Fortress Investment Group is trying to prevent two of its portfolio companies from spiralling into bankruptcy, according to the Financial Times. Fortress declined to comment.
The publicly listed firm, which last month decided not to issue a dividend, is trying to preserve Intrawest, a ski resort company that has $1.6 billion in debt coming due on 23 October, and Gagfah, a German real estate company that is seeking to raise equity to comply with its debt obligations.
Gagfah said in a statement Friday that it had no need to raise additional equity or debt. The company said its debt begins maturing in 2010, and the bulk of the company’s debt matures in 2013.
“There is no truth whatsoever to today’s report rumours,” Gagfah said.
Fortress bought Intrawest, which owns the prominent Vancouver ski resort, Whistler Blackcomb, in 2006 for $2.8 billion. Whistler will be among the host venues for the 2010 Winter Olympics. Fortress bought Gagfah, a former German state-owned housing group, in 2004 in a €3.5 billion deal.
Fortress has approached potential and existing lenders about a refinancing of $1.4 billion of Intrawest’s senior debt, the FT reported. Fortress is injecting $100 million to shore up the company’s equity value. There is a small chance the company will file for bankruptcy, the article said. Investors in Gagfah were asked to provide additional capital to help the company meet the terms of its debt, the report added.
Fortress last month said it would not issue a dividend for the third quarter in an attempt to shore up its capital base and invest in the financial services sector. The decision came amid a significant slowdown in the firm’s fundraising.
New capital devoted to Fortress’ private equity franchise dropped 71 percent for the 12-month period ending on 30 July, compared with the same period last year, although the firm grew its total assets under management by 23 percent in that time.
Across all of Fortress’ investment vehicles, the firm raised about $2.2 billion in the three months ending 30 June, down from $5.9 billion in the same period in 2007. Earlier this year, Fortress held a roughly $500 million first close on its sixth private equity fund. The firm did not disclose the target for the vehicle, but its fifth buyout fund closed on $5 billion last year.