Proceeds.......................... 12 Considerations......................... 22
Consolidated Capitalization.............. 12 Legal Matters............................ 24
Interest and Asset Coverages............. 13 Purchasers' Statutory Rights............. 24
Details of the Offering.................. 14 Certificate of the Company............... 25
Certificate of the Underwriters.......... 26
</TABLE>
------------------------
In this Prospectus, unless the context otherwise requires, the "Company" or
"Intrawest" refers to Intrawest Corporation, either alone or together with its
subsidiaries and their respective interests in joint ventures and partnerships.
Unless otherwise specified, "fiscal" in connection with a year means, with
respect to the Company, in the case of any year prior to 1995, the 12 months
ended September 30, in the case of 1995, the nine months ended June 30 and, in
the case of any year after 1995, the 12 months ended June 30.
As used in this Prospectus, "skier visit" means one guest accessing a ski
mountain on any one day and "unit" means one condominium-hotel unit, one
townhome unit, one single-family lot or 1,000 square feet of commercial space.
All dollar amounts set forth in this Prospectus are expressed in Canadian
dollars, except where indicated otherwise.
------------------------
DOCUMENTS INCORPORATED BY REFERENCE
The following documents of the Company which have been filed with
securities commissions or similar regulatory authorities in each of the
provinces of Canada are incorporated by reference into and form an integral part
of this Prospectus:
(a) the Annual Information Form (the "Annual Information Form") dated
September 19, 1997 for the fiscal year ended June 30, 1997, including
Management's Discussion and Analysis ("Management's Discussion and
Analysis") and the audited consolidated financial statements including
the notes thereto (the "Consolidated Financial Statements") for the
fiscal years ended June 30, 1997 and 1996 together with the auditors'
report thereon dated September 5, 1997 contained in the Annual
Information Form; and
(b) the Information Circular dated October 7, 1997 relating to the Annual
General Meeting of shareholders of the Company to be held on November
17, 1997, excluding the sections entitled "Report on Executive
Compensation" and "Performance Graph" contained therein.
Any annual information form, material change report (other than
confidential reports), comparative interim financial statements or management
proxy circular filed by the Company with securities commissions or similar
authorities in the provinces of Canada subsequent to the date of this Prospectus
and prior to termination of this offering shall be deemed to be incorporated by
reference into this Prospectus.
ANY STATEMENT CONTAINED IN A DOCUMENT INCORPORATED OR DEEMED TO BE
INCORPORATED BY REFERENCE HEREIN SHALL BE DEEMED TO BE MODIFIED OR SUPERSEDED
FOR THE PURPOSES OF THIS PROSPECTUS TO THE EXTENT THAT A STATEMENT CONTAINED
HEREIN OR IN ANY OTHER SUBSEQUENTLY FILED DOCUMENT THAT ALSO IS OR IS DEEMED TO
BE INCORPORATED BY REFERENCE HEREIN MODIFIES OR SUPERSEDES SUCH STATEMENT. THE
MODIFYING OR SUPERSEDING STATEMENT NEED NOT STATE THAT IT HAS MODIFIED OR
SUPERSEDED A PRIOR STATEMENT OR INCLUDE ANY OTHER INFORMATION SET FORTH IN THE
DOCUMENT THAT IT MODIFIES OR SUPERSEDES. THE MAKING OF A MODIFYING OR
SUPERSEDING STATEMENT SHALL NOT BE DEEMED AN ADMISSION FOR ANY PURPOSES THAT THE
MODIFIED OR SUPERSEDED STATEMENT, WHEN MADE, CONSTITUTED A MISREPRESENTATION, AN
UNTRUE STATEMENT OF A MATERIAL FACT OR AN OMISSION TO STATE A MATERIAL FACT THAT
IS REQUIRED TO BE STATED OR THAT IS NECESSARY TO MAKE A STATEMENT NOT MISLEADING
IN LIGHT OF THE CIRCUMSTANCES IN WHICH IT WAS MADE. ANY STATEMENT SO MODIFIED OR
SUPERSEDED SHALL NOT BE DEEMED, EXCEPT AS SO MODIFIED OR SUPERSEDED, TO
CONSTITUTE A PART OF THIS PROSPECTUS.
2
<PAGE> 4
ELIGIBILITY FOR INVESTMENT
In the opinion of McCarthy Tetrault, counsel to the Company, and Stikeman,
Elliott, counsel to the Underwriters, subject to compliance with the prudent
investment standards and the general investment provisions and restrictions of
the statutes referred to below (and, where applicable, the regulations
thereunder) and, in certain cases, subject to the satisfaction of the
requirements relating to investment or lending policies or goals and, in certain
cases, the filing of such policies or goals, the Debentures offered hereunder
will not, on the date of issue, be precluded as investments by or under the
following statutes:
<TABLE>
<S> <C>
Insurance Companies Act (Canada) Supplemental Pension Plans Act (Quebec)
Trust and Loan Companies Act (Canada) Financial Institutions Act (British Columbia)
Pension Benefits Standards Act, 1985 (Canada) Pension Benefits Standards Act (British
Loan and Trust Corporations Act (Ontario) Columbia)
Pension Benefits Act (Ontario) Loan and Trust Corporations Act (Alberta)
An Act respecting insurance (Quebec) The Pensions Benefits Act, 1992 (Saskatchewan)
An Act respecting trust companies and savings Insurance Act (Manitoba)
companies (Quebec)
</TABLE>
In the opinion of such counsel, the Debentures will, on the date of issue,
be qualified investments under the Income Tax Act (Canada) (the "Tax Act") and
the regulations thereunder for trusts governed by registered retirement savings
plans, registered retirement income funds and deferred profit sharing plans
(other than trusts governed by deferred profit sharing plans to which
contributions are made by the Company or a corporation which does not deal at
arm's length with the Company within the meaning of the Tax Act) and will not be
foreign property for purposes of Part XI of the Tax Act.
3
<PAGE> 5
SUMMARY OF THE OFFERING
The following information is a summary only and is to be read in
conjunction with, and is qualified in its entirety by, the more detailed
information appearing elsewhere in this Prospectus and in the documents
incorporated by reference herein. Capitalized terms used but not defined in this
summary have the respective meanings ascribed thereto elsewhere in this
Prospectus.
ISSUE: $125,000,000 principal amount of 6.85% Debentures due
2002.
PRICE: Non-fixed.
MATURITY DATE: December 2, 2002.
INTEREST: 6.85% per annum, payable semi-annually in arrears on
June 2 and December 2 of each year, commencing on
June 2, 1998. The interest payable in respect of the
Debentures on June 2, 1998 will be such amount as has
accrued from the date of closing to June 2, 1998.
REDEMPTION: The Debentures will be redeemable, at the option of
the Company, in whole at any time or in part from
time to time, on not less than 10 nor more than 60
days' prior notice, upon payment of a redemption
price equal to the greater of the Canada Yield Price
and par, together with accrued and unpaid interest to
(but excluding) the date fixed for redemption.
PURCHASE FOR CANCELLATION: The Company will be entitled to purchase Debentures
at any time in the market or by tender or private
contract at any price.
RANK: The Debentures will be direct unsecured and
unsubordinated obligations of the Company and will
not be secured by any mortgage, pledge, hypothec or
other charge. Subject to certain statutorily
preferred exceptions, the Debentures will rank pari
passu in right of payment with all other present and
future unsecured and unsubordinated indebtedness of
the Company. The Debentures effectively will be
subordinated to all existing and future obligations
(including trade payables) of the Company's
subsidiaries and consolidated partnership interests
including, without limitation, Debt of Subsidiaries,
which aggregated approximately $349.6 million
(excluding intercorporate Debt) as at September 30,
1997. In addition, the Company has outstanding
secured Debt, which aggregated approximately $178.4
million as at September 30, 1997, and which, in the
event of the enforcement of the security interests in
respect of such Debt, would rank in priority to the
Debentures to the extent of such security interests.
SUMMARY OF COVENANTS: Holders of Debentures will be entitled to the benefit
of covenants imposing limitations on (i) the
incurrence of Debt by the Company and the incurrence
of Debt or the issuance of Preferred Shares by
Subsidiaries, (ii) the entering into of Sale and
Leaseback Transactions, (iii) mergers, amalgamations
or consolidations and (iv) the sale of all or
substantially all the property or assets of the
Company.
4
<PAGE> 6
INTEREST AND ASSET
COVERAGES: The interest and asset coverages for the 12 month
period ended June 30, 1997, after giving effect to
this offering and the application of the estimated
net proceeds therefrom, determined in accordance with
the Indenture (but without giving pro forma effect to
other Debt and Preferred Shares incurred or issued,
Debt and Preferred Shares eliminated or asset
acquisitions or dispositions as would be required
under the Indenture) are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C>
Consolidated EBITDA to
Consolidated Interest Expense Ratio............. 2.75times
Consolidated Net Debt to
Consolidated Net Tangible Assets................ 46.07%
</TABLE>
See also "Interest and Asset Coverages" for the
coverages determined in accordance with applicable
Canadian securities laws.
USE OF PROCEEDS: The net proceeds from the sale of the Debentures will
be used for general corporate purposes, including
expanding and enhancing ski operations at the
Company's resorts, supporting continued growth of its
resort real estate operations and resort club
operations, and financing potential acquisitions and
investments. Pending such application, approximately
$50 million of such net proceeds will be used to pay
down borrowings under one of the Company's revolving
credit facilities on an interim basis and the balance
will be invested temporarily in short-term money
market instruments.
CREDIT RATINGS: The Debentures have been provisionally rated B+(High)
by CBRS Inc. ("CBRS") and BB(high) by Dominion Bond
Rating Service Limited ("DBRS").
An investment in the Debentures involves certain risks. Before making an
investment decision, prospective purchasers should consider carefully all of the
information contained in this Prospectus and the documents incorporated by
reference herein, including the factors set forth herein under "Risk Factors"
and in the Annual Information Form under "Risk and Risk Management" in
Management's Discussion and Analysis.
5
<PAGE> 7
THE COMPANY
The Company was formed by an amalgamation on November 23, 1979 under, and
is governed by, the Company Act (British Columbia). The registered office of the
Company is located at 1300 - 777 Dunsmuir Street, Vancouver, British Columbia,
V7Y 1K2, its executive office is located at Suite 800, 200 Burrard Street,
Vancouver, British Columbia, V6C 3L6 and its telephone number is (604) 669-9777.
The Company maintains a web site at www.intrawest.com.
OVERVIEW
Intrawest is a leading developer and operator of mountain resorts across
North America. The Company's principal strength is its ability to combine
expertise in resort operations and real estate development. By combining high
quality resort services and amenities with innovative residential and commercial
real estate development, the Company has generated, and has implemented
strategies that it expects will continue to generate, increases in the number of
visitors, return on assets and average selling prices of real estate at its
resorts.
For fiscal 1997 ski and resort operations represented approximately 68% and
real estate operations represented approximately 32% of the Company's
consolidated revenue from continuing operations.
RESORT OPERATIONS
Intrawest's network of eight resorts, which are geographically diversified
across North America's major ski regions, enables it to provide a wide range of
distinctive vacation experiences. The Company's resorts include
Whistler/Blackcomb and Panorama in British Columbia, Tremblant and Mont Ste.
Marie in Quebec, Stratton in Vermont, Snowshoe in West Virginia, Copper in
Colorado and a 33% interest in Mammoth in California. The Company acquired
Whistler, Copper and Mont Ste. Marie in fiscal 1997. The acquisition of
Whistler, which is adjacent to Blackcomb, provides the Company with resort
operations at both mountains within one of North America's top-rated ski
resorts. Whistler/Blackcomb generated a combined total of approximately 1.7
million skier visits during the 1996/97 ski season. The acquisition of Copper
provides the Company with ownership of a major resort operation in Colorado, the
most popular ski region in North America. Mont Ste. Marie is a small regional
resort near Ottawa. During the 1996/97 ski season the Company's network of
resorts generated approximately 5.2 million skier visits, which is greater than
any other North American group of affiliated mountain resorts.
The following table summarizes certain key statistics relating to each of
the Company's mountains.
<TABLE>
<CAPTION>
INTRAWEST AVERAGE SNOW- 1996/97
OWNERSHIP SKIABLE VERTICAL LIFTS ANNUAL MAKING SKIER
RESORT PERCENTAGE TERRAIN DROP TRAILS (HIGH-SPEED) SNOWFALL COVERAGE VISITS
- --------------------------------- ---------- ------- -------- ------ ------------ -------- -------- -------
(%) (ACRES) (FEET) (INCHES) (%) (000'S)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Whistler......................... 100(1) 3,657 5,020 104 14(5) 360 4 757
Blackcomb........................ 77 3,410 5,280 119 16(7) 360 10 989
Copper........................... 100 2,433 2,699 117 21(3) 255 11 944
Mammoth.......................... 33(2) 4,000 3,100 150 38(4) 350 20 884
Tremblant........................ 100 502 2,131 77 11(6) 140 75 615
Stratton......................... 100 563 2,003 90 12(2) 180 75 405
Snowshoe......................... 100 200 1,598 53 11(1) 185 99 357
Panorama......................... 100 2,000 4,047 80 8(1) 110 50 143
Mont Ste. Marie.................. 100 108 1,250 20 3(2) 120 80 62
</TABLE>
- ---------------
(1) In connection with a covenant not to compete with the business activities of
Blackcomb Skiing Enterprises Limited Partnership, the Company has agreed to
grant to Nippon Cable Co., Ltd., one of its minority partners in this
partnership, an option to acquire a 23% interest in Whistler at a price
based on the terms of the Whistler acquisition. The option will be
exercisable during the 30-day period ending November 30, 1997.
(2) Each of the shareholders of Mammoth (including the Company) has a pro rata
right of first refusal to purchase any shares of Mammoth to be sold by any
other shareholder.
6
<PAGE> 8
RESORT REAL ESTATE DEVELOPMENT
Intrawest is North America's largest mountain resort real estate developer
with real estate sales revenue in fiscal 1997 of $118.2 million. The Company
owns, develops and manages residential and commercial resort real estate at each
of its resorts, and is developing mountain resort villages at Keystone in
Colorado and Squaw Valley in California and has an exclusive right to purchase
sites for multi-family developments at Sun Peaks in British Columbia. Intrawest
owns or has rights to acquire land on which it expects to develop and sell
approximately 15,000 units over the next 12 to 15 years. The Company's resort
development formula links the staged expansion of ski and other resort
operations with the planning, design and managed development of architecturally
distinct four-season resort villages at the base of the mountain. The Intrawest
formula emphasizes quality of service, comprehensive amenities, village ambience
and other characteristics which attract visitors and buyers of real estate.
Intrawest has successfully employed this formula at Blackcomb and Tremblant and,
as a result, the villages at these locations have become major attractions,
drawing both skiers and non-skiers. The Company is at various stages of applying
its formula to the extensive developable land holdings at its other resorts. The
Company also builds and operates resort club locations which are marketed as
timeshare vacation ownership resorts.
The following table summarizes certain key statistics relating to each of
the Company's resort real estate holdings.
<TABLE>
<CAPTION>
AS AT JUNE 30, 1997
DATE --------------------------------------------------------------------------------
CONSTRUCTION RESIDENTIAL COMMERCIAL
COMMENCED/ RESIDENTIAL UNITS HELD COMMERCIAL COMMERCIAL SPACE HELD
IS EXPECTED RESIDENTIAL UNITS UNDER FOR FUTURE SPACE SPACE UNDER FOR FUTURE
RESORT TO COMMENCE UNITS SOLD DEVELOPMENT DEVELOPMENT COMPLETED DEVELOPMENT DEVELOPMENT
- ---------------------------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
(SQ. FT.) (SQ. FT.) (SQ. FT.)
<S> <C> <C> <C> <C> <C> <C> <C>
Blackcomb(1)................ 1987 2,320 341(2) 330 47,000 13,000 --
Tremblant................... 1992 927 229 1,694 109,000 9,000 52,000
Keystone(3)................. 1995 141 430 2,529 34,000 59,000 207,000
Sun Peaks................... 1995 26 108 116 -- 6,000 --
Panorama.................... 1995 8 104 988 -- 5,000 --
Stratton.................... 1997 -- 178 1,172 -- -- 35,000
Snowshoe.................... 1997 -- 17 833 -- -- 50,000
Mammoth(4).................. 1998 -- 215 2,185 -- -- 155,000
Copper...................... 1998 -- -- 1,100 -- -- 80,000
Squaw Valley................ 1998 -- -- 700 -- -- 110,000
Whistler(5)................. 1998 -- -- 915 -- -- 80,000
-------- --------- --------- --------- --------- ---------
3,422 1,622(6) 12,562(6) 190,000 92,000(6) 769,000(6)
======== ========= ========= ========= ========= =========
</TABLE>
- ---------------
(1) The Company has a 77% interest in Blackcomb Skiing Enterprises Limited
Partnership.
(2) Includes 60 units of employee housing.
(3) The Company has a 50% interest in a joint venture that owns and is
developing the land at Keystone. The information on Keystone in this table
reflects 100% of the joint venture's land holdings.
(4) At Mammoth, the Company owns land for the development of approximately 400
residential units and participates in two joint ventures which each own land
for the development of approximately 1,000 residential units and 77,000
square feet of commercial space. The Company's interest in these joint
ventures is 89% and 75%, respectively.
(5) In connection with a covenant not to compete with the business activities of
Blackcomb Skiing Enterprises Limited Partnership, the Company has agreed to
grant to Nippon Cable Co., Ltd., one of its minority partners in this
partnership, an option to acquire a 23% interest in Whistler at a price
based on the terms of the Whistler acquisition. The option will be
exercisable during the 30-day period ending November 30, 1997.
(6) The Company's pipeline of real estate projects comprises residential units
and commercial space under development and held for future development which
aggregate 15,045 units.
7
<PAGE> 9
KEY OPERATING STRENGTHS
Intrawest believes that the following key operating strengths provide
distinct competitive advantages which have enabled it to achieve significant and
profitable growth.
FULLY INTEGRATED APPROACH
Intrawest's operating strategy is to link the staged modernization and
expansion of mountain facilities at its resorts with the controlled development
of four-season resort villages focused on high occupancy accommodations. This
strategy is designed to increase and balance utilization of the Company's
resorts and has resulted in growth in skier visits, revenue and operating profit
per visit, and real estate values. The implementation of this strategy begins
with the enhancement of the skiing experience on the mountain itself through
capital expenditures, such as the creation of new lifts, trails, additional
restaurants, expanded snowmaking capability and improved ski schools. The
expansion of resort facilities is followed by the staged development of the
major land holdings of the Company designed to increase real estate values and
maximize occupancy rates. These land holdings typically encompass all or a
significant portion of the developable sites at the base of the mountain at the
resort. The type of real estate development and the timing of its introduction
to the market are carefully managed by the Company with a view to attracting
more visitors to the mountain and achieving capital appreciation and high
occupancy of accommodations. Increasing real estate values and higher occupancy
rates further enable expansion of the resort facilities, such as the addition of
golf courses, convention facilities and other year-round facilities. The Company
believes that the integration of resort and real estate development results in
sustainable growth as increasing numbers of visitors and buyers of real estate
are attracted to the Company's resorts.
CONTROL OF RESORT OPERATIONS
Intrawest controls multiple revenue sources at each resort, thereby
diversifying its revenue mix and maximizing its returns. In addition to
operating the lifts, the Company manages many of the ancillary operations at its
resorts, including on-mountain restaurant and retail facilities, equipment
rentals, lodging at the base, ski schools, golf courses and golf schools. The
Company's ownership of commercial property at its resorts enables it to ensure
that the retail space enhances the overall appeal of the resort. By controlling
most of the resort operations, the Company can maintain quality of service,
offer comprehensive amenities and provide distinctive village ambience, all of
which attract additional visitors and buyers of real estate.
GEOGRAPHIC DIVERSIFICATION
Intrawest is a geographically diversified mountain resort company, with
eight resorts strategically located across North America's major ski areas. The
Company's geographic diversity (i) reduces the risks associated with
unfavourable weather conditions or a severe economic slowdown in any particular
region, (ii) increases the accessibility of the Company's network of resorts to
the overall North American skier population and (iii) enables the Company to
offer a wide range of mountain vacation alternatives banded together under the
Intrawest brand.
MULTI-RESORT NETWORK
The integration of its network of resorts provides Intrawest with the
opportunity to (i) achieve economies of scale in purchasing goods and services,
(ii) expand cross-marketing programs and efficiencies, (iii) better utilize
distribution channels by offering travel agents and tour operators a range of
mountain resort alternatives, assurance of service quality, booking convenience
and incentive packages, (iv) establish performance benchmarks for operations
across all of the resorts, (v) form cross-resort teams to address technical and
operational issues, (vi) hire specialized individuals at the corporate level as
resources for the entire group and (vii) develop proprietary information
technology systems for application across all of the resorts.
SUCCESSFUL GROWTH THROUGH ACQUISITIONS
Intrawest has acquired five resorts during the past three years (including
a 33% interest in Mammoth), as well as Whistler Mountain at Whistler/Blackcomb.
Intrawest has demonstrated that its integrated approach to resort operations and
real estate development can be successfully applied to acquired resorts. Since
Intrawest acquired Blackcomb in 1986, annual skier visits have increased from
278,000 to 989,000, annual revenue has increased from
8
<PAGE> 10
$5.9 million to $107.4 million and average sales prices of townhomes have grown
from $135 per square foot to $342 per square foot at that resort. Since
Intrawest acquired Tremblant in 1991, annual skier visits have increased from
345,000 to 615,000, annual revenue has increased from $13.7 million to $79.8
million and average sales prices of townhomes have grown from $143 per square
foot to $217 per square foot at that resort.
RESORT REAL ESTATE EXPERTISE
Intrawest's real estate expertise differentiates it from its mountain
resort competitors. The Company has over 20 years of experience in the real
estate industry, including ten years of experience in the development of
mountain resort properties. Since 1994 the Company has focused its attention on
mountain resort ownership and mountain resort real estate development. The
Company has expertise in all aspects of resort real estate development,
including master planning, project design, construction, sales and marketing and
property management. This expertise has created significant new business
opportunities, such as the selection of Intrawest to develop resort villages at
Keystone and Squaw Valley.
CONSERVATIVE APPROACH TO REAL ESTATE DEVELOPMENT
Intrawest has a disciplined and conservative approach to its resort real
estate business. This approach involves (i) acquiring land at low cost in
conjunction with the purchase of a resort or otherwise securing land through
options and joint ventures, (ii) mitigating completed inventory risk by
pre-selling a significant portion of units prior to commencement of and during
construction of projects (since fiscal 1993 the Company has pre-sold
approximately 83% of its units prior to completion of construction), (iii)
concentrating on woodframe projects which have a short construction timetable,
(iv) engaging general contractors to construct projects and typically
structuring contracts on a fixed-price basis to ensure that contractors bear the
risk of cost overruns, (v) taking a long-term approach towards real estate
development that emphasizes profit maximization on a project by project basis
and (vi) building on the Company's successful track record through the transfer
of "project templates" to new developments. These elements, combined with the
geographic diversity of the Company's real estate development projects, mitigate
many of the major risks associated with real estate development.
STRONG MANAGEMENT TEAM
Intrawest's senior managers are recognized as leaders in the industry. The
Company's senior management team consists of five individuals who are
responsible for strategic direction, as well as the oversight of principal
business divisions, and have an average of over ten years of experience with the
Company. Experienced local management teams are responsible for resort
operations and real estate development activities at specific resorts. In
addition, management at the corporate level provides specialized expertise in
particular areas across Intrawest's network of resorts.
GROWTH STRATEGIES
Intrawest's primary objective is to capitalize on its operating strengths
and extensive resort real estate holdings to further strengthen its position as
a leading mountain resort developer and operator in North America. Specifically,
the Company's strategies to increase revenue and net income are as follows:
EXTEND PROVEN STRATEGY TO ALL RESORTS
Intrawest's primary growth strategy is to extend its fully integrated
approach to resort and real estate development at each of its resorts. This
formula has been successfully employed at Blackcomb and Tremblant and is in
various stages of implementation at the Company's other resorts.
INCREASE UTILIZATION OF ASSETS
Intrawest seeks to increase the utilization of its resort facilities during
non-peak periods through activity programming and targeted marketing while
enhancing the quality of services offered to its guests. The Company believes
that operating strategies customarily employed by other resort operators to
increase skier visits without regard to timing may result in overcrowding during
peak periods which adversely affects customer service and guest satisfaction. In
addition, such strategies may necessitate capital expenditures to meet peak
period demand which
9
<PAGE> 11
lower returns on invested capital. By focusing on increasing utilization during
non-peak periods, the Company believes that its strategy will increase skier
visits and lift ticket sales while minimizing the need for new capital
investments, thereby increasing profitability and return on invested capital.
Historically, the implementation by the Company of this strategy has been a
contributing factor in increasing the ratio of the Company's revenue to assets.
Intrawest also seeks to increase year-round utilization of its resorts by
developing more summer and shoulder season activities and amenities. The Company
owns and operates six championship golf courses and three additional courses are
under construction. The Company believes that increases in utilization during
the summer and the shoulder seasons will enhance the Company's ability to retain
quality employees and attract premier restaurants, shops and hotels, thereby
enhancing the four-season appeal of its resorts and the demand for and market
value of its resort real estate property.
CAPITALIZE ON REAL ESTATE PIPELINE
Intrawest's real estate strategy is to increase the value of its real
estate holdings as part of the overall development of the resort and to
carefully manage the number and mix of new projects brought to market each year
in order to maximize the Company's returns and support real estate values at the
resort. The Company owns, or has rights to acquire, land available for the
development of approximately 15,000 units, a land position which is
significantly larger than that controlled by any other North American mountain
resort developer. Construction is under way on the Company's first projects at
Stratton and Snowshoe and pre-development work is proceeding at Mammoth,
Whistler, Copper and Squaw Valley. As these new locations come onstream, the
Company expects to begin delivering significantly more units per year than the
465 units sold in fiscal 1997. The Company believes that its current supply of
land can support this increased level of activity for the next 12 to 15 years.
The Company will also seek opportunities to continue to add to its inventory of
available land.
On a selective basis, Intrawest may undertake new real estate ventures at
mountain resorts which it does not own, such as its resort village development
projects at Keystone, Squaw Valley and Sun Peaks. In addition, the Company
believes, based on internal development studies, that its resort club business
can be successfully expanded to mountain resorts which it does not own and to
other locations, including warm weather resorts.
INCREASE REVENUE PER VISIT
Intrawest seeks to increase its revenue per visit by expanding revenue from
non-lift ticket sources such as retail shops, food and beverage services,
lodging, ski schools and summer activities and by increasing lift ticket yields.
Intrawest's strategy to expand revenue from non-lift ticket sources involves the
addition of more revenue-generating attractions at its resorts, such as
restaurants, retail shops, hotels, golf schools and golf courses, in order to
stimulate increased spending per guest. The Company plans to increase its lift
ticket yields by managing ticket discounts on peak ski days, more closely
aligning ticket programs to specific customer segments and introducing more
programs to package tickets with other services offered at its resorts.
PROMOTE INTRAWEST BRAND
Intrawest believes, based on various marketing studies and customer
satisfaction surveys carried out by the Company, that each of its resorts is
recognized for the distinctive quality of its mountain facilities, services and
village ambience and that each resort has achieved "name" recognition in its
particular market. The Company's strategy is to extend this recognition across
its resort network by banding the resorts together to promote the Intrawest
brand name in the mountain resort business. The Company believes that by
establishing brand recognition it can enhance customer loyalty and more
effectively exploit cross-marketing opportunities.
GROW THROUGH ACQUISITIONS
The Company believes that consolidation trends in the mountain resort
industry will continue to provide attractive acquisition opportunities which it
will continue to evaluate. The Company may also consider acquiring smaller
regional resorts which have a strong local following and can provide a customer
base for its other resorts and businesses complementary to its existing mountain
resort operations.
10
<PAGE> 12
RECENT DEVELOPMENTS
TREMBLANT PHASE 2 DEVELOPMENT
In September 1997 the Company announced its plans for the second major
phase of development of Tremblant to take place over the next five years.
Planned on-mountain and base area improvements, with an estimated cost of $88
million, include a substantial increase in skiable terrain, additional
snowmaking, five new ski lifts including a new gondola, a third golf course and
golf academy, an equestrian centre, an outdoor amphitheatre and a new beach and
tennis facility. A further $46 million is planned for basic infrastructure
development including roads and public transportation, parking facilities, and
water and sewer systems. The federal, provincial and municipal governments have
committed to fund approximately $80 million of these costs by way of grants and
loans. The second phase of development also includes the construction for sale
of several condo-hotel and townhome projects and additional commercial expansion
of the village having an aggregate estimated market value of $366 million.
CHANGE OF AUDITORS
At the Company's annual general meeting to be held on November 17, 1997,
management of the Company proposes to nominate KPMG, Chartered Accountants, as
auditors of the Company in place of Coopers & Lybrand, Chartered Accountants,
the Company's current primary auditor. The majority of the Company's
subsidiaries are currently audited by KPMG. Coopers & Lybrand audits directly
only a limited portion of the Company's revenue and therefore must carry out
additional procedures on those material components of the Company's business
which are audited by KPMG and other auditors.
11
<PAGE> 13
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Debentures offered
hereunder, after deducting the Underwriters' fee and discount and the estimated
offering expenses, are estimated to be approximately $122,756,250. The Company
intends to use the net proceeds for general corporate purposes, including
expanding and enhancing ski operations at its resorts, supporting continued
growth of its resort real estate operations and resort club operations, and
financing potential acquisitions and investments. Pending such application,
approximately $50 million of such net proceeds will be used to pay down
borrowings under one of the Company's revolving credit facilities on an interim
basis and the balance will be invested temporarily in short-term money market
instruments. Although the Company regularly reviews acquisition and investment
opportunities, no contract, arrangement or understanding currently exists
regarding any material acquisition or investment.
One of the Underwriters is a subsidiary of a Canadian chartered bank which
is a lender to the Company under the revolving credit facility which is to be
reduced on an interim basis through the initial application of a portion of the
net proceeds of this offering. See "Plan of Distribution".
CONSOLIDATED CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as at June 30, 1997 (i) on an actual basis and (ii) as adjusted to
reflect the sale by the Company of the Debentures offered hereunder and the
application of the estimated net proceeds therefrom as described under "Use of
Proceeds". This table should be read in conjunction with the Consolidated
Financial Statements.
<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Cash and short-term deposits............................................. $ 59,718 $ 132,474
======== =========
Short-term debt(1)....................................................... 90,738 40,738
-------- -----------
Long-term debt
Bank and other long-term debt
Ski and resort operations........................................... 243,035 243,035
Real estate......................................................... 113,123 113,123
Other............................................................... 29,045 29,045
Debentures............................................................. -- 125,000
Limited recourse notes(2).............................................. 13,815 13,815
-------- -----------
Total long-term debt.............................................. 399,018 524,018
-------- -----------
Non-controlling interest in subsidiaries................................. 11,307 11,307
-------- -----------
Total shareholders' equity............................................... 498,068 498,068
-------- -----------
Total capitalization.............................................. $999,131 $ 1,074,131
======== =========
</TABLE>
- ---------------
(1) Consists of current portion of long-term debt.
(2) In connection with the acquisition of Copper, a subsidiary of the Company
issued to the vendors of Copper certain limited recourse notes. At June 30,
1997, the notes were recorded in the Company's accounts at US$12.5 million
($17.2 million), of which US$2.5 million ($3.4 million) was classified as
short-term debt.
12
<PAGE> 14
INTEREST AND ASSET COVERAGES
The interest and asset coverages set forth below have been prepared and
included in this Prospectus in accordance with disclosure requirements under
applicable Canadian securities laws. Accordingly, the ratios below have not been
calculated in accordance with the provisions of the Indenture relating to the
incurrence of Debt. The following financial ratios, which give effect to this
offering and the application of the estimated net proceeds therefrom, are
calculated, with respect to interest coverage on long-term debt, for the 12
month period ended and, with respect to net tangible asset coverage on long-term
debt as at, June 30, 1997.
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C>
Interest coverage on long-term debt................................................. 1.74 times
Net tangible asset coverage on long-term debt....................................... 1.77 times
</TABLE>
The interest and asset coverages for the 12 month period ended June 30,
1997, after giving effect to this offering and the application of the estimated
net proceeds therefrom, determined in accordance with the Indenture (but without
giving pro forma effect to other Debt and Preferred Shares incurred or issued,
Debt and Preferred Shares eliminated or asset acquisitions or dispositions as
would be required under the Indenture) are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C>
Consolidated EBITDA to Consolidated Interest Expense Ratio.......................... 2.75 times
Consolidated Net Debt to Consolidated Net Tangible Assets........................... 46.07%
</TABLE>
Consolidated EBITDA for the year ended June 30, 1997 was $94.5 million, the
same amount as Consolidated EBITDA on a pro forma basis. For pro forma purposes
it has been assumed that $125 million principal amount of Debentures, bearing
interest at a rate of 6.85% per annum, were issued and sold at 99.865% of their
principal amount on July 1, 1996. It has also been assumed that the proceeds
were used to repay $50 million of debt bearing interest at a rate of 5.5% per
annum, with the balance, net of assumed fees and costs of $2.1 million, in cash
which was invested at 3% per annum.
Consolidated Interest Expense for the year ended June 30, 1997 was $30.7
million, representing $35.5 million of interest incurred net of $4.8 million of
interest income. The components of interest incurred are detailed in note 15 to
the Consolidated Financial Statements. On a pro forma basis Consolidated
Interest Expense was increased by $3.7 million, representing $8.6 million of
interest incurred on the Debentures net of $2.7 million interest savings on the
repaid debt, less $2.2 million of interest income on the cash balances.
The actual ratio of Consolidated EBITDA to Consolidated Interest Expense
was 3.08 at June 30, 1997. This is approximately double the coverage required
under the Debt Incurrence Provisions in the Indenture. On a pro forma basis, the
ratio would have been 2.75 times.
Consolidated Net Debt was $431.3 million at June 30, 1997. On a pro forma
basis Consolidated Net Debt was increased by $2.2 million, representing the
reduction in cash due to the assumed fees and costs of this offering.
Consolidated Net Tangible Assets were $940.9 million at June 30, 1997, and on a
pro forma basis Consolidated Net Tangible Assets were the same amount.
The actual ratio of Consolidated Net Debt to Consolidated Net Tangible
Assets was 45.84% at June 30, 1997, below the ratio of 60% required under the
Debt Incurrence Provisions in the Indenture. The Company generally expects this
ratio to rise during its first and second fiscal quarters due to the seasonality
of ski and resort operations and the construction of real estate projects.
During the third and to a lesser degree fourth quarters, when the resorts
generate approximately 80% of their revenues and construction is completed on
real estate projects, the Company expects this ratio to decline. On a pro forma
basis, the ratio of Consolidated Net Debt to Consolidated Net Tangible Assets
would have been marginally higher at 46.07%.
13
<PAGE> 15
DETAILS OF THE OFFERING
The following is a summary of the principal terms and conditions of the
Debentures and of the Indenture under which they will be issued. This summary
does not purport to be complete. For full particulars, reference should be made
to the Indenture. Certain of the terms used herein are defined under "Certain
Definitions" below. In this section, references to the "Company" refer to
Intrawest Corporation alone and do not refer to Intrawest Corporation and its
subsidiaries together with their respective interests in joint ventures or
partnerships.
INDENTURE
The Debentures will be issued under an indenture (the "Indenture") to be
dated as of November 17, 1997 between the Company and Montreal Trust Company of
Canada, as trustee (the "Trustee").
INTEREST RATE AND MATURITY
The Debentures will be limited to an aggregate principal amount of $125
million, will be dated the date of the Indenture and will mature on December 2,
2002. Each Debenture will bear interest at the rate of 6.85% per annum from the
date of the Indenture, payable semi-annually in arrears, on June 2 and December
2 in each year, commencing on June 2, 1998. The interest payable in respect of
the Debentures on June 2, 1998 will be such amount as has accrued from the date
of closing to June 2, 1998.
PAYMENT PROVISIONS
Interest on the Debentures will be mailed or otherwise delivered by the
Trustee to registered holders of the Debentures. At maturity, the principal of
the Debentures will be payable at the main branch of a Canadian chartered bank
to be specified in the Indenture.
RANK
The Debentures will be direct unsecured and unsubordinated obligations of
the Company and will not be secured by any mortgage, pledge, hypothec or other
charge. Subject to certain statutorily preferred exceptions, the Debentures will
rank pari passu in right of payment with all other present and future unsecured
and unsubordinated indebtedness of the Company.
The Debentures will be unsubordinated obligations of the Company but such
obligations effectively will be subordinated to all existing and future
obligations (including trade payables) of the Company's subsidiaries and
consolidated partnership interests including, without limitation, Debt of
Subsidiaries, which aggregated approximately $349.6 million (excluding
intercorporate Debt) as at September 30, 1997, and effectively will be
subordinated to any preferred shares issued by a subsidiary. In addition, the
Company has outstanding secured Debt, which aggregated approximately $178.4
million as at September 30, 1997, and which, in the event of the enforcement of
the security interests in respect of such Debt, would rank in priority to the
Debentures to the extent of such security interests. The Indenture will contain
covenants imposing limitations on the incurrence of Debt by the Company and the
incurrence of Debt or the issuance of Preferred Shares by Subsidiaries. The
Company's ability to service its indebtedness is dependent on dividends, loans
and other payments from its subsidiaries.
FORM, DENOMINATION AND TRANSFER
The Debentures will be issued in fully registered form in denominations of
$1,000 and integral multiples thereof. The Debentures initially will be
transferable at the principal offices of the Trustee in Toronto and Vancouver.
REDEMPTION
The Debentures will be redeemable, at the option of the Company, in whole
at any time or in part from time to time, upon payment of a redemption price
equal to the greater of (i) the Canada Yield Price and (ii) par, together, in
each case, with accrued and unpaid interest to (but excluding) the date fixed
for redemption. The Company will give notice of redemption at least 10 days but
not more than 60 days before the date fixed for redemption. Where
14
<PAGE> 16
less than all of the outstanding Debentures are to be redeemed, the Debentures
to be so redeemed will be selected by the Trustee by lot or in such other manner
as the Trustee determines.
PURCHASE FOR CANCELLATION
The Company will be entitled to purchase Debentures at any time in the
market (which will include purchase from or through an investment dealer or a
firm holding membership in a recognized stock exchange) or by tender or private
contract at any price. Debentures that are so purchased will be cancelled and
may not be reissued or resold.
CERTAIN COVENANTS
The Indenture will contain covenants, among others, substantially to the
effect set forth below.
LIMITATION ON DEBT AND PREFERRED SHARES
As long as the Debentures remain outstanding, the Company may not incur or
permit any Subsidiary to incur any Debt, and may not permit any Subsidiary to
issue any Preferred Shares, unless:
(i) Consolidated EBITDA to Consolidated Interest Expense Ratio. The ratio
of Consolidated EBITDA to Consolidated Interest Expense for the last
four full fiscal quarters of the Company for which consolidated
financial statements of the Company have been publicly released (the
"Measurement Period"), calculated on a pro forma basis as described
below, would be equal to or greater than 1.5 to 1; and
(ii) Consolidated Net Debt to Consolidated Net Tangible Assets. The
quotient (expressed as a percentage) obtained when (a) the sum of
Consolidated Net Debt and Consolidated Preferred Share Amounts is
divided by (b) Consolidated Net Tangible Assets, each as at the last day
of the Measurement Period, calculated on a pro forma basis as described
below, would be less than or equal to 60%;
(clauses (i) and (ii) above, collectively, being the "Debt Incurrence
Provisions").
The calculation of the Debt Incurrence Provisions shall be made giving pro
forma effect as at the beginning of the Measurement Period to the incurrence or
issuance of the Debt or Preferred Shares to be incurred or issued, as the case
may be, and to all other Debt and Preferred Shares incurred or issued and all
Debt and Preferred Shares eliminated during the Measurement Period or subsequent
to the end of the Measurement Period and to all asset acquisitions and
dispositions that occurred during the Measurement Period or subsequent to the
end of the Measurement Period and without regard to the Limited Recourse Notes
or the assets to which the Limited Recourse Notes relate.
Notwithstanding the foregoing limitation, the Company and any Subsidiary
will be permitted to incur and issue the following:
(i) Debt evidenced by the Debentures;
(ii) Debt of the Company to any Subsidiary and Debt of any Subsidiary to,
or Preferred Shares of any Subsidiary owned by, the Company or another
Subsidiary;
(iii) Debt incurred or Preferred Shares issued by a person and outstanding
at the time such person became a Subsidiary, or such person is merged
into a Subsidiary, or a Subsidiary merges into or consolidates or
amalgamates with such person (in a transaction in which the resulting
entity is or becomes a Subsidiary), excluding Debt or Preferred Shares
incurred or issued as consideration for, or in anticipation of, or to
provide all or any portion of the funds or credit support utilized or
necessary to consummate, the transaction pursuant to which such person
becomes a Subsidiary or such merger, consolidation or amalgamation;
(iv) Debt incurred by the Company or any Subsidiary secured by a lien on an
asset and outstanding at the time such asset was acquired by the Company
or any Subsidiary, excluding Debt incurred in connection with the
transaction pursuant to which such asset was acquired;
(v) Debt of the Company or any Subsidiary incurred under a Qualifying
Construction Loan;
15
<PAGE> 17
(vi) Debt of the Company or any Subsidiary incurred to finance the
estimated costs of development, construction or installation of
recreational or related facilities or amenities of a resort (including
for greater certainty alpine, cross-country or wilderness ski
facilities, golf facilities, employee housing facilities or hotels);
provided that (a) the principal amount of such Debt does not exceed 100%
of such estimated costs plus any expenses to be incurred in connection
with the incurrence of such Debt, (b) all such Debt could have been
incurred under the Debt Incurrence Provisions on the date the first
$1.00 of such Debt was incurred (the "Development Start Date"), and (c)
for purpose of the calculation of the Debt Incurrence Provisions, the
full amount of Debt incurred pursuant to this clause (vi) on or after
the Development Start Date shall be considered to be outstanding as of
the Development Start Date, giving pro forma effect to the utilization
thereof to finance the costs of development, construction or
installation of such facilities or amenities;
(vii) Debt of the Company or any Subsidiary incurred pursuant to any
revolving credit facility existing or committed at the date of the
Indenture or any revolving credit facility which becomes available to
the Company or any Subsidiary after the date of the Indenture; provided
that (a) with respect to any revolving credit facility which becomes
available to the Company or any Subsidiary after the date of the
Indenture, the full amount of such revolving credit facility could have
been incurred pursuant to the Debt Incurrence Provisions as of the date
the first $1.00 of such Debt was incurred, and (b) for purpose of the
calculation of the Debt Incurrence Provisions, the full amount of each
revolving credit facility available to the Company or any Subsidiary
shall be considered to be outstanding as of the later of the date of the
Indenture and the date the first $1.00 of Debt was incurred thereunder,
giving pro forma effect to the utilization thereof (provided further,
that for such purpose any portion of any revolving credit facility not
actually outstanding as of the date the calculations under the Debt
Incurrence Provisions are made, in the case of any revolving credit
facility existing or committed at the date of the Indenture which is not
available specifically for the purpose of financing capital expenditures
and any revolving credit facility which becomes available to the Company
or any Subsidiary after the date of the Indenture for the purpose of
refinancing any such revolving credit facility, shall be considered to
be utilized to repay or retire Debt, and, in any other case, shall be
considered to be utilized to finance capital expenditures);
(viii) Debt of the Company or any Subsidiary which is incurred or Preferred
Shares of any Subsidiary issued in exchange for, or the proceeds of
which are used to renew, extend, repay, redeem, purchase, refinance or
refund (each a "refinancing") any Debt of the Company or any Subsidiary
or Preferred Shares of any Subsidiary outstanding on the date of the
Indenture or permitted to be incurred pursuant to the Debt Incurrence
Provisions, this clause (viii) and clauses (iii), (iv), (vi) and (vii)
above subject to restrictions on the amount of such refinancing and the
ranking thereof; and
(ix) Debt of the Company or any Subsidiary arising by operation of law or
(a) consisting of reimbursement obligations under letters of credit or
similar facilities, (b) in respect of surety bonds and performance bonds
provided in the ordinary course of business, or (c) consisting of
guarantees, indemnities, surety or performance bonds or obligations in
respect of purchase price adjustments in connection with the acquisition
or disposition of assets.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Company may not, and may not permit any Subsidiary to, enter into any
Sale and Leaseback Transaction (other than any Sale and Leaseback Transaction
between the Company and any Subsidiary or between Subsidiaries) unless, at the
time the transaction is entered into, the Company or such Subsidiary, as the
case may be, would be permitted to incur Debt in accordance with the provisions
of the "Limitation on Debt and Preferred Shares" covenant described above equal
to the capitalized amount thereof that would appear at such time on the
consolidated balance sheet of the Company in accordance with generally accepted
accounting principles.
MERGERS, CONSOLIDATIONS AND CERTAIN SALES OF ASSETS
The Company may not, in a single transaction or a series of related
transactions, amalgamate or consolidate with or merge into any other person, or
permit any other person to amalgamate or consolidate with or merge into the
16
<PAGE> 18
Company, or directly or indirectly transfer, sell, lease or otherwise dispose of
all or substantially all of its property and assets to any person, unless:
(i) the Company shall be the surviving person, or the person (if other
than the Company) formed by such amalgamation, consolidation or into
which the Company is merged or that acquires by disposition all or
substantially all of the properties and assets of the Company shall be a
company, partnership or trust organized and validly existing under the
federal laws of Canada or any province or territory thereof or the laws
of the United States of America or any state thereof or the District of
Columbia and shall expressly assume, by a supplemental indenture
executed and delivered to the Trustee in form satisfactory to the
Trustee, all of the Company's obligations under the Indenture and the
Debentures and, in the case of an entity organized otherwise than under
the laws of the Province of British Columbia, shall attorn to the
jurisdiction of the courts of the Province of British Columbia;
(ii) immediately before and after giving effect to such transaction, no
Event of Default or event that with the passing of time or the giving of
notice, or both, would constitute an Event of Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction and treating any
Debt which becomes an obligation of the Company or any Subsidiary or any
person who becomes a successor obligor under the Indenture as a result
of such transaction as having been incurred by the Company or such
Subsidiary or such person at the time of the transaction, the Company or
such person, as the case may be, could incur at least $1.00 of
additional Debt pursuant to the Debt Incurrence Provisions of the
"Limitation on Debt and Preferred Shares" covenant described above; and
(iv) immediately after giving effect to such transaction, on a pro forma
basis, the Company or any person becoming the successor obligor under
the Indenture shall have a Consolidated Net Worth no lower than 90% of
the Consolidated Net Worth of the Company immediately before such
transaction;
provided, however, that clauses (iii) and (iv) above shall not apply to any
transaction between the Company and one or more wholly owned Subsidiaries.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture:
(i) failure to pay any principal on any Debenture when due;
(ii) failure to pay any interest on any Debenture when due, continued for
a period of five business days;
(iii) default in the performance, or breach, of any other covenant or
agreement of the Company under the Indenture or the Debentures,
continued for 30 days after written notice to the Company by the Trustee
or holders of at least 25% in aggregate principal amount of outstanding
Debentures;
(iv) default by the Company or any Subsidiary under the terms of any other
Debt having an outstanding principal amount in excess of $25 million
individually or in the aggregate which default results in the
acceleration of the payment of such Debt (which acceleration has not
been waived or rescinded) or constitutes the failure to pay such Debt at
the final stated maturity thereof provided, however, that for such
purpose Debt shall not include any Debt for which there is no recourse
to any assets of the Company or any Subsidiary other than the assets
subject to a lien securing such Debt;
(v) the rendering of a final judgment or judgments (not subject to appeal)
against the Company or any Subsidiary in an aggregate amount in excess
of $25 million by a court or courts of competent jurisdiction, which
judgment or judgments remain undischarged and unstayed for a period of
30 days after the date on which the right to appeal all such judgments
has expired; and
(vi) certain events of bankruptcy, insolvency or reorganization affecting
the Company or any Principal Subsidiary.
If an Event of Default (other than an Event of Default described in clause
(vi) above) shall occur and be continuing with respect to the Debentures, either
the Trustee or the holders of at least 25% in aggregate principal
17
<PAGE> 19
amount of the outstanding Debentures may accelerate the maturity of all
Debentures; provided, however, that notwithstanding any other provision of the
Indenture, after such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of
outstanding Debentures may rescind and annul such acceleration if all Events of
Default, other than the nonpayment of accelerated principal, have been cured or
waived as provided in the Indenture. If an Event of Default specified in clause
(vi) above occurs, the outstanding Debentures will ipso facto become immediately
due and payable without any declaration or other act on the part of the Trustee
or any holder of a Debenture. For information as to waiver of defaults, see
"Modification and Waiver".
MODIFICATION AND WAIVER
Certain modifications and amendments of the Indenture will require the
approval of holders of not less than 66 2/3% of the outstanding principal amount
of Debentures, provided that the approval of holders of 90% of the outstanding
principal amount of Debentures will be required to (a) change the stated
maturity of the principal of, the redemption price of, or any instalment of
interest on, any Debentures, (b) reduce the principal amount of, or interest on,
any Debentures, (c) change the place or currency of payment of principal of,
redemption price of, or interest on, any Debentures, (d) amend the above-stated
percentage of Debentures necessary to modify or amend the Indenture, or (e)
reduce the percentage of the outstanding principal amount of Debentures
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain Events of Default.
The holders of 66 2/3% of the outstanding principal amount of the
Debentures, on behalf of all holders of Debentures, may waive compliance by the
Company with certain restrictive provisions of the Indenture. Subject to certain
rights of the Trustee, as provided in the Indenture, the holders of 66 2/3% of
the outstanding principal amount of the Debentures, on behalf of all holders of
outstanding Debentures, may waive any Event of Default under the Indenture,
except an Event of Default in the payment of principal or interest or an Event
of Default arising from the failure to redeem any Debentures pursuant to a
notice of redemption.
In addition, the Company and the Trustee will be entitled, without the
consent of the Debentureholders, to amend or supplement the Indenture or the
Debentures for certain limited purposes, including any ambiguities, defects or
inconsistencies provided that, in the opinion of the Trustee, the rights of the
Trustee and the Debentureholders would not be prejudiced thereby.
CERTAIN DEFINITIONS
Certain of the defined terms used in this Prospectus will be defined in the
Indenture substantially as follows. Reference is made to the Indenture for the
full definition of all such terms, as well as any other terms used herein for
which no definition is provided.
"Canada Yield Price" of any Debentures to be redeemed means a price equal
to the price of such Debentures (excluding accrued and unpaid interest)
calculated to provide a yield per annum to maturity, compounded semi-annually
and calculated in accordance with generally accepted financial practice in
Canada from time to time, equal to the Government of Canada Yield plus 0.40%
calculated at 10:00 a.m. (Toronto time) on the third business day prior to the
date fixed for redemption of such Debentures.
"Capital Lease Obligation" of any person means the obligation of such
person to pay rent or other payment amounts under a lease of (or other Debt
arrangement conveying the right to use) real or personal property which, in
accordance with generally accepted accounting principles, is required to be
classified and accounted for as a capital lease or a liability and would appear
as a dollar amount on the face of a consolidated balance sheet of such person.
"Consolidated Debt" means, as at any date, consolidated Debt of the Company
as at such date determined in accordance with generally accepted accounting
principles.
"Consolidated EBITDA" means, for any period, the consolidated revenues less
the consolidated expenses of the Company for such period, plus (i) Consolidated
Interest Expense for such period, plus (ii) capitalized interest which is
charged through cost of goods sold in determining the consolidated revenues less
the consolidated expenses of the Company for such period, plus (iii)
consolidated income tax expense of the Company for such period (other than
income taxes (either positive or negative) attributable to extraordinary or
non-recurring gains or losses), plus (iv) consolidated depreciation expense of
the Company for such period, plus (v) consolidated amortization expense
18
<PAGE> 20
of the Company for such period, minus (vi) consolidated interest income of the
Company for such period, all as determined in accordance with generally accepted
accounting principles; provided, however, that to the extent taken into account
in determining such amount there shall be excluded therefrom all extraordinary
or non-recurring items.
"Consolidated Interest Expense" means, for any period, the consolidated
interest expense of the Company for such period determined in accordance with
generally accepted accounting principles, including without limitation or
duplication (or, to the extent not so included, with the addition of) (i) the
portion of any Capital Lease Obligation included in Consolidated Debt that is
allocable to interest expense for such period, (ii) interest for such period
that is capitalized and (iii) charges paid or accrued during such period to the
holders of any instruments considered to be quasi-equity in accordance with
generally accepted accounting principles (other than Preferred Shares) issued by
the Company or a Subsidiary to a person other than the Company or a Subsidiary
where the payment of such charges has not been deferred by the issuers of such
instruments to a date subsequent to the end of such period, minus consolidated
interest income of the Company for such period determined in accordance with
generally accepted accounting principles.
"Consolidated Net Debt" means, as at any date, Consolidated Debt as at such
date less consolidated cash and cash equivalents of the Company as at such date
determined in accordance with generally accepted accounting principles.
"Consolidated Net Tangible Assets" means, as at any date, the book value as
at such date of all of the property, both real and personal, of the Company
determined on a consolidated basis in accordance with generally accepted
accounting principles, excluding (i) goodwill, (ii) unamortized Debt financing
discount and expenses and (iii) cash and cash equivalents.
"Consolidated Net Worth" of any person means, as at any date, the
consolidated shareholders' equity of such person as at such date determined in
accordance with generally accepted accounting principles.
"Consolidated Preferred Share Amounts" means, as at any date, the amount of
all Preferred Shares of all Subsidiaries determined in accordance with generally
accepted accounting principles and which would appear as a dollar amount on the
face of the consolidated balance sheet of the Company as at such date.
"Debt" means (without duplication), with respect to any person, (i) every
obligation of such person for money borrowed by such person, (ii) every
obligation of such person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of any business, property or other assets, (iii) every Capital Lease Obligation
of such person and (iv) every obligation of the type referred to in clauses (i)
to (iii) of another person the payment of which such person has guaranteed or
for which such person is responsible or liable, in each case determined in
accordance with generally accepted accounting principles, provided, however,
that (v) any debt in respect of any co-ownership arrangement, joint venture,
partnership, limited liability company or other similar entity which is
guaranteed by such person shall only be considered to be Debt to the extent of
such person's interest in such co-ownership arrangement, joint venture,
partnership, limited liability company or other similar entity until such time
as the guarantee is called upon in which case the amount demanded under the
guarantee shall be considered to be Debt at the time of the demand, unless such
co-ownership arrangement, joint venture, partnership, limited liability company
or other similar entity would be accounted for on a fully consolidated basis in
the consolidated financial statements of the Company in accordance with
generally accepted accounting principles and (vi) there shall be excluded
therefrom all IPP Excluded Debt.
"generally accepted accounting principles" means generally accepted
accounting principles in effect in Canada as at the date of the Indenture and,
to the extent adopted by the Company in its consolidated financial statements as
at and for the year ended June 30, 1997, consistent therewith.
"Government of Canada Yield" means, on any date, the yield per annum to
maturity on such date, compounded semi-annually and calculated in accordance
with generally accepted financial practice in Canada from time to time, which a
non-callable Government of Canada Bond would carry if issued, in Canadian
dollars in Canada, at 100% of its principal amount on such date with a term to
maturity approximately equal to the remaining term to maturity, calculated as of
the redemption date, of the Debentures, such yield per annum to maturity being
the average of the yields provided by two major Canadian investment dealers
selected by the Company.
19
<PAGE> 21
"IPP Excluded Debt" means up to $41 million of liabilities of the Company
and its Subsidiaries under the IPP Guarantees, provided that in the event there
is any demand made against the Company or any Subsidiary under any of the IPP
Guarantees, the IPP Excluded Debt shall thereafter be permanently reduced to $0.
"IPP Guarantees" means all liabilities of the Company or any Subsidiary
from time to time in respect of obligations of Intracorp Properties Partnership
or Intracorp Properties Partnership U.S. or any corporation, partnership or
other entity in which either of them have any interest, arising pursuant to the
Asset Purchase Agreement dated August 3, 1994 between the Company and Intracorp
Properties Partnership or the Partnership Interests Purchase Agreement made the
4th day of August, 1994 between Intrawest U.S.A., Inc. and IntraCo Holdings
Partnership and executed by Intracorp Properties Partnership U.S., in each case
as amended and in effect from time to time.
"Limited Recourse Notes" means certain limited recourse notes of Copper
Mountain, Inc. in the original amount of US $15.8 million that are secured by
and provide for recourse only to certain leasehold interests in condominium
projects at Copper Mountain in Colorado which are to be sold to tenants and
under which amounts equivalent to rent received are payable as interest and the
net proceeds from the sale of units and commercial space are payable as
principal.
"Preferred Shares" means shares of a Subsidiary of any class or classes
(however designated) that rank prior, as to payment of dividends or as to
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding-up of such Subsidiary, to shares of any other class of
such Subsidiary.
"Principal Subsidiaries" means Intrawest Resort Corporation (a corporation
formed on October 31, 1997 by the amalgamation of Intrawest Resort Corporation,
Blackcomb Mountain Properties Ltd., Blackcomb Skiing Enterprises Ltd., Whistler
Mountain Holdings Limited, Whistler Mountain Ski Corporation, IW Resorts Ltd.
and Mont Ste. Marie (1984) Inc.), Blackcomb Skiing Enterprises Limited
Partnership, Whistler Mountain Resort Limited Partnership, Mont Tremblant
Resorts and Company, Limited Partnership, Intrawest Resort Ownership
Corporation, Intrawest U.S. Holdings Inc., Stratton Ski Corporation, Snowshoe
Resort, Inc. and Copper Mountain, Inc. and any other Subsidiary the Consolidated
Net Worth of which at any time after the date of the Indenture shall constitute
more than 10% of the Consolidated Net Worth of the Company; provided that (i) if
any Principal Subsidiary shall transfer any material assets to another
Subsidiary, such transferee shall become a Principal Subsidiary and (ii) for the
greater certainty, a Subsidiary that is or becomes a Principal Subsidiary at any
time on or after the date of the Indenture shall not cease to be a Principal
Subsidiary because from time to time it does not constitute more than 10% of the
Consolidated Net Worth of the Company.
"Project" means a residential or resort development project (or, in the
case of any such project which is being developed in phases, any particular
phase thereof), including for greater certainty houses, townhomes, multiple unit
residences, timeshare buildings, strata-titled hotels and mixed-use buildings
which are comprised of one or more of the foregoing types of facilities and
commercial space, together, in each case, with ancillary amenities and
facilities.
"Qualifying Construction Loan" means a loan (i) with a term to maturity of
18 months or less, (ii) the proceeds of which are used to finance the cost of
development or construction of a Qualifying Project and (iii) which is advanced
by a financial institution dealing with the Company at arm's length.
"Qualifying Project" means a Project in respect of which (i) the aggregate
estimated development or construction costs do not exceed $7,500,000 in the case
of a Project in Canada or US $7,500,000 in the case of a Project outside Canada,
provided that the aggregate estimated development or construction costs for all
Projects permitted pursuant to this clause (i) at any time shall not exceed
$40,000,000, or (ii) substantially all space other than commercial space and
common areas is being developed for sale and purchase and sale agreements
acceptable to the financial institution providing the applicable Qualifying
Construction Loan have been entered into representing aggregate sales revenues
equal to at least 50% of the aggregate estimated development or construction
costs of such Project.
"Sale and Leaseback Transaction" of any person means an arrangement with
any lender or investor or to which any lender or investor is a party providing
for the leasing by such person of any property or asset of such person for a
term, including renewal terms at the option of the lessor, of three years or
more and which property or asset has been or is being sold or transferred by
such person more than 270 days after the acquisition thereof or the completion
of construction or commencement of operation thereof to such lender or investor
or to any person to whom funds have
20
<PAGE> 22
been or are to be advanced by such lender or investor on the security of such
property or asset. The term of such arrangement shall be deemed to expire on the
date of the last payment of rent or any other amount due under such arrangement
prior to the first date on which such arrangement may be terminated by the
lessee without payment of a penalty.
"Subsidiary" means (i) a company more than 50% of the voting power of the
outstanding voting shares of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries or by the Company and one or more
other Subsidiaries or (ii) any other person (other than a corporation) in which
the Company or one or more other Subsidiaries or the Company and one or more
Subsidiaries, directly or indirectly, has at least a majority ownership and
power to direct the policies, management and affairs thereof.
CREDIT RATINGS
The Debenture have been assigned a provisional rating of B+(High) by CBRS
and BB(high) by DBRS. CBRS and DBRS rate debt instruments by nine rating
categories from a high of A++ to a low of D in the case of CBRS and from a high
of AAA to a low of C in the case of DBRS with the "(low)" and "(high)"
designations indicating relative strength within the rating category.
Prospective purchasers of the Debentures should consult the rating agencies with
respect to the interpretation of the foregoing ratings and the implications of
those ratings. The credit ratings accorded to the Debentures are not
recommendations to buy, sell or hold any securities of the Company and may be
subject to revision or withdrawal by CBRS or DBRS at any time.
PLAN OF DISTRIBUTION
Pursuant to an agreement (the "Underwriting Agreement") dated November 7,
1997 between the Company and RBC Dominion Securities Inc., TD Securities Inc.,
ScotiaMcLeod Inc. and HSBC James Capel Canada Inc. (collectively, the
"Underwriters"), the Company has agreed to issue and sell and the Underwriters
have agreed to purchase, subject to the terms and conditions contained therein,
an aggregate of $125,000,000 principal amount of Debentures on November 17,
1997, or such other date as may be agreed upon by the Company and the
Underwriters, but, in any event, not later than December 19, 1997, at a price of
$998.65 per $1,000 principal amount of Debentures for total consideration of
$124,831,250 payable in cash against delivery of such Debentures. The
Underwriting Agreement provides that the Company will pay the Underwriters a fee
of $1,875,000 in consideration for the services rendered by the Underwriters
under the Underwriting Agreement. The obligations of the Underwriters under the
Underwriting Agreement are several and not joint and may be terminated upon the
occurrence of certain stated events. The Underwriters are, however, obligated to
take up and pay for all of the Debentures if any are purchased under the
Underwriting Agreement.
The Debentures will be offered to the public at prices to be negotiated
between each purchaser and the Underwriters. Accordingly, the price at which the
Debentures will be offered and sold to the public may vary as between purchasers
and during the period of distribution of the Debentures. The Underwriters'
overall compensation will increase or decrease by the amount by which the
aggregate price paid for the Debentures by purchasers exceeds, or is less, than
the aggregate price paid by the Underwriters to the Company for the Debentures.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under applicable Canadian securities
legislation.
The Debentures have not been, and will not be, registered under the United
States Securities Act of 1933, as amended (the "1933 Act") and, accordingly,
they may not be offered or sold within the United States, except in transactions
exempt from registration requirements of the 1933 Act. The Underwriting
Agreement enables the Underwriters to reoffer and resell the Debentures that
they have acquired pursuant to the Underwriting Agreement to certain qualified
institutional buyers in the United States provided such offers and sales are
made in accordance with Rule 144A adopted under the 1933 Act. Moreover, the
Underwriting Agreement provides that the Underwriters will offer and sell
Debentures outside the United States in accordance with Regulation S adopted
under the 1933 Act.
Until the 40-day period has elapsed after the commencement of the offering
of the Debentures offered hereunder, any offer or sale of such Debentures made
in the United States by a dealer (whether or not participating in this offering)
may violate the registration requirements of the 1933 Act if such offer or sale
is made otherwise than in accordance with Rule 144A adopted under the 1933 Act.
21
<PAGE> 23
The Company has been advised that, in connection with this offering, the
Underwriters may effect transactions which stabilize or maintain the market
price of the Debentures at a level above that which might otherwise prevail in
the open market. Such transactions, if commenced, may be discontinued at any
time.
ScotiaMcLeod Inc., one of the Underwriters, is a subsidiary of a Canadian
chartered bank which is a lender of debt to the Company, a portion of which is
to be reduced on an interim basis through the initial application of a portion
of the net proceeds of this offering. As a result, the Company may be considered
to be a "connected issuer" of ScotiaMcLeod Inc. within the meaning of applicable
Canadian securities legislation. Intrawest has debt relating to its ski and
resort operations and project debt outstanding with the lender which controls
ScotiaMcLeod Inc. which at September 30, 1997 amounted to approximately $65.6
million. The debt relating to ski and resort operations is secured by, among
other things, fixed charges on assets related to such operations and the real
estate project debt is secured by fixed charges on specific properties. The
Company is in compliance with the terms of the agreements governing all of such
debt. The Company intends to use approximately $50 million of the net proceeds
of this offering to reduce such debt on an interim basis under one of the
Company's revolving credit facilities. Neither ScotiaMcLeod Inc. nor the
Canadian chartered bank which controls such Underwriter was involved in the
Company's decision to distribute the Debentures offered hereunder. ScotiaMcLeod
Inc., together with the other Underwriters, negotiated the offering price with
the Company.
RISK FACTORS
In addition to the other matters set forth or incorporated by reference in
this Prospectus, the following factors should be considered carefully in
evaluating an investment in the Debentures offered by this Prospectus.
CORPORATE STRUCTURE; STRUCTURAL SUBORDINATION
Substantially all of the Company's business activities and assets are
operated or held by its subsidiaries and partnerships in which it has an
interest. Accordingly, the Company's principal source of cash to meet debt
service and other operating obligations (including payments on the Debentures)
are dividends, loans and other payments from its subsidiaries and partnerships
in which it has an interest. As a result of the corporate structure and the fact
that the holders of the Debentures will have no direct claim against the
Company's subsidiaries and partnerships in which it has an interest, whether as
a result of a guarantee or otherwise, the Debentures are effectively
subordinated in right of payment and junior to all liabilities (including trade
payables) of the Company's subsidiaries and consolidated partnerships interests.
In addition, the Company has outstanding secured debt which, in the event of the
enforcement of the security interests in respect of such debt, would rank in
priority to the Debentures to the extent of such security interests.
As at September 30, 1997, after giving effect to the offering of the
Debentures and the application of the estimated net proceeds therefrom, the
Company and its Subsidiaries would have had outstanding approximately $663.2
million of Debt (excluding intercorporate Debt), $478.0 million of which is
secured Debt or Debt of Subsidiaries which effectively would rank in priority to
the Debentures. In addition, as at such date, and after giving such effect, the
Company and its Subsidiaries would have had undrawn commitments under existing
revolving credit facilities of approximately $103.4 million, all of which would
have been for secured Debt or Debt of Subsidiaries which effectively would rank
in priority to the Debentures. The Indenture will contain covenants imposing
limitations on the incurrence of Debt by the Company and the incurrence of Debt
or issuance of Preferred Shares by Subsidiaries.
ABSENCE OF PUBLIC MARKET
There is no existing public market for the Debentures, nor can there be any
assurance that a public market will develop. The Company does not intend to list
the Debentures on any securities exchange.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of McCarthy Tetrault, counsel to the Company, and Stikeman,
Elliott, counsel to the Underwriters, the following is a summary of the material
Canadian federal income tax consequences generally applicable to a purchaser of
Debentures pursuant to this Prospectus who for the purposes of the Income Tax
Act
22
<PAGE> 24
(Canada) (the "Tax Act") at all relevant times is a resident of Canada, deals at
arm's length with the Company and holds the Debentures as capital property (a
"Holder"). This summary is not applicable to (a) Holders who are "financial
institutions" (as defined in the Tax Act) for the purpose of the
"mark-to-market" rules in the Tax Act and (b) Holders who are exempt from
taxation under Part I of the Tax Act. Such Holders should consult their own tax
advisors with respect to their particular circumstances.
This summary is based on the current provisions of the Tax Act and the
regulations thereunder, all specific proposals to amend the Tax Act and the
regulations publicly announced by or on behalf of the Minister of Finance prior
to the date hereof, and counsels' understanding of the published administrative
practices of Revenue Canada. This summary is not exhaustive of all possible
Canadian federal income tax considerations and does not take into account or
anticipate any other changes in the law, whether by judicial, governmental or
legislative decision or action, nor does it take into account provincial,
territorial or foreign income tax considerations.
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, NOR
SHOULD IT BE INTERPRETED AS, LEGAL OR TAX ADVICE TO ANY PARTICULAR HOLDER, AND
NO REPRESENTATIONS ARE MADE WITH RESPECT TO THE CANADIAN INCOME TAX CONSEQUENCES
TO ANY PARTICULAR HOLDER. ACCORDINGLY, PROSPECTIVE PURCHASERS OF THE DEBENTURES
SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR PARTICULAR
CIRCUMSTANCES.
INTEREST ON THE DEBENTURES
A Holder of a Debenture that is a corporation, partnership, unit trust or
any trust of which a corporation or partnership is a beneficiary must include,
in computing income for any taxation year, the amount of interest that accrued
on the Debenture to the end of that taxation year or that became receivable or
was received by it before the end of that taxation year, except to the extent
that the interest was included in computing the Holder's income for a preceding
taxation year.
Any other Holder of a Debenture, including an individual, must include, in
computing income for each taxation year, the amount of interest received or
receivable on the Debenture by the Holder in that taxation year (depending upon
the method regularly followed by the Holder in computing income), except to the
extent that such interest was included in computing the Holder's income for a
preceding taxation year.
DISPOSITION
On a disposition of a Debenture, including a redemption or purchase for
cancellation by the Company, the Holder will generally be required to include in
computing income in the year of disposition an amount equal to the interest that
accrued on the Debentures from the last interest payment date to the date of
disposition, to the extent that such amount was not otherwise included in income
for the year or a preceding taxation year. Any premium paid by the Company to a
Holder because the Company exercises its right to redeem Debentures before the
maturity thereof will be deemed to be interest received at that time by the
Holder to the extent that such premium can reasonably be considered to relate
to, and does not exceed the value at the time of the redemption of, interest
that would otherwise have been paid or payable by the Company on the Debentures
for taxation years ending after the redemption.
In general, a disposition of a Debenture, including a redemption or
purchase for cancellation by the Company, will give rise to a capital gain (or a
capital loss) to the extent that the Holder's proceeds of disposition (exclusive
of amounts included in the Holder's income as interest to the date of the
disposition and any reasonable costs of disposition) exceed (or are less than)
the Holder's adjusted cost base of the Debenture.
Generally, three-quarters of the amount of any capital gain (a "taxable
capital gain") realized by a Holder in a taxation year on the disposition of a
Debenture must be included in income in that year, and three-quarters of the
amount of any capital loss (an "allowable capital loss") realized by a Holder in
a taxation year on the disposition of a Debenture may be deducted from taxable
capital gains realized by the Holder in that year. Allowable capital losses in
excess of taxable capital gains may be carried back and deducted in any of the
three preceding taxation years or carried forward and deducted in any following
taxation year against net taxable capital gains realized in such years to the
extent and under the circumstances described in the Tax Act.
23
<PAGE> 25
A Holder that is a "Canadian-controlled private corporation" (as defined in
the Tax Act) may be liable for an additional refundable tax of 6 2/3% on
investment income, including an amount in respect of interest and capital gains
in respect of the Debentures.
LEGAL MATTERS
Certain legal matters relating to the Debentures offered by this Prospectus
will be passed upon at the date of closing on behalf of the Company by McCarthy
Tetrault and on behalf of the Underwriters by Stikeman, Elliott.
The partners and associates of McCarthy Tetrault own in the aggregate less
than 1.0% of the outstanding common shares of the Company. The partners and
associates of Stikeman, Elliott own in the aggregate less than 1.0% of the
outstanding common shares of the Company.
PURCHASERS' STATUTORY RIGHTS
Securities legislation in certain of the provinces of Canada provides
purchasers with the right to withdraw from an agreement to purchase securities
within two business days after receipt or deemed receipt of a prospectus and any
amendment. In several of the provinces, securities legislation further provides
a purchaser with remedies for rescission or, in some jurisdictions, damages
where the prospectus and any amendment contains a misrepresentation or is not
delivered to the purchaser, provided that such remedies for rescission or
damages are exercised by the purchaser within the time limit prescribed by the
securities legislation of the purchaser's province. The purchaser should refer
to any applicable provisions of the securities legislation of the purchaser's
province for the particulars of these rights or consult with a legal adviser.
24
<PAGE> 26
CERTIFICATE OF THE COMPANY
Dated: November 7, 1997
The foregoing, together with the documents incorporated herein by reference
and the information deemed to be incorporated herein by reference, constitutes
full, true and plain disclosure of all material facts relating to the securities
offered by this Prospectus as required by the securities laws of the provinces
of Canada and, for purposes of the Securities Act (Quebec), does not contain any
misrepresentation likely to affect the value or the market price of the
securities to be distributed.
<TABLE>
<S> <C>
(signed) JOE S. HOUSSIAN (signed) DANIEL O. JARVIS
Chairman, President and Chief Executive Officer Executive Vice President and Chief Financial
Officer
On behalf of the Board of Directors
(signed) GORDON H. MACDOUGALL (signed) CHARLES E. YOUNG
Director Director
</TABLE>
25
<PAGE> 27
CERTIFICATE OF THE UNDERWRITERS
Dated: November 7, 1997
To the best of our knowledge, information and belief, the foregoing,
together with the documents incorporated herein by reference and the information
incorporated herein by reference, constitutes full, true and plain disclosure of
all material facts relating to the securities offered by this Prospectus as
required by the securities laws of the provinces of Canada and, for purposes of
the Securities Act (Quebec), does not contain any misrepresentation likely to
affect the value or the market price of the securities to be distributed.
<TABLE>
<S> <C>
RBC DOMINION SECURITIES INC. TD SECURITIES INC.
By: (signed) DAVID E. SCOTT By: (signed) LEE DAVIS
</TABLE>
SCOTIAMCLEOD INC.
By: (signed) DANIEL F. SULLIVAN
HSBC JAMES CAPEL CANADA INC.
By: (signed) MARK A. WEISDORF
The following includes the names of every person or company having an
interest, directly or indirectly, to the extent of not less than 5% in the
capital of:
RBC DOMINION SECURITIES INC.: a majority owned subsidiary of a Canadian
chartered bank.
TD SECURITIES INC.: a wholly owned subsidiary of a Canadian chartered bank.
SCOTIAMCLEOD INC.: a wholly owned subsidiary of a Canadian chartered bank.
HSBC JAMES CAPEL CANADA INC.: a wholly owned subsidiary of a Canadian chartered
bank.
26
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the
undersigned, thereunto duly authorized.
Date: November 7, 1997
INTRAWEST CORPORATION
By /s/ ROSS MEACHER
-----------------------------------------
Name: Ross Meacher
Title: Corporate Secretary
