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9/12/02 Rocky Mtn. News IB

2002 WL 9112338

Thursday, September 12, 2002

Business

VAIL UNLIKELY TO STOP WINTER PARK DEAL

David Kesmodel ROCKY MOUNTAIN NEWS kesmodeld@RockyMountainNews.com or (303}892-2514 SEE END OF TEXT FOR INFOBOX

Vail Resorts Inc. does not appear to have a strong-enough case to thwart Intrawest Corp.'s takeover of Winter Park Resort, legal experts say.

Vail has threatened to sue Intrawest over the Canadian company's proposed pact with Denver to operate and redevelop the city- owned resort. Vail says the deal appears to violate a noncompete clause in its contract with Intrawest for real estate development at Vail's Keystone Resort.

Terms of the Winter Park deal were announced last week, reflecting Denver's plan to make the ski resort more competitive in an industry dominated by deep-pocketed operators such as Vail.

Avon-based Vail says Intrawest agreed, as part of the rivals' 1994 Keystone accord, not to develop competing real estate within five miles of any ski resort in Grand County unless it obtained a "controlling interest" in the resort. Vail says Intrawest wouldn't have a controlling stake at Winter Park because Denver would own the resort.

Intrawest counters that, while it would lease the resort from Denver, it would assume all the financial risk and pay all resort costs. The lease would run up to 76 years.

"Without having reviewed any documents, I would think a judge would conclude that Intrawest (would have) a controlling interest in Winter Park," said John Dunn, an Avon lawyer who has litigated cases involving noncompete agreements. "Intrawest would be assuming the risk of whether Winter Park is going to make money for the long term."

Intrawest plans to inject $99 million into the resort over 10 years.

Mark Lowenstein, a professor at the University of Colorado School Of Law, said he had not reviewed any legal documents but that Intrawest's Winter Park role "would seem to qualify as controlling interest."

Experts said Vail's beef with Vancouver, British Columbia-based Intrawest, owner of Copper Mountain Resort, could raise antitrust concerns.

Vail "narrowly dodged the bullet" on antitrust issues when it bought Keystone and Breckenridge in 1997, and a judge likely would look closely at "fairness issues" of any attempt to block the Winter Park deal, said Jim Chalat, a ski law expert.

Vail’s four Colorado resorts accounted for 43 percent of the state’s skier visits in 2001-2002.

Tom Russell, a professor at the University Of Denver College Of Law, said courts prefer competition and that a judge likely would read the Vail-Interwest noncompete pact “very narrowly.”

"If this partnership contract between Intrawest and Vail is vague, then the vagueness will hurt Vail's claim," he said.

Russell also said that many ski resorts operate on U.S. Forest Service land including Winter Park - "so the issue of 'controlling interest' can't be land ownership."

Vail has repeatedly expressed its concerns about the winter Park deal to Denver and Intrawest officials, said Porter Wharton III, a Vail senior vice president. Any such deal must be approved by Denver City Council.

Vail has retained Denver law firm Brownstein Hyatt & Farber on the matter.

There's no arbitration clause in the Vail-Intrawest contract, so a lawsuit would go to a judge. Vail would likely sue in Summit County District Court, Dunn said.

INFOBOX

Vail Resorts Inc. Avon, Colorado

NYSE: MTN

Holdings outside Colorado: Grand Teton Lodge Co. (Jackson Hole, Wyo.); The Lodge at Rancho Mirage (Rancho Mirage, Calif.); Heavenly Ski Resort (Calif. /Nev.)

Employees: About 14,000 (peak season)

2001 total ski visits: 5 million

2001 revenue: $559.3 million

2001 net income: $18.7 million, or 53 cents per share (Fiscal year ended July 31, 2001)

Stock performance: 52-week high: $21.80; 52-week low: $12.95; Wednesday close: $16.11

Intrawest Corp. Vancouver, British Columbia

NYSE: IDR

Top Colorado Interests: Copper Mountain Resort; Keystone Real Estate Developments

(in partnership with Vail Resorts); Snowmass Village; Three Peaks at Silverthorne; Winter Park (pending)

Holdings outside Colorado: Whistler Blackcomb (British Columbia); Tremblant (Mont Tremblant, Quebec); Stratton Mountain (Vt.); Panorama Mountain village (British Columbia); Mammoth Mountain (Calif.)

Employees: About 20,000 (peak season)

2001 total ski visits: 7 million

2001 revenue: $922.8 million

2001 net income: $50.7 million, or $1.15 per share (Fiscal year ended June 31, 2001)

Stock performance: 52-week low: $12.00; Wednesday close: $14.29