AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 12, 2003
REGISTRATION NO. 333-110856
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM F-10
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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INTRAWEST CORPORATION
(Exact name of Registrant as specified in its charter)
CANADA 7011 NOT APPLICABLE
(Province or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
SUITE 800, 200 BURRARD STREET, VANCOUVER, BRITISH COLUMBIA, CANADA V6C 3L6 (604)
669-9777
(Address and telephone number of Registrant's principal executive offices)
PTSGE CORP., SUITE 2900, 925 FOURTH AVENUE, SEATTLE, WASHINGTON 98104 (206)
623-7580
(Name, address and telephone number of agent for service in the United States)
------------------------------------
COPIES TO:
RICHARD J. BALFOUR ROSS J. MEACHER GARY. J. KOCHER
MCCARTHY TETRAULT LLP INTRAWEST CORPORATION CHRISTOPHER H. CUNNINGHAM
Suite 1300 Suite 800 PRESTON GATES & ELLIS LLP
777 Dunsmuir Street 200 Burrard Street Suite 2900
Vancouver, B.C., Canada, V7Y 1K2 Vancouver, B.C., Canada, V6C 3L6 925 Fourth Avenue
(604) 643-7100 (604) 669-9777 Seattle, WA 98104
(206) 623-7580
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
PROVINCE OF BRITISH COLUMBIA, CANADA
(Principal jurisdiction regulating this offering)
It is proposed that this filing shall become effective (check appropriate box):
A. [X] Upon filing with the Commission, pursuant to Rule 467(a) (if in
connection with an offering being made contemporaneously in the United
States and Canada).
B. [ ] At some future date (check appropriate box below).
1. [ ] Pursuant to Rule 467(b) on ( ) at ( ) (designate a
time not sooner than seven calendar days after filing).
2. [ ] Pursuant to Rule 467(b) on ( ) at ( ) (designate a
time seven calendar days or sooner after filing) because the
securities regulatory authority in the review jurisdiction has
issued a receipt or notification of clearance on ( ).
3. [ ] Pursuant to Rule 467(b) as soon as practicable after notification
of the Commission by the Registrant or the Canadian securities
regulatory authority of the review jurisdiction that a receipt or
notification of clearance has been issued with respect hereto.
4. [ ] After the filing of the next amendment to this form (if preliminary
material is being filed).
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to the home jurisdiction's shelf
prospectus offering procedures, check the following box. [ ]
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PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
[Intrawest Logo] US$350,000,000
INTRAWEST CORPORATION
7.50% SENIOR NOTES DUE OCTOBER 15, 2013
------------------------
Intrawest Corporation (the "Company") hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (the "Letter of Transmittal", which together with this
Prospectus constitute the "Exchange Offer"), to exchange an aggregate principal
amount up to US$350,000,000 of 7.50% Senior Notes due October 15, 2013 of the
Company (the "Exchange Notes"), which are being registered under the United
States Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
registration statement (the "Registration Statement") of which this Prospectus
constitutes a part, and qualified for distribution under this Prospectus in the
Provinces of British Columbia and Ontario in Canada (the "Qualifying
Provinces"), for a like principal amount of the issued and outstanding
US$350,000,000 aggregate principal amount of 7.50% Senior Notes due October 15,
2013 of the Company which were issued on October 9, 2003 (the "Original Notes"),
with the holders thereof. The Exchange Notes and the Original Notes are
collectively referred to herein as the "Notes."
The Exchange Notes are offered hereunder in order to satisfy certain
obligations of the Company under the Exchange and Registration Rights Agreement
dated October 9, 2003 (the "Registration Rights Agreement") among the Company
and the initial purchasers of the Original Notes (the "Initial Purchasers").
The Exchange Notes will evidence the same debt as the Original Notes and
will be issued, and holders thereof will be entitled to the same rights as
holders of the Original Notes, under the Indenture (as defined herein) governing
the Notes. The terms of the Exchange Notes are identical in all material
respects to the Original Notes except for certain transfer restrictions and
registration rights relating to the Original Notes and except that, in the event
of a Registration Default (as defined herein), special interest, in addition to
the interest set forth below, shall accrue on the Original Notes at a per annum
rate of 0.5% for the first 90 days of the Registration Default Period (as
defined herein) and at a per annum rate of 1.0% thereafter for the remaining
portion of the Registration Default Period. Upon cure of the Registration
Default, the special interest shall no longer accrue and the Original Notes will
bear interest at the original rate; provided, however, that if, after any such
cure, a different Registration Default occurs, then special interest shall again
accrue in accordance with the foregoing provisions. See "Description of the
Notes -- Exchange Offer; Registration Rights."
THIS OFFERING IS MADE BY A CANADIAN ISSUER THAT IS PERMITTED, UNDER A
MULTIJURISDICTIONAL DISCLOSURE SYSTEM ADOPTED BY THE UNITED STATES, TO PREPARE
THIS PROSPECTUS IN ACCORDANCE WITH THE DISCLOSURE REQUIREMENTS OF CANADA.
PROSPECTIVE INVESTORS SHOULD BE AWARE THAT SUCH REQUIREMENTS ARE DIFFERENT FROM
THOSE OF THE UNITED STATES. THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED OR
INCORPORATED HEREIN HAVE BEEN PREPARED IN ACCORDANCE WITH CANADIAN GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES, AND ARE SUBJECT TO CANADIAN AUDITING AND AUDITOR
INDEPENDENCE STANDARDS, AND THUS MAY NOT BE COMPARABLE TO FINANCIAL STATEMENTS
OF UNITED STATES COMPANIES.
PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THE ACQUISITION OF THE SECURITIES
DESCRIBED HEREIN MAY HAVE TAX CONSEQUENCES BOTH IN THE UNITED STATES AND IN
CANADA. SUCH CONSEQUENCES FOR INVESTORS WHO ARE RESIDENT IN, OR CITIZENS OF, THE
UNITED STATES MAY NOT BE DESCRIBED FULLY HEREIN. SEE "CERTAIN INCOME TAX
CONSEQUENCES."
THE ENFORCEMENT BY INVESTORS OF CIVIL LIABILITIES UNDER THE UNITED STATES
FEDERAL SECURITIES LAWS MAY BE AFFECTED ADVERSELY BY THE FACT THAT THE COMPANY
IS CONTINUED UNDER THE LAWS OF CANADA, THAT SOME OR ALL OF ITS OFFICERS AND
DIRECTORS MAY BE RESIDENTS OF CANADA, THAT SOME OR ALL OF THE EXPERTS NAMED IN
THE REGISTRATION STATEMENT MAY BE RESIDENTS OF CANADA, AND THAT ALL OR A
SUBSTANTIAL PORTION OF THE ASSETS OF THE COMPANY AND SAID PERSONS MAY BE LOCATED
OUTSIDE THE UNITED STATES.
PROSPECTIVE INVESTORS SHOULD BE AWARE THAT, DURING THE PERIOD OF THE
EXCHANGE OFFER, THE COMPANY OR ITS AFFILIATES, DIRECTLY OR INDIRECTLY, MAY BID
FOR OR MAKE PURCHASES OF THE SECURITIES TO BE DISTRIBUTED OR TO BE EXCHANGED, OR
CERTAIN RELATED SECURITIES, AS PERMITTED BY APPLICABLE LAWS OR REGULATIONS OF
CANADA OR ITS PROVINCES OR TERRITORIES.
Interest on the Notes at a per annum rate of 7.50% is payable semi-annually
on April 15 and October 15 of each year, commencing April 15, 2004. The Notes
are redeemable at the option of the Company, in whole or in part, at any time on
or after October 15, 2008 at the redemption prices set forth herein plus accrued
and unpaid interest to the date of redemption. The Notes are also redeemable by
the Company at any time, in whole but not in part, at the option of the Company
at their principal amount plus accrued and unpaid interest to the date of
redemption in the event of certain changes affecting Canadian withholding taxes.
In addition, upon a Change of Control Triggering Event (as defined herein), the
Company is required to offer to purchase all outstanding Notes at a price equal
to 101% of the principal amount thereof, plus accrued and unpaid interest to the
date of repurchase.
The Notes are senior unsecured obligations of the Company, rank pari passu
in right of payment with all other existing and future senior unsecured
obligations of the Company and rank senior in right of payment to all existing
and future obligations of the Company expressly subordinated in right of payment
to the Notes. Holders of secured obligations of the Company will, however, have
claims that are prior to the claims of the holders of the Notes with respect to
the assets securing such obligations. In addition, the Notes are effectively
subordinated to all existing and future indebtedness and other liabilities of
the Company's subsidiaries. As of September 30, 2003, after giving pro forma
effect to the sale of the Original Notes and the application of the net proceeds
thereof, the Company would have had US$760.4 million of senior unsecured
indebtedness and US$50.8 million of senior secured indebtedness, and the
Company's subsidiaries would have had US$777.0 million of liabilities.
(continued on following page)
------------------------
THE TENDER OF ORIGINAL NOTES FOR EXCHANGE NOTES INVOLVES RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 9 HEREOF FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES. NO
"UNDERWRITER" WITHIN THE MEANING OF APPLICABLE CANADIAN SECURITIES LEGISLATION
HAS BEEN INVOLVED IN THE PREPARATION OF THIS PROSPECTUS OR PERFORMED ANY REVIEW
OF THE CONTENTS OF THIS PROSPECTUS.
------------------------
THESE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
The date of this Prospectus is December 12, 2003
The Exchange Notes will be represented by a global Exchange Note
registered in the name of the nominee of The Depository Trust Company ("DTC").
Beneficial interests in the global Exchange Note will be shown on, and transfers
thereof will be effected only through, records maintained by DTC and its
participants. Except as described herein, Exchange Notes in definitive form will
not be issued. See "Description of the Notes -- Transfer, Exchange and
Book-Entry Procedures."
The Company is making the Exchange Offer in reliance on the position of
the staff of the United States Securities and Exchange Commission (the
"Commission") as set forth in certain no-action letters addressed to other
parties in other transactions. However, the Company has not sought its own
no-action letter and there can be no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Offer as in such
other circumstances. Based upon these interpretations by the staff of the
Commission, the Company believes that Exchange Notes issued pursuant to the
Exchange Offer in exchange for Original Notes may be offered for resale, resold
and otherwise transferred by a holder thereof (other than any holder which is
(i) a broker-dealer who purchased such Original Notes directly from the Company
for resale pursuant to Rule 144A or other available exemptions under the
Securities Act, (ii) a broker-dealer who acquired such Original Notes as a
result of market-making or other trading activities or (iii) a person that is an
"affiliate" (as defined in Rule 405 of the Securities Act) of the Company (an
"Affiliate")) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such Exchange Notes. Holders of Original Notes accepting the Exchange Offer for
the purpose of participating in a distribution of the Exchange Notes may not
rely on the position of the staff of the Commission as set forth in these
no-action letters and would have to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transaction. A secondary resale transaction in the United States by a
holder of Original Notes who is using the Exchange Offer to participate in the
distribution of Exchange Notes must be covered by an effective registration
statement containing the selling securityholder information required by Item 507
of Regulation S-K under the Securities Act.
Each broker-dealer (other than an Affiliate of the Company) that receives
Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it acquired the Original Notes as a result of market-making
activities or other trading activities and that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging,
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act even though it
may be deemed to be an underwriter for purposes thereof. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Original
Notes where such Original Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period ending on the earlier of the 180th day after the Exchange
Offer has been completed or such time as broker-dealers no longer own any
Registrable Securities (as defined in the Registration Rights Agreement), it
will make this Prospectus, as amended or supplemented, available to any such
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." Any broker-dealer who is an Affiliate of the Company may not rely
on such no-action letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transactions.
THERE IS CURRENTLY NO MARKET THROUGH WHICH THE EXCHANGE NOTES MAY BE SOLD
AND HOLDERS MAY NOT BE ABLE TO RESELL EXCHANGE NOTES DISTRIBUTED UNDER THIS
PROSPECTUS. Although the Initial Purchasers have informed the Company that they
currently intend to make a market in the Exchange Notes, they are not obligated
to do so, and any such market-making may be discontinued at any time without
notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the Exchange Notes. The Company does not intend to
apply for listing of the Notes on any securities exchange or for quotation of
the Notes through the Nasdaq Stock Market ("Nasdaq").
ii
Any Original Notes not tendered and accepted in the Exchange Offer will
remain outstanding and the holders thereof will be entitled to all the rights
and preferences and will be subject to the limitations applicable thereto under
the Indenture. Following consummation of the Exchange Offer, the holders of the
Original Notes will continue to be subject to the existing restrictions upon
transfer thereof and the Company will have no further obligation to such holders
to provide for registration under the Securities Act of the Original Notes held
by them. To the extent that Original Notes are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered, or tendered but
unaccepted, Original Notes could be adversely affected. Although the Original
Notes are eligible for trading in the Private Offerings, Resales and Trading
through Automated Linkages (PORTAL) market, it is not expected that an active
market for the Original Notes will develop while they are subject to
restrictions on transfer.
The Company will accept for exchange any and all Original Notes that are
validly tendered and not withdrawn at or prior to 5:00 p.m., New York City time,
on the date the Exchange Offer expires, which will be January 15, 2004 (the
"Expiration Date"), unless the Exchange Offer is extended by the Company, in
which case the term "Expiration Date" shall mean the latest date to which the
Exchange Offer is extended. Tenders of Original Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date. The
Exchange Offer is not conditioned upon any minimum principal amount of Original
Notes being tendered or accepted for exchange. However, the Exchange Offer is
subject to certain conditions which may be waived by the Company and to the
terms and provisions of the Registration Rights Agreement. The Exchange Notes
will bear interest from the later of October 15, 2003 and the last interest
payment date (if any) of the Original Notes to occur prior to the issue date of
the Exchange Notes. Holders of the Original Notes whose Original Notes are
accepted for exchange pursuant to the Exchange Offer will not receive interest
on such Original Notes for any period subsequent to the later of October 15,
2003 and the last interest payment date (if any) to occur prior to the issue
date of the Exchange Notes.
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HOLDERS OF ORIGINAL NOTES SHOULD USE THE BLUE LETTER OF
TRANSMITTAL AND THE GREEN NOTICE OF GUARANTEED DELIVERY IN
MAKING THEIR TENDERS.
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iii
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus contains or incorporates statements that constitute
"forward-looking statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995, including statements regarding, among
other matters, the intent, belief or current expectations of the Company or its
management with respect to the Company's operating strategies, the Company's
growth strategies, the Company's capital expenditures and recent acquisitions,
industry trends, competition and other factors affecting the Company's financial
condition or results of operations. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks, uncertainties and other known and unknown factors, including the
factors discussed in Management's Discussion and Analysis (as defined below),
which may cause actual results, performance or achievements to differ materially
from the future results, performance or achievements expressed or implied in
such forward-looking statements.
DOCUMENTS INCORPORATED BY REFERENCE
INFORMATION HAS BEEN INCORPORATED BY REFERENCE IN THIS SHORT FORM
PROSPECTUS FROM DOCUMENTS FILED WITH THE 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).
The following documents, filed with the various securities commissions or
similar authorities in Canada, are specifically incorporated by reference in and
form an integral part of this Prospectus:
(a) the Annual Information Form of the Company dated September 15, 2003
for the fiscal year ended June 30, 2003, including the Management's
Discussion and Analysis of the Company for the year ended June 30,
2003 ("Management's Discussion and Analysis");
(b) the Information Circular of the Company dated September 26, 2003
(except for the sections entitled "Corporate Governance," "Report on
Executive Compensation" and "Performance Graph") distributed in
connection with the Company's annual general meeting held on November
10, 2003;
(c) the audited consolidated financial statements of the Company for the
years ended June 30, 2003 and 2002, together with the notes thereto
and the auditors' report thereon (the "Annual Consolidated Financial
Statements"); and
(d) the unaudited consolidated financial statements of the Company for the
three months ended September 30, 2003 and 2002 (the "Interim
Consolidated Financial Statements" and, together with the Annual
Consolidated Financial Statements, the "Consolidated Financial
Statements").
All documents of the Company of the type referred to above (excluding any
confidential material change reports) that are filed by the Company with a
securities commission or any similar authority in Canada after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference into this Prospectus.
Any statement contained in this Prospectus or 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
2
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.
CERTAIN DEFINITIONS AND STATISTICAL INFORMATION
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.
Statistical information relating to the ski and golf industries included
in this Prospectus is derived by the Company from recognized industry reports
regularly published by industry associations and independent consulting and data
compilation organizations in these industries, including The National Ski Areas
Association, The Canadian Ski Council, the White Book of Ski Areas and the
National Golf Foundation.
In this Prospectus, unless the context otherwise requires, the "Company"
or "Intrawest" refers to Intrawest Corporation, either alone or with its
subsidiaries and their respective interests in joint ventures and partnerships.
ALL DOLLAR AMOUNTS USED HEREIN ARE IN U.S. DOLLARS, UNLESS OTHERWISE STATED.
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
The Company is a corporation continued under the laws of the Canada and a
substantial portion of its assets are located in, and substantially all of the
directors, controlling persons and officers of the Company and certain of the
experts named herein are residents of, jurisdictions other than the United
States. As a result, it may be difficult for United States investors to effect
service within the United States upon those directors, controlling persons,
officers or experts who are not residents of the United States, or to realize in
the United States upon judgments of courts of the United States predicated upon
civil liability of such directors, controlling persons, officers or experts
under United States federal securities laws. The Company has been advised by its
Canadian counsel, McCarthy Tetrault LLP, that a judgment of a United States
court predicated solely upon civil liability under such laws would probably be
enforceable in Canada if the United States court in which the judgment was
obtained had a basis for jurisdiction in the matter that was recognized by a
Canadian court for such purposes. The Company has also been advised by such
counsel that an action may be brought in British Columbia in the first instance
on the basis of civil liability predicated solely upon such laws if the British
Columbia court is satisfied that the United States is the lex loci delicti
(i.e., the place of the wrong) for such a claim.
3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information contained
elsewhere in this Prospectus.
THE EXCHANGE OFFER
SECURITIES OFFERED......... Up to $350,000,000 principal amount of 7.50% Senior
Notes due October 15, 2013, which have been
registered under the Securities Act and qualified
for distribution in the Provinces of British
Columbia and Ontario in Canada. The terms of the
Exchange Notes are identical in all material
respects to the Original Notes except for certain
transfer restrictions and registration rights
relating to the Original Notes and except that, in
the event that either (i) an Exchange Offer
Registration Statement (as defined herein) is not
filed with the Commission on or prior to the 60th
day following the date of original issue of the
Original Notes, (ii) such Exchange Offer
Registration Statement is not declared effective on
or prior to the 180th day following the date of
original issue of the Original Notes, (iii) the
Exchange Offer is not completed within 45 days
after the initial effective date of the Exchange
Offer Registration Statement, (iv) the Exchange
Offer Registration Statement is declared effective
but thereafter ceases to be effective or useable or
(v) certain other events specified in the
Registration Rights Agreement occur, then special
interest, in addition to the interest set forth on
the cover page hereof, shall accrue on the Original
Notes at a per annum rate of 0.5% for the first 90
days of the Registration Default Period and at a
per annum rate of 1.0% thereafter for the remaining
portion of the Registration Default Period. Upon
cure of the Registration Default, the special
interest shall no longer accrue and the Original
Notes will bear interest at the original rate;
provided, however, that if, after any such cure, a
different Registration Default occurs, then special
interest shall again accrue in accordance with the
foregoing provisions. See "Description of the Notes
-- Exchange Offer; Registration Rights."
THE EXCHANGE OFFER......... The Exchange Notes are being offered in exchange
for a like principal amount of Original Notes. The
issuance of the Exchange Notes is intended to
satisfy certain obligations of the Company under
the Registration Rights Agreement. The Exchange
Notes will evidence the same debt as the Original
Notes and will be issued, and holders thereof will
be entitled to the same rights as holders of the
Original Notes, under the Indenture. The Exchange
Offer is not conditional upon any minimum principal
amount of Original Notes being tendered or accepted
for exchange.
TENDERS, EXPIRATION DATE;
WITHDRAWAL................. The Exchange Offer will expire at 5:00 p.m., New
York City time, on January 15, 2004, or such later
date to which it is extended by the Company in its
sole discretion. Tenders of outstanding Notes may
be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. Any
Original Notes not accepted for exchange for any
reason will be returned without expense to the
tendering holders thereof as promptly as
practicable after the expiration or termination of
the Exchange Offer. See "The Exchange Offer" for a
description of the procedures for tendering the
Original Notes.
4
U.S. AND CANADIAN FEDERAL
INCOME TAX CONSEQUENCES.... For United States federal income tax purposes, an
exchange of Original Notes for Exchange Notes
pursuant to the Exchange Offer should not be a
taxable event for US Holders (as defined herein) of
Original Notes. The exchange by a Holder (as
defined herein) of an Original Note for an Exchange
Note should not constitute a taxable event for
Canadian federal income tax purposes. Accordingly,
a Holder will not be subject to tax in respect of
the exchange. Further, the payment of interest,
principal or premium, if any, to a Holder of the
Exchange Notes will be exempt from Canadian
withholding tax. See "Certain Income Tax
Consequences."
USE OF PROCEEDS............ There will be no cash proceeds payable to the
Company from the issuance of the Exchange Notes
pursuant to the Exchange Offer. The Company used
the net proceeds of approximately $343.6 million
received from the sale of the Original Notes to
retire the Company's outstanding 9.75% Senior Notes
due August 15, 2008 and to reduce bank and other
indebtedness of the Company.
EXCHANGE AGENT............. JPMorgan Chase Bank is serving as Exchange Agent
(the "Exchange Agent") pursuant to the Exchange
Offer.
5
CONSEQUENCES OF EXCHANGING ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER
The Company is making the Exchange Offer in reliance on the position of
the staff of the Commission as set forth in certain no-action letters addressed
to other parties in other transactions. However, the Company has not sought its
own no-action letter and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange Offer
as in such other circumstances. Based upon these interpretations by the staff of
the Commission, the Company believes that Exchange Notes issued pursuant to the
Exchange Offer in exchange for Original Notes may be offered for resale, resold
and otherwise transferred by a holder thereof (other than any holder which is
(i) a broker-dealer who purchased such Original Notes directly from the Company
for resale pursuant to Rule 144A or other available exemptions under the
Securities Act, (ii) a broker-dealer who acquired such Original Notes as a
result of market-making or other trading activities or (iii) a person that is an
Affiliate of the Company) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Notes. Holders of Original Notes accepting the
Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes may not rely on the position of the staff of the Commission as
set forth in these no-action letters and would have to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. A secondary resale transaction
in the United States by a holder of Original Notes who is using the Exchange
Offer to participate in the distribution of Exchange Notes must be covered by an
effective registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K under the Securities Act.
Each broker-dealer (other than an Affiliate of the Company) that receives
Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it acquired the Original Notes as a result of market-making
activities or other trading activities and that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging,
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act even though it
may be deemed to be an underwriter for purposes thereof. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Original
Notes where such Original Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period ending on the earlier of the 180th day after the Exchange
Offer has been completed or such time as broker-dealers no longer own any
Registrable Securities (as defined in the Registration Rights Agreement) it will
make this Prospectus, as amended or supplemented, available to any such
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." Any broker-dealer who is an Affiliate of the Company may not rely
on such no-action letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transactions.
EFFECT OF THE EXCHANGE OFFER ON HOLDERS OF ORIGINAL NOTES
As a result of the making of the Exchange Offer, and upon acceptance for
exchange of all Original Notes that have been properly tendered and not
withdrawn pursuant to the Exchange Offer, the Company will have fulfilled a
covenant contained in the Registration Rights Agreement and, accordingly, the
holders of the Original Notes will have no further registration rights under the
Registration Rights Agreement, except that, in certain limited circumstances,
the Company is required to file with the Commission a Shelf Registration
Statement (as defined herein). See "Description of the Notes -- Exchange Offer;
Registration Rights." Any Original Notes not tendered and accepted in the
Exchange Offer will remain outstanding and the holders thereof will be entitled
to all the rights and preferences and will be subject to the limitations
applicable thereto under the Indenture. All untendered, and tendered but
unaccepted, Original Notes will continue to be subject to the restrictions on
transfer provided for in the Original Notes and the Indenture. To the extent
that Original Notes are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered, or tendered but unaccepted, Original Notes could be
adversely affected. See "Risk Factors -- Consequences of Failure to Exchange."
6
SUMMARY DESCRIPTION OF THE NOTES
The Exchange Notes will evidence the same debt as the Original Notes and
will be issued, and the holders thereof will be entitled to the same rights as
holders of the Original Notes, under the Indenture. The terms of the Exchange
Notes are identical in all material respects to the Original Notes except for
certain transfer restrictions and registration rights relating to the Original
Notes and except that, in the event of a Registration Default, special interest,
in addition to the interest set forth on the cover page hereof, shall accrue on
the Original Notes at a per annum rate of 0.5% for the first 90 days of the
Registration Default Period and at a per annum rate of 1.0% thereafter for the
remaining portion of the Registration Default Period. Upon cure of the
Registration Default, the special interest shall no longer accrue and the
Original Notes will bear interest at the original rate; provided, however, that
if after any such cure, a different Registration Default occurs, then special
interest shall again accrue in accordance with the foregoing provisions. See
"Description of the Notes -- Exchange Offer; Registration Rights."
The Exchange Notes will bear interest from the later of October 15, 2003
and the last interest payment date (if any) of the Original Notes to occur prior
to the issue date of the Exchange Notes. Holders of the Original Notes whose
Original Notes are accepted for exchange pursuant to the Exchange Offer will not
receive interest on such Original Notes for any period subsequent to the later
of October 15, 2003 and the last interest payment date (if any) to occur prior
to the issue date of the Exchange Notes.
ISSUER..................... Intrawest Corporation.
NOTES...................... $350,000,000 aggregate principal amount of the
Company's 7.50% Senior Notes due October 15, 2013.
MATURITY DATE.............. October 15, 2013.
INTEREST PAYMENT DATES..... April 15 and October 15 of each year, commencing
April 15, 2004.
OPTIONAL REDEMPTION........ The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or
after October 15, 2008, at the redemption prices
set forth herein, plus accrued and unpaid interest
to the date of redemption. See "Description of the
Notes -- Optional Redemption."
TAX REDEMPTION............. The Notes will be redeemable by the Company at any
time, in whole but not in part, at the option of
the Company at a redemption price of 100% of their
principal amount plus accrued and unpaid interest
to the date of redemption in the event the Company
becomes obligated to pay Additional Amounts (as
defined herein) as a result of certain changes
affecting Canadian withholding taxes. See
"Description of the Notes -- Optional Redemption"
and "-- Additional Amounts for Canadian Taxes."
CHANGE OF CONTROL.......... Upon the occurrence of a Change of Control
Triggering Event, which requires both a Change of
Control (as defined herein) and a Rating Decline
(as defined herein), the Company is required to
offer to purchase all outstanding Notes at 101% of
the principal amount thereof, plus accrued and
unpaid interest to the date of purchase. See
"Description of the Notes -- Covenants -- Change of
Control."
ADDITIONAL AMOUNTS......... All payments with respect to the Notes made by the
Company will be made without withholding or
deduction for Canadian taxes unless required by law
or by the interpretation or administration thereof,
in which case, subject to certain exceptions, the
Company will pay such Additional Amounts as may be
necessary, so that the net amount received by the
holders after such withholding or deduction will
not be less than the amount that would have been
received in the absence of
7
such withholding or deduction. See "Description of
the Notes -- Additional Amounts for Canadian
Taxes."
RANKING.................... The Notes will constitute senior unsecured
obligations of the Company, and indebtedness
evidenced by the Notes will rank pari passu in
right of payment with all other existing and future
senior unsecured obligations of the Company and
senior in right of payment to all existing and
future obligations of the Company expressly
subordinated in right of payment to the Notes.
Holders of secured obligations of the Company will,
however, have claims that are prior to the claims
of the holders of the Notes with respect to the
assets securing such obligations. In addition, the
Notes will be effectively subordinated to all
existing and future indebtedness and other
liabilities of the Company's subsidiaries. As of
September 30, 2003, after giving pro forma effect
to the sale of the Original Notes and the
application of the net proceeds thereof, the
Company would have had $760.4 million of senior
unsecured indebtedness and $50.8 million of senior
secured indebtedness, and the Company's
subsidiaries would have had $777.0 million of
liabilities.
CERTAIN COVENANTS.......... The Indenture contains covenants that, among other
things, limit the ability of the Company or, in
some cases, certain of its subsidiaries, to incur
indebtedness and issue preferred shares, make
restricted payments, create liens, enter into sale
and leaseback transactions, dispose of assets,
enter into transactions with affiliates and related
persons and enter into amalgamations,
consolidations or mergers or sell all or
substantially all of their assets. If the Notes are
rated Investment Grade (as defined herein) by
certain rating agencies, all such covenants will
cease to apply, other than certain of the covenants
relating to creating liens and to amalgamations,
consolidations or mergers or the sale of all or
substantially all of the Company's assets. All of
these limitations, however, are subject to a number
of important exceptions and qualifications. See
"Description of the Notes -- Covenants" and "--
Fall-away Event."
ABSENCE OF PUBLIC MARKET
FOR THE EXCHANGE NOTES..... Although the Initial Purchasers have informed the
Company that they currently intend to make a market
in the Exchange Notes, they are not obligated to do
so, and any such market-making may be discontinued
at any time without notice. Accordingly, there can
be no assurance as to the development or liquidity
of any market for the Exchange Notes. The Company
does not intend to apply for listing of the Notes
on any securities exchange or for quotation of the
Notes through Nasdaq.
RISK FACTORS
Prospective recipients of the Exchange Notes should consider carefully the
information set forth under "Risk Factors" and all other information set forth
in this Prospectus in evaluating an investment in the Exchange Notes.
ADDITIONAL INFORMATION
For additional information regarding the Exchange Notes, see "Description
of the Notes" and "Certain Income Tax Considerations."
8
RISK FACTORS
Participation in the Exchange Offer is voluntary. In addition to other
information set forth elsewhere in the Prospectus, before tendering Original
Notes for Exchange Notes, prospective recipients of the Exchange Notes should
consider carefully the risk factors set forth below in evaluating an investment
in the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Original Notes who do not exchange their Original Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Original Notes as set forth in the legend
thereon as a consequence of the issuance of the Original Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and similar requirements of applicable
securities laws of the states of the United States and other jurisdictions. In
general, the Original Notes may not be offered or sold, unless registered under
the Securities Act or registered or qualified for distribution under the
securities laws of other applicable jurisdictions, except pursuant to an
exemption therefrom or in a transaction not subject thereto. Except in certain
limited circumstances provided for in the Registration Rights Agreement, the
Company does not intend to register the Original Notes under the Securities Act
or to register or qualify for distribution the Original Notes under the
securities laws of any such jurisdiction. In addition, any holder of Original
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
secondary resale transaction.
Issuance of the Exchange Notes in exchange for the Original Notes pursuant
to the Exchange Offer will be made only after timely receipt by the Exchange
Agent of such Original Notes, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of the Original
Notes desiring to tender such Original Notes in exchange for Exchange Notes
should allow sufficient time to ensure timely delivery. The Company is under no
duty to give notification of defects or irregularities with respect to tenders
of Original Notes for exchange. Original Notes that are not tendered or that are
tendered but not accepted by the Company for exchange pursuant to the Exchange
Offer, will, following consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof provided for in the
Original Notes and the Indenture and, upon consummation of the Exchange Offer,
certain registration rights under the Registration Rights Agreement relating to
the Original Notes will terminate. See "Description of the Notes -- Exchange
Offer; Registration Rights."
To the extent that Original Notes are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered, or tendered but
unaccepted, Original Notes could be adversely affected, and the volatility of
the market price of the Original Notes could increase, due to a reduction in
liquidity. Although the Original Notes are eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages (PORTAL) market, it is
not expected that an active market for the Original Notes will develop while
they are subject to restrictions on transfer.
LEVERAGE
As of September 30, 2003, after giving pro forma effect to the sale of the
Original Notes and the application of the net proceeds thereof, the Company
would have had total consolidated debt of $1.23 billion and shareholders' equity
of $703.7 million. See "Consolidated Capitalization" and "Use of Proceeds." The
Indenture permits the Company and its subsidiaries to incur or guarantee
additional debt, subject to certain limitations. There is no assurance the
Company's business will generate sufficient cash flow from operations in the
future to service the Company's debt and make necessary capital expenditures, in
which case the Company may seek additional financing, dispose of certain assets
or seek to refinance some or all of its debt. There is no assurance that any of
these alternatives could be effected, if at all, on satisfactory terms.
The Indenture contains numerous financial and operating covenants that
limit the discretion of management with respect to certain business matters.
These covenants place significant restrictions on, among
9
other things, the ability of the Company to incur additional indebtedness, to
create liens or other encumbrances, to make certain payments and investments,
and to sell or otherwise dispose of assets and merge or consolidate with other
entities. A failure to comply with the obligations contained in the Indenture
could permit acceleration of the related debt and acceleration of debt under
other instruments that contain cross-acceleration or cross-default provisions.
See "Description of the Notes -- Covenants."
ADVERSE CONSEQUENCES OF HOLDING COMPANY STRUCTURE
The Company is primarily a holding company with limited material business
operations, sources of income or assets of its own other than the shares of its
subsidiaries. The Notes will be obligations exclusively of the Company. The
subsidiaries of the Company will not have guaranteed the payment of principal or
of interest on the Notes and the Notes will therefore be effectively
subordinated to the obligations of the Company's subsidiaries as a result of the
Company being a holding company. In the event of an insolvency, liquidation or
other reorganization of any of the subsidiaries of the Company, the creditors of
the Company (including the holders of the Notes), as well as shareholders of the
Company, will have no right to proceed against the assets of such subsidiaries
or to cause the liquidation or bankruptcy of such subsidiaries under applicable
bankruptcy laws. Creditors of such subsidiaries would be entitled to payment in
full from such assets before the Company, as a shareholder, would be entitled to
receive any distribution therefrom. Except to the extent that the Company may
itself be a creditor with recognized claims against such subsidiaries, claims of
creditors of such subsidiaries will have priority with respect to the assets and
earnings of such subsidiaries over the claims of creditors of the Company,
including claims under the Notes. As of September 30, 2003, after giving pro
forma effect to the sale of the Original Notes and the application of the net
proceeds thereof, the Company's subsidiaries would have had $777.0 million of
liabilities.
In addition, as a result of the Company being a holding company, the
Company's operating cash flow and its ability to service its indebtedness,
including the Notes, is dependent upon the operating cash flow of its
subsidiaries and the payment of funds by such subsidiaries to the Company in the
form of loans, dividends or otherwise. The Company's subsidiaries are distinct
legal entities and have no obligation, contingent or otherwise, to pay any
amounts due pursuant to the Notes or to make any funds available therefor,
whether by dividends, interest, loans, advances or other payments. In addition,
the payment of dividends and the making of loans, advances and other payments to
the Company by its subsidiaries may be subject to statutory or contractual
restrictions (including requirements to maintain minimum levels of working
capital and other assets), are contingent upon the earnings of those
subsidiaries and are subject to various business and other considerations.
SEASONALITY OF OPERATIONS
Ski and resort operations are highly seasonal. In fiscal 2003
approximately 67% of the Company's ski and resort operations revenue was
generated during the period from December to March. Furthermore, during this
period a significant portion of ski and resort operations revenue is generated
on certain holidays, particularly Christmas/New Year, Presidents' Day and school
spring breaks, and on weekends. Problems during these peak periods, such as
adverse weather conditions, access route closures and equipment failures, could
have a material adverse effect on the Company's operating results. The Company's
real estate operations tend to be somewhat seasonal as well, with construction
primarily taking place during the summer and the majority of sales being closed
in the December to June period. Although the Company expects its warm-weather
resorts to mitigate the seasonality of ski and resort operations revenue, the
Company's mountain resorts have operating losses and negative cash flows for the
period from May to October. The Company has revolving lines of credit
aggregating approximately $400 million on which it can draw during this period
to finance its working capital requirements. The Company's ability to borrow
under these credit facilities is subject to certain conditions, including
compliance with certain financial covenants. A reduction in these credit
facilities could have a material adverse effect on the Company's financial
condition and results of operations. There can be no assurance that the Company
will continue to be able to borrow under such credit facilities.
10
CAPITAL EXPENDITURES
The Company operates in a capital-intensive industry and has made
significant capital expenditures to establish its competitive position. The
Company spent $39.4 million in fiscal 2003 on acquisitions, resort operations,
capital improvements and other investments. The Company expects to incur
approximately $20 million to $25 million per year in ongoing maintenance
expenditures at its mountain resorts. In addition, the Company makes significant
investments in connection with its real estate development activities. The
Company expects to make significant capital expenditures in the future to
enhance and maintain the operations of its resorts and to develop its expanded
real estate holdings. There can be no assurance that the Company will have
adequate funds, from internal or external sources, to make all planned or
required capital expenditures. A lack of available funds for such capital
expenditures could have a material adverse effect on the Company's ability to
implement its operating and growth strategies.
GROWTH INITIATIVES
The Company is currently engaged in, and has plans for, a variety of
improvement, expansion and development projects relating to both its resort and
real estate operations. There can be no assurance (i) that the Company will
receive the necessary regulatory approvals for such projects, (ii) as to when
such projects will be completed, (iii) that the Company's estimated costs
associated with such projects will prove to be accurate or (iv) that the Company
will receive the expected benefits from such projects.
REAL ESTATE DEVELOPMENT
In addition to the risks described herein, the development of real estate
exposes the Company to a number of other specific risks, including the inability
to obtain necessary zoning and regulatory approvals, the availability of
construction financing, potential cost overruns and the attractiveness of
properties to prospective purchasers and tenants. There can be no assurance that
market conditions will support the Company's planned real estate development
activities.
In February 2003, the Company announced that it was reorganizing the
manner in which the production phase of its resort real estate development
business is conducted. In Canada, a new limited partnership, Leisura
Developments Limited Partnership ("Leisura Canada"), has been formed which will
conduct Intrawest's 2003 resort real estate development business at its Canadian
resorts. In the United States, Intrawest has implemented a similar structure.
Intrawest, through a wholly owned subsidiary, will hold a minority equity
investment in Leisura Developments, LLC ("Leisura U.S." and, together with
Leisura Canada, "Leisura"). Leisura has acquired and will continue to acquire
land parcels from Intrawest at the point construction is about to commence on a
new project. Leisura rather than Intrawest is at risk for cost overruns,
completion delays and purchaser contract defaults on any project that it
purchases. As at the date hereof, Leisura has acquired land parcels for seven
projects at five resorts. In future years, Intrawest expects to carry out the
bulk of the real estate production at its resorts in a similar fashion. There is
no guarantee, however, that the Leisura entities or entities created for a
similar purpose will acquire more land parcels from Intrawest in the future.
COMPETITION
The industries in which the Company operates are highly competitive. The
Company's resorts compete for destination visitors with other resorts in Canada,
the United States, Europe and Japan. They also compete for destination and day
visitors within each resort's local market area. The competitive position of the
Company's resorts is dependent upon many variables, including location and
accessibility, pricing, extent and quality of resort facilities, quality of snow
conditions and terrain, quality of ski and golf facilities, service and
reputation. There can be no assurance that the Company's principal competitors
will not be successful in capturing a share of the Company's present or
potential customer base. Intrawest also faces competition for destination and
day visitors from other leisure industry companies and alternative recreational
activities. Such competitors may be better positioned to withstand adverse
weather or economic conditions and they may have greater financial resources to
develop new attractions.
11
UNFAVORABLE WEATHER CONDITIONS
The Company's ability to attract visitors to its mountain resorts is
influenced by weather conditions and the amount of snowfall during the ski
season. Adverse weather conditions may discourage visitors from participating in
outdoor activities at the Company's resorts. In addition, unseasonably warm
weather may result in inadequate natural snowfall, which increases the cost of
snowmaking, and could render snowmaking wholly or partially ineffective in
maintaining quality skiing conditions. Excessive natural snowfall may materially
increase the costs incurred for grooming trails and may also make it difficult
for visitors to obtain access to the Company's mountain resorts. Prolonged
periods of adverse weather conditions, or the occurrence of such conditions
during peak periods of the ski season, could have a material adverse effect on
the Company's operating results.
ECONOMIC DOWNTURN
Skiing and golf are discretionary recreational activities with relatively
high participation costs, and a deterioration of economic conditions could have
an adverse impact on the Company's resort operations. An economic downturn could
reduce spending on resort vacations and result in declines in visits and revenue
per visit. In addition, an economic downturn could expose the Company's real
estate operations to land risk and completed inventory risk. Land risk arises
when land is purchased with debt and economic conditions deteriorate resulting
in higher holding costs and reduced profitability or loan defaults and
foreclosure action. Completed inventory risk arises when completed units cannot
be sold and construction financing cannot be repaid. There can be no assurance
that an economic downturn will not have a material adverse effect on the
operating results of the Company's real estate operations.
WORLD EVENTS
World events such as the terrorist attacks on September 11, 2001, the war
in Iraq and the SARS outbreak disrupt domestic and international travel and
reduce visits, or change the mix of visits, to our resorts. Often these types of
events happen suddenly and cannot be prepared for. The occurrence of similar
such events in the future could have a material adverse effect on the Company's
financial condition and results of operations.
ADEQUACY OF INSURANCE COVERAGE
All resorts owned by the Company are insured against property damage,
business interruptions and general liability. There can be no assurance that
such insurance will remain available to the Company at commercially reasonable
rates or that the amount of such coverage will be adequate to cover any
liability incurred by the Company. If the Company is held liable for amounts
exceeding the limits of its insurance coverage or for claims outside the scope
of that coverage, its business, results of operations and financial condition
could be materially adversely affected.
DEPENDENCE ON KEY EMPLOYEES
The success of the Company depends in part on its senior management. The
unanticipated departure of any key member of the Company's management team could
have a material adverse effect on the Company's financial condition and results
of operations.
CURRENCY EXPOSURE
Over the past several years, the Company's Canadian resort operations have
benefited from the lower Canadian dollar, particularly in relation to the US
dollar, by making such operations particularly attractive to US and European
visitors. A significant increase in the value of the Canadian dollar,
particularly against the US dollar, could have a material adverse impact on the
Company's earnings from its Canadian resorts.
12
To the extent that the United States dollar proceeds from the sale of the
Original Notes are used to retire Canadian dollar debt and the repayment of the
Notes is dependent on Canadian dollar cash flows, the Company is exposed to
exchange rate risk.
ABSENCE OF PUBLIC MARKETS FOR THE EXCHANGE NOTES
Although the Initial Purchasers have informed the Company that they
currently intend to make a market in the Exchange Notes, they are not obligated
to do so, and any such market-making may be discontinued at any time without
notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the Exchange Notes. The Company does not intend to
apply for listing of the Notes on any securities exchange or for quotation of
the Notes through Nasdaq.
LIMITATION ON ABILITY TO PURCHASE THE NOTES FOLLOWING A CHANGE OF CONTROL
TRIGGERING EVENT
The Indenture provides that, upon the occurrence of a Change of Control
Triggering Event, the Company will be required to make an offer to purchase
outstanding Notes at a purchase price equal to 101% of their principal amount
plus accrued and unpaid interest thereon to the date of purchase. In the event
of a Change of Control Triggering Event, the total debt represented by the Notes
could become due and payable. There can be no assurance that the Company would
be able to repay or refinance such indebtedness or, if such refinancing were to
occur, that such refinancing would be on terms favorable to the Company. See
"Description of the Notes -- Covenants -- Change of Control."
RECENT DEVELOPMENTS
TENDER OFFER, CONSENT SOLICITATION AND REDEMPTION OF 2008 NOTES
On September 29, 2003, the Company made an offer (the "Tender Offer") to
purchase for cash any and all of its outstanding 9.75% Senior Notes due August
15, 2008 (the "2008 Notes"). In connection with the Tender Offer, the Company
also solicited consents (the "Consent Solicitation") from the holders of the
2008 Notes to the removal of certain covenants related to the 2008 Notes. The
Company offered to pay $1,048.75 per $1,000 principal amount (the "Total
Consideration") of 2008 Notes to holders who tendered pursuant to the Tender
Offer and provided their consent on or before October 9, 2003 (the "Consent
Date"). The Total Consideration included a consent fee of $10.00 per $1,000
principal amount of 2008 Notes (the "Consent Fee"). Holders who tendered their
2008 Notes after the Consent Date but on or before October 30, 2003 (the
"Expiration Date") were entitled to receive the Total Consideration less the
Consent Fee, or $1,038.75 per $1,000 principal amount of 2008 Notes.
On October 10, 2003, the Company completed the Consent Solicitation, with
a total of $115,250,500 or 58% of the aggregate outstanding principal amount of
2008 Notes being tendered in the Tender Offer and Consent Solicitation on or
before the Consent Date. Accordingly, the Company executed a second supplemental
indenture to the indenture governing the 2008 Notes (the "2008 Note Indenture"),
the effect of which was to eliminate substantially all of the restrictive
covenants contained in the 2008 Note Indenture. The Tender Offer expired on
October 30, 2003 with no further 2008 Notes being tendered.
On October 21, 2003, the Company announced that it had elected to redeem
all outstanding 2008 Notes in accordance with the terms of the 2008 Note
Indenture. The outstanding 2008 Notes were redeemed on November 21, 2003 (the
"Redemption Date") at a redemption price of $1,048.75 per $1,000 principal
amount of 2008 Notes, plus all interest accrued thereon up to but excluding the
Redemption Date.
13
CONSOLIDATED CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of September 30, 2003 (i) on an actual basis, and (ii) as adjusted to
reflect the sale by the Company of the Original Notes and the application of the
net proceeds thereof as described under "Use of Proceeds." This table should be
read in conjunction with the Consolidated Financial Statements incorporated by
reference into this Prospectus.
AS OF SEPTEMBER 30, 2003
-----------------------------
ACTUAL AS ADJUSTED(1)
---------- ---------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
Cash and short-term deposits................................ $ 89,248 $ 89,248
========== ==========
Short-term debt(2).......................................... $ 200,657 $ 182,870
---------- ----------
Long-term debt
Bank and other long-term debt
Ski and resort operations.............................. 86,032 86,032
Real estate............................................ 37,852 37,852
Other.................................................. 292,764 176,726
9.75% Senior Notes due 2008............................... 200,165 --
10.50% Senior Notes due 2010.............................. 399,296 399,296
Original Notes............................................ -- 350,000
---------- ----------
Total long-term debt................................... 1,016,109 1,049,906
---------- ----------
Non-controlling interest in subsidiaries.................... 44,267 44,267
---------- ----------
Total shareholders' equity(3)............................... 713,333 703,748
---------- ----------
Total capitalization...................................... $1,974,366 $1,980,791
========== ==========
---------------
(1) The total net proceeds from the sale of the Original Notes of approximately
$343.6 million was used to retire the Company's 2008 Notes and to reduce
bank and other indebtedness of the Company. See "Use of Proceeds."
(2) Consists of current portion of long-term debt.
(3) Does not include (i) 4,142,900 Common Shares reserved for issuance on the
exercise of the then outstanding stock options granted under the Company's
stock option plan and (ii) 196,400 Common Shares reserved for issuance
pursuant to the Company's share purchase plans.
USE OF PROCEEDS
There will be no cash proceeds payable to the Company from the issuance of
the Exchange Notes pursuant to the Exchange Offer. The Company used the net
proceeds of approximately $343.6 million received from the sale of the Original
Notes to retire the 2008 Notes and reduce bank and other indebtedness of the
Company. The indebtedness to be repaid was incurred for maintenance and capital
expenditures, real estate development projects and other general corporate
purposes. The Original Notes surrendered in exchange for the Exchange Notes will
be cancelled and cannot be reissued. The issuance of the Exchange Notes will not
result in any change in the aggregate indebtedness of the Company.
14
THE COMPANY
The Company was formed by an amalgamation on November 23, 1979 under the
Company Act (British Columbia) and was continued under the Canada Business
Corporations Act on January 14, 2002. The registered office of the Company is
located at 1300 - 777 Dunsmuir Street, Vancouver, British Columbia, Canada, V7Y
1K2, its executive office is located at Suite 800, 200 Burrard Street,
Vancouver, British Columbia, Canada, V6C 3L6 and its telephone number is (604)
669-9777. The Company maintains a Web site at www.intrawest.com. The contents of
the Company's Web site do not form a part of this Prospectus.
OVERVIEW
Intrawest is the world's leading developer and operator of
village-centered resorts. 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.
CORPORATE STRUCTURE
The following is a list of the Company's principal subsidiaries and
partnerships as at June 30, 2003, indicating the place of
incorporation/registration, and showing the percentage equity interest
beneficially owned by the Company.
PLACE OF PERCENTAGE
INCORPORATION/ EQUITY INTEREST
REGISTRATION HELD BY THE COMPANY
---------------- -------------------
Blackcomb Skiing Enterprises Limited Partnership........ British Columbia 77
Whistler Mountain Resort Limited Partnership............ British Columbia 77
Mont Tremblant Resorts and Company, Limited
Partnership........................................... Quebec 100
IW Resorts Limited Partnership.......................... British Columbia 100
Intrawest Resort Ownership Corporation.................. British Columbia 100
Intrawest Resort Finance Corporation.................... British Columbia 100
Intrawest U.S. Holdings Inc............................. Delaware 100
Intrawest Luxembourg S.A................................ Luxembourg 100
Intrawest Golf Holdings, Inc............................ Delaware 100
Intrawest Retail Group, Inc............................. Colorado 100
Intrawest Resorts, Inc.................................. Delaware 100
Intrawest Sandestin Company, L.L.C. .................... Delaware 100
Keystone/Intrawest L.L.C................................ Delaware 50
Copper Mountain, Inc.................................... Delaware 100
Mountain Creek Resort, Inc.............................. New Jersey 100
Snowshoe Mountain, Inc.................................. West Virginia 100
The Stratton Corporation................................ Vermont 100
RESORT OPERATIONS
Intrawest's network of 10 mountain 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, Blue Mountain in Ontario,
Tremblant in Quebec, Stratton in Vermont, Snowshoe in West Virginia, Copper and
Winter Park in Colorado, Mountain Creek in New Jersey and Mammoth in California.
During the 2002/2003 ski season the Company's network of resorts generated
approximately 8.2 million skier visits, which is more than the number generated
by any other North American group of affiliated mountain resorts. Intrawest
holds a 45% equity interest in Alpine Helicopters, Ltd., the parent company of
Canadian Mountain Holidays Inc., a provider of
15
helicopter destination skiing and helicopter-assisted mountaineering and hiking
in southeastern British Columbia.
Intrawest is also developing and operating the warm-weather destination
resort of Sandestin, the largest resort and residential community in
northwestern Florida. Intrawest owns and operates 17 golf courses throughout
North America and manages an additional 12 courses.
The following table summarizes certain key statistics relating to each of
the Company's mountain resort locations.
INTRAWEST AVERAGE SNOW- 2002/2003
OWNERSHIP SKIABLE VERTICAL LIFTS ANNUAL MAKING SKIER
RESORT PERCENTAGE TERRAIN DROP TRAILS (HIGH-SPEED) SNOWFALL COVERAGE VISITS
------ ---------- ------- -------- ------ ------------ -------- -------- ---------
(%) (ACRES) (FEET) (INCHES) (%) (000'S)
Whistler Blackcomb... 77 7,071 5,280 227 33(15) 360 7 2,112
Mammoth.............. 59.5(1) 3,500 3,100 185 35(10) 350 17 1,375
Copper............... 100 2,450 2,699 125 23(5) 255 16 1,058
Winter Park(2)....... 100 2,762 3,060 134 23(8) 359 11 972
Tremblant............ 100 604 2,115 92 14(7) 140 75 751
Blue Mountain........ 50 251 720 34 12(4) 100 94 620
Snowshoe............. 100 224 1,598 57 14(2) 185 100 488
Stratton............. 100 583 2,003 90 16(5) 180 90 417
Mountain Creek....... 100 168 1,040 44 11(3) 90 100 357
Panorama............. 100 1,500 4,047 100 9(1) 110 40 198
---------------
(1) Each of the shareholders of Mammoth Mountain Ski Area ("MMSA") (including
the Company) has a pro rata right of first refusal to purchase any shares of
MMSA to be sold by any other shareholder to third parties.
(2) The Company assumed control of Winter Park Resort on December 23, 2002 under
a 60-year lease. There were a total of 793,000 skier visits from this date
to the end of the 2002/2003 season.
RESORT REAL ESTATE DEVELOPMENT
Intrawest is North America's largest mountain resort real estate
developer. 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, Squaw Valley in California, Solitude in Utah,
Snowmass in Colorado and Les Arcs in France. The Company is also developing
resort villages at Lake Las Vegas Resort in Nevada and at Sandestin in Florida.
Intrawest owns or has rights to acquire land on which it expects to develop and
sell approximately 19,000 units over the next 10 to 12 years. The Company's
resort development formula links the staged expansion of ski, golf and other
resort operations with the planning, design and managed development of
architecturally distinct four-season resort villages. 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 Whistler 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. At many of its resorts, the Company also builds and operates
resort club locations which are marketed as timeshare vacation ownership
resorts. Resort club locations are in operation at Whistler Blackcomb,
Tremblant, Panorama and Sandestin, and in Hawaii, Vancouver and Palm Desert.
In February 2003, the Company announced that it was reorganizing the
manner in which the production phase of its resort real estate development
business is conducted. In Canada, a new limited partnership, Leisura
Developments Limited Partnership, has been formed which will conduct Intrawest's
2003 resort real estate development business at its Canadian resorts. In the
United States, Intrawest has implemented a similar structure. Intrawest, through
a wholly owned subsidiary, will hold a minority equity investment in Leisura
Developments, LLC. Leisura has acquired and will continue to acquire land
parcels from Intrawest at the point construction is about to commence on a new
project. Leisura rather than Intrawest
16
is at risk for cost overruns, completion delays and purchaser contract defaults
on any project that it purchases. As at the date hereof, Leisura has acquired
land parcels for seven projects at five resorts. In future years, Intrawest
expects to carry out the bulk of the real estate production at its resorts in a
similar fashion. There is no guarantee, however, that the Leisura entities or
entities created for a similar purpose will acquire more land parcels from
Intrawest in the future.
The following table summarizes certain key statistics relating to each of
the Company's resort real estate holdings.
AS AT JUNE 30, 2003
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)
Whistler/Blackcomb(1)........... 1987 3,267 430 108 113,000 102,000 --
Tremblant....................... 1992 2,121 44 3,372 154,000 -- 411,000
Keystone(2)..................... 1995 983 -- 1,511 95,000 -- 94,000
Panorama........................ 1995 452 47 748 22,000 -- 10,000
Stratton........................ 1997 290 59 777 -- -- --
Snowshoe........................ 1997 373 61 925 38,000 9,000 48,000
Mammoth......................... 1998 513 79 2,334 61,000 4,000 35,000
Copper.......................... 1998 467 38 1,288 87,000 -- 65,000
Sandestin....................... 1999 830 443 892 113,000 2,000 45,000
Solitude(3)..................... 1999 144 -- -- 9,000 -- --
Three Peaks(4).................. 2000 188 -- 5 -- -- --
Blue Mountain................... 2000 457 81 1,466 35,000 11,000 54,000
Squaw Valley.................... 2000 258 -- 127 67,000 -- --
Mountain Creek.................. 2001 45 21 1,049 -- -- 101,000
Lake Las Vegas.................. 2001 -- 177 788 -- 58,000 60,000
Les Arcs........................ 2002 102 173 455 7,000 7,000 42,000
Snowmass........................ 2003 -- -- 645 -- -- 184,000
Winter Park..................... 2004 -- -- 1,100 -- -- 50,000
------ ----- ------ ------- ------- ---------
10,490 1,653(5) 17,590(5) 801,000 193,000(5) 1,199,000(5)
====== ===== ====== ======= ======= =========
---------------
(1) The Company has a 77% interest in both Whistler Mountain Resort Limited
Partnership and in Blackcomb Skiing Enterprises Limited Partnership. The
information on Whistler Blackcomb in this table reflects 100% of the
partnerships' land holdings.
(2) The Company has a 50% interest in a joint venture that owns and is
developing the land at Keystone (certain projects are at 55% and 60%). The
information on Keystone in this table reflects 100% of the joint venture's
land holdings.
(3) The Company entered into an option agreement with Solitude Ski Corporation
in September 1998 pursuant to which the Corporation has the right to acquire
land at the base of Solitude Mountain.
(4) The Company has a 50% interest in a joint venture that owns and is
developing the land at Three Peaks. The information on Three Peaks in this
table reflects 100% of the joint venture's land holdings.
(5) The Company's pipeline of real estate projects comprises residential units
and commercial space under development and held for future development which
aggregate 20,635 units.
INTEREST COVERAGE
The interest coverage set forth below has been prepared and included in
this Prospectus in accordance with the disclosure requirements of applicable
Canadian securities laws and has been calculated on a pro forma basis after
giving effect to the issuance of the Original Notes, the repayment of the
Company's 2008 Notes and other long-term debt from the proceeds of the offering
of Original Notes and the repayment or redemption of all long-term debt since
the date of the Annual Consolidated Financial Statements.
The annual interest requirements on the bank and other indebtedness of
Intrawest (using applicable interest and exchange rates) for the 12 months ended
June 30, 2003 and for the 12 months ended September 30, 2003 were $99.1 million
and $103.8 million, respectively. The Company's earnings before deduction of
interest on long-term debt and income taxes for the 12 months ended June 30,
2003 and for the 12 months ended September 30, 2003 amounted to $120.1 million
and $141.5 million, respectively. These amounts are, respectively, 1.21 times
and 1.36 times the Company's interest requirements for this period.
17
THE EXCHANGE OFFER
The Original Notes were not registered under the Securities Act or the
securities laws of any state of the United States, or qualified for distribution
under the securities laws of any province of Canada. The Original Notes were
offered and sold to "qualified institutional buyers" (as defined in Rule 144A
under the Securities Act) in compliance with Rule 144A and in offshore
transactions meeting the requirements of Rule 903 or Rule 904 of Regulation S
under the Securities Act and were sold under private placement exemptions from
the prospectus requirements of applicable securities laws in Canada. The
Original Notes are eligible for trading in the Private Offerings, Resales and
Trading through Automated Linkages (PORTAL) market.
The sole purpose of the Exchange Offer is to fulfill the obligations of
the Company with respect to the Registration Rights Agreement which was entered
into in connection with the sale of the Original Notes. Under the Registration
Rights Agreement, the Company has agreed to (i) file an Exchange Offer
Registration Statement with the Commission within 60 days following the date of
original issue of the Original Notes with respect to an offer to exchange the
Original Notes for debt securities of the Company which are substantially
identical to the Original Notes, (ii) use its best efforts to cause such
Exchange Offer Registration Statement to be declared effective under the
Securities Act within 180 days following the date of original issue of the
Original Notes and (iii) use its best efforts to consummate such exchange offer
within 45 days after such Exchange Offer Registration Statement has been
declared effective.
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING ORIGINAL NOTES
Promptly after the Registration Statement of which this Prospectus
constitutes a part (which, for purposes of the Registration Rights Agreement,
constitutes an Exchange Offer Registration Statement) has been declared
effective under the Securities Act and a receipt has been issued for this
Prospectus by the securities regulatory authorities in the Qualifying Provinces,
the Company will offer the Exchange Notes in exchange for surrender of the
Original Notes. The Company will keep the Exchange Offer open for not less than
30 calendar days after the date on which notice of the Exchange Offer is mailed
to the holders of the Original Notes. In substitution for each Original Note
properly tendered to the Company pursuant to the Exchange Offer and not
withdrawn by the holder thereof, the holder of such Original Note will receive
an Exchange Note having a principal amount equal to the principal amount of such
surrendered Original Note. The Exchange Notes will evidence the same debt as the
Original Notes and will be issued, and holders thereof will be entitled to the
same rights as holders of the Original Notes, under the Indenture. The Exchange
Notes will bear interest from the later of October 15, 2003 and the latest
interest payment date (if any) of the Original Notes to occur prior to the issue
date of the Exchange Notes. Holders of the Original Notes whose Original Notes
are accepted for exchange pursuant to the Exchange Offer will not receive
interest on such Original Notes for any period subsequent to the later of
October 15, 2003 and the last interest payment date (if any) to occur prior to
the issue date of the Exchange Notes.
The terms of the Exchange Notes are identical in all material respects to
the Original Notes except for certain transfer restrictions and registration
rights relating to the Original Notes and except that, in the event that either
(i) an Exchange Offer Registration Statement is not filed with the Commission on
or prior to the 60th day following the date of original issue of the Original
Notes, (ii) such Exchange Offer Registration Statement is not declared effective
on or prior to the 180th day following the date of original issue of the
Original Notes, (iii) the Exchange Offer is not completed within 45 days after
the initial effective date of the Exchange Offer Registration Statement, (iv)
the Exchange Offer Registration Statement is declared effective but thereafter
ceases to be effective or useable or (v) certain other events specified in the
Registration Rights Agreement occur, then special interest, in addition to the
interest set forth on the cover page hereof, shall accrue on the Original Notes
at a per annum rate of 0.5% for the first 90 days of the Registration Default
Period and at a per annum rate of 1.0% thereafter for the remaining portion of
the Registration Default Period. Upon cure of the Registration Default, the
special interest shall no longer accrue and the Original Notes will bear
interest at the original rate; provided, however, that if, after any such cure,
a different Registration Default occurs, then special interest shall again
accrue in accordance with the foregoing provisions. See "Description of the
Notes -- Exchange Offer; Registration Rights."
18
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Original Notes which are
validly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on January 15, 2004; provided, however, that if the Company in
its sole discretion extends the period of time for which the Exchange Offer is
open, the term "Expiration Date" means 5:00 p.m., New York City time, on the
latest date to which the Exchange Offer is extended.
As of the date of this Prospectus, $350 million aggregate principal amount
of Original Notes are outstanding. This Prospectus, together with the applicable
Letter of Transmittal, is first being sent on or about December 15, 2003, to all
registered holders of Original Notes known to the Company. The Company's
obligation to accept Original Notes for exchange pursuant to the Exchange Offer
is subject to certain conditions set forth under "-- Certain Conditions to the
Exchange Offer" below.
Original Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 or any integral multiple thereof.
The Company expressly reserves the right to extend or amend the Exchange
Offer at any time or from time to time prior to the Expiration Date or to
terminate the Exchange Offer and not to accept for exchange any Original Notes
not theretofore accepted for exchange for any reason, including if any of the
events set forth below under "-- Certain Conditions to the Exchange Offer" shall
have occurred and shall not have been waived by the Company. The Company will
give oral or written notice of any extension, amendment, non-acceptance or
termination to the Exchange Agent and to the holders of the Original Notes as
promptly as practicable, such notice to such holders in the case of any
extension to be issued by means of a press release or other public announcement
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any extension of the Exchange
Offer, all Original Notes previously tendered pursuant to the Exchange Offer
will remain subject to the Exchange Offer.
PROCEDURES FOR TENDERING ORIGINAL NOTES
The tender to the Company of Original Notes by a holder thereof as set
forth below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a holder who wishes to tender
Original Notes for exchange pursuant to the Exchange Offer must transmit a
properly completed and duly executed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to, or an Agent's Message (as
defined herein) in connection with a book-entry transfer must be completed and
received by, the Exchange Agent at the address set forth in the Letter of
Transmittal on or prior to the Expiration Date. In addition, either (i)
certificates for such Original Notes must be received by the Exchange Agent
along with the Letter of Transmittal, (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Original Notes, if such procedure
is available, into the Exchange Agent's account at DTC (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below,
must be received by the Exchange Agent on or prior to the Expiration Date or
(iii) the holder must comply with the guaranteed delivery procedures described
below. THE METHOD OF DELIVERY OF ORIGINAL NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR ORIGINAL NOTES
SHOULD BE SENT TO THE COMPANY.
It is anticipated that any financial institution that is a participant in
DTC's system may use DTC's automated tender offer program to tender. In that
event, participants in the program may, instead of physically completing and
signing the Letter of Transmittal and delivering it to the Exchange Agent,
transmit their acceptance of the Exchange Offer electronically. They would do so
by causing DTC to transfer the Original
19
Notes to be tendered to the Exchange Agent in accordance with its procedures for
transfer. DTC would then send an Agent's Message to the Exchange Agent. The term
"Agent's Message" means a message transmitted by the Book-Entry Transfer
Facility to, and received by, the Exchange Agent, forming a part of a
confirmation of a book-entry transfer, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Original Notes, that such participant
has received and agrees to be bound by the terms of the Letter of Transmittal
and that the Company may enforce such agreement against such participant.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Original Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the
Original Notes who has not completed the box entitled "Special Issuance
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be made by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States or which is otherwise an
"eligible guarantor" institution within the meaning of Rule 17Ad-15 under the
United States Securities Exchange Act of 1934, as amended (the "Exchange Act")
(collectively, "Eligible Institutions").
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Original Notes tendered for exchange will be
determined by the Company, in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Original Notes not properly tendered or to not accept
any particular Original Notes which acceptance might, in the judgment of the
Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange Offer
as to any particular Original Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Original Notes in the Exchange Offer). The interpretation of the terms
and conditions of the Exchange Offer as to any particular Original Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
Original Notes for exchange must be cured within such reasonable period of time
as the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Original Notes for exchange, nor
shall any of them incur any liability for failure to give such notification.
If Original Notes are registered in the name of a person other than a
signer of the Letter of Transmittal, the Original Notes surrendered for exchange
must be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered holder with the signature
thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Original Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
In all cases, issuance of Exchange Notes for Original Notes that are
accepted for exchange pursuant to the Exchange offer will be made only after
timely receipt by the Exchange Agent of certificates for such Original Notes or
a timely Book-Entry Confirmation of such Original Notes in the Exchange Agent's
account at the Book-Entry Transfer Facility, a properly completed and duly
executed Letter of Transmittal and all other required documents or an Agent's
Message. If any tendered Original Notes are not accepted for any reason set
forth in the terms and conditions of the Exchange Offer or if Original Notes are
submitted for a greater principal amount than the holder desires to exchange,
such unaccepted or non-exchanged Original Notes will be returned without expense
to the tendering holder thereof (or, in the case of Original Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer
Facility
20
pursuant to the book-entry procedures described below, such non-exchanged
Original Notes will be credited to an account maintained with such Book-Entry
Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to each of the Original Notes at the Book-Entry Transfer Facility for
purposes of the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility system may make book-entry delivery of Original
Notes by causing DTC to transfer such Original Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility in accordance with DTC's procedures
for transfer. However, although delivery of Original Notes may be effected
through book-entry transfer at the Book-Entry Transfer Facility, the applicable
Letter of Transmittal or facsimile thereof, with any required signature
guarantees and any other required documents, or an Agent's Message, must, in any
case, be transmitted to and received by the Exchange Agent at the address set
forth in the Letter of Transmittal on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of Original Notes desires to tender such Original
Notes and the Original Notes are not immediately available, or time will not
permit such holder's Original Notes or other required documents to reach the
Exchange Agent before the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if (i)
the tender is made through an Eligible Institution, (ii) prior to the Expiration
Date, the Exchange Agent received from such Eligible Institution a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) and
Notice of Guaranteed Delivery, substantially in the form provided by the Company
(by telegram, telex, facsimile transmission, or mail or hand delivery), setting
forth the name and address of the holder of Original Notes and the amount of
Original Notes tendered, stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Original Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Original Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the Letter
of Transmittal, are received by the Exchange Agent within five NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following
terms and conditions, which are part of the Exchange Offer.
Without disposing of the debt evidenced by the Original Notes, the party
tendering Original Notes for exchange pursuant to the Exchange Offer (the
"Transferor") will exchange, assign and transfer the Original Notes to the
Company and irrevocably constitute and appoint the Exchange Agent as the
Transferor's agent and attorney-in-fact to cause the Original Notes to be
assigned, transferred and exchanged. The Transferor will represent and warrant
that it has full power and authority to tender, exchange, assign and transfer
the Original Notes and to acquire Exchange Notes issuable upon the exchange of
such tendered Original Notes, and that, when the same are accepted for exchange,
the Company will acquire good and unencumbered title to the tendered Original
Notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The Transferor will also warrant that it will,
upon request, execute and deliver any additional documents deemed by the Company
to be necessary or desirable to complete the exchange, assignment and transfer
of tendered Original Notes. The Transferor will further agree that acceptance of
any tendered Original Notes by the Company and the issuance of Exchange Notes in
exchange therefor shall constitute performance in full by the Company of certain
obligations under the Registration Rights Agreement
21
and that the Company shall have no further obligations or liabilities thereunder
(except in certain limited circumstances).
All authority conferred by the Transferor will survive the death or
incapacity of the Transferor and every obligation of the Transferor shall be
binding upon the heirs, legal representative, successors, assigns, executors and
administrators of such Transferor.
By tendering Original Notes and executing the Letter of Transmittal, the
Transferor will certify that it is not an Affiliate of the Company, that it is
not a broker-dealer that owns Original Notes acquired directly from the Company
or any Affiliate of the Company, that it is acquiring the Exchange Notes under
the Exchange Offer in the ordinary course of such Transferor's business and that
such Transferor is not participating, and has no arrangement or understanding
with any person to participate, in a distribution of such Exchange Notes.
WITHDRAWAL RIGHTS
Tenders of Original Notes may be withdrawn at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth in the Letter of
Transmittal. Any such notice of withdrawal must specify the name of the person
having tendered the Original Notes to be withdrawn, identify the Original Notes
to be withdrawn (including the principal amount of such Original Notes), and
(where certificates for Original Notes have been transmitted) specify the name
in which such Original Notes are registered, if different from that of the
withdrawing holder. If certificates for Original Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Original Notes have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Original Notes and otherwise comply with the
procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, in its sole discretion, which determination shall be final and
binding on all parties. Any Original Notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the Exchange Offer. Any
Original Notes which have been tendered for exchange but which are not exchanged
for any reason will be returned to the holder thereof without cost to such
holder (or, in the case of Original Notes tendered by book-entry transfer into
the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described above, such Original Notes will be
credited to an account maintained with such Book-Entry Transfer Facility for the
Original Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Original Notes may be
re-tendered by following one of the procedures described under "-- Procedures
for Tendering Original Notes" above at any time on or prior to the Expiration
Date.
ACCEPTANCE OF ORIGINAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Original Notes validly tendered and not withdrawn and
the issuance of the Exchange Notes will be made promptly after the Expiration
Date. For the purposes of the Exchange Offer, the Company shall be deemed to
have accepted for exchange validly tendered Original Notes when, as and if the
Company has given oral or written notice thereof to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders of Original
Notes for the purposes of receiving Exchange Notes from the Company and causing
the Original Notes to be assigned, transferred and exchanged, without disposing
of the debt evidenced by the Original Notes. Upon the terms and subject to the
conditions of the Exchange Offer, delivery of Exchange Notes to be issued in
exchange for accepted Original Notes will be made by the Exchange Agent promptly
after acceptance of the tendered Original Notes.
22
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue Exchange Notes in
exchange for, any Original Notes and may terminate or amend the Original Offer,
if at any time before the acceptance of such Original Notes for exchange or the
exchange of the Exchange Notes for such Original Notes, any of the following
events shall occur:
(a) the Exchange Offer violates applicable law or any applicable
interpretation of the staff of the Commission;
(b) an action or proceeding shall have been instituted or threatened in
any court or by any governmental agency which might materially impair
the ability of the Company to proceed with the Exchange Offer, or a
material adverse development shall have occurred in any existing
action or proceeding with respect to the Company; or
(c) all governmental approvals shall not have been obtained, which
approvals the Company deems necessary for the consummation of the
Exchange Offer.
The foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its reasonable judgment. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Original Notes
tendered, and no Exchange Notes will be issued in exchange for any such Original
Notes, if at such time any stop or cease trade order shall be threatened or in
effect with respect to the Registration Statement of which this Prospectus
constitutes a part, this Prospectus or the qualification of the Indenture under
the United States Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
The Exchange Offer is not conditioned upon any minimum principal amount of
Original Notes being tendered or accepted for exchange.
EXCHANGE AGENT
JPMorgan Chase Bank has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at the address set forth in the Letter of Transmittal. Questions
and requests for assistance, requests for additional copies of this Prospectus
or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery
should be directed to the Exchange Agent addressed as follows:
BY MAIL, HAND OR OVERNIGHT DELIVERY:
JPMORGAN CHASE BANK
1301 FIFTH AVENUE
SUITE 3410
SEATTLE, WA 98101
ATTENTION: MICHAEL A. JONES
FACSIMILE: (206) 624-3867
CONFIRM BY TELEPHONE: (206) 903-4908
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH IN THE LETTER OF
TRANSMITTAL OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
23
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payment to brokers,
dealers, or others soliciting acceptances of the Exchange Offer. The Company
will, however, pay certain other expenses to be incurred in connection with the
Exchange Offer, including the fees and expenses of the Exchange Agent,
accounting and certain legal fees.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
business or affairs of the Company since the respective dates as of which
information is given herein. The Exchange Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Original Notes in any
jurisdiction in which the making of the Exchange Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. However, the
Company may, in its discretion, take such action as it may deem necessary to
make the Exchange Offer in any such jurisdiction and extend the Exchange Offer
to holders of Original Notes in such jurisdiction. In any jurisdiction the
securities laws or blue sky laws of which require the Exchange Offer to be made
by a licensed broker or dealer, the Exchange Offer is being made on behalf of
the Company by one or more registered brokers or dealers which are licensed
under the laws of such jurisdiction.
TRANSFER TAXES
Holders who tender their Original Notes for exchange pursuant to the
Exchange Offer will not be obligated to pay any transfer taxes in connection
therewith, except that holders who instruct the Company to register Exchange
Notes in the name of, or request that Original Notes not tendered or not
accepted in the Exchange Offer be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Original Notes who do not exchange their Original Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Original Notes as set forth in the legend
thereon as a consequence of the issuance of the Original Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act, and similar requirements of applicable
securities laws of the states of the United States and other jurisdictions. In
general, the Original Notes may not be offered or sold, unless registered under
the Securities Act or registered or qualified for distribution under the
securities laws of other applicable jurisdictions, except pursuant to an
exemption therefrom or in a transaction not subject thereto. Except in certain
limited circumstances provided for in the Registration Rights Agreement, the
Company does not intend to register the Original Notes under the Securities Act
or to register or qualify for distribution the Original Notes under the
securities laws of any such jurisdiction. In addition, any holder of Original
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
secondary resale transaction.
Original Notes that are not tendered or that are tendered but not accepted
by the Company for exchange pursuant to the Exchange Offer, will, following
consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof provided for in the Original Notes and the
Indenture and, upon consummation of the Exchange Offer, certain registration
rights under the Registration Rights Agreement relating to the Original Notes
will terminate. See "Description of the Notes -- Exchange Offer; Registration
Rights."
To the extent that Original Notes are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered, or tendered but
unaccepted, Original Notes could be adversely affected, and the volatility of
the market price of the Original Notes could increase, due to a reduction in
liquidity. Although the Original
24
Notes are eligible for trading in the Private Offerings, Resales and Trading
through Automated Linkages (PORTAL) market, it is not expected that an active
market for the Original Notes will develop while they are subject to
restrictions on transfer.
OTHER
Participation in the Exchange Offer is voluntary, and holders of Original
Notes should carefully consider whether to accept the Exchange Offer and tender
their Original Notes. Holders of the Original Notes are urged to consult their
financial and tax advisors in making their own decisions on what action to take.
25
DESCRIPTION OF THE NOTES
The Exchange Notes, like the Original Notes, are to be issued under an
indenture (the "Indenture") dated as of October 9, 2003 among the Company,
JPMorgan Chase Bank, as U.S. Trustee (the "U.S. Trustee"), and CIBC Mellon Trust
Company, as Canadian Trustee (the "Canadian Trustee" and together with the U.S.
Trustee, each a "Trustee," and collectively, the "Trustees"). The Exchange Notes
will evidence the same debt as the Original Notes and will be issued, and the
holders thereof will be entitled to the same rights as holders of the Original
Notes, under the Indenture. The terms of the Exchange Notes are identical in all
material respects to the Original Notes except for certain transfer restrictions
and registration rights relating to the Original Notes and except that, in the
event that either (i) an Exchange Offer Registration Statement is not filed with
the Commission on or prior to the 60th day following the date of original issue
of the Original Notes, (ii) such Exchange Offer Registration Statement is not
declared effective on or prior to the 180th day following the date of original
issue of the Original Notes, (iii) the Exchange Offer is not completed within 45
days after the initial effective date of the Exchange Offer Registration
Statement, (iv) the Exchange Offer Registration Statement is declared effective
but thereafter ceases to be effective or useable or (v) certain other events
specified in the Registration Rights Agreement occur, then special interest, in
addition to the interest set forth on the cover page hereof, shall accrue on the
Original Notes at a per annum rate of 0.5% for the first 90 days of the
Registration Default Period and at a per annum rate of 1.0% thereafter for the
remaining portion of the Registration Default Period. Upon cure of the
Registration Default, the special interest shall no longer accrue and the
Original Notes will bear interest at the original rate; provided, however, that
if, after any such cure, a different Registration Default occurs, then special
interest shall again accrue in accordance with the foregoing provisions.
Accordingly, unless specifically stated to the contrary, the following
description applies equally to all Notes. A copy of the Indenture is available
upon request from the Company. The Indenture is subject to the provisions of the
Canada Business Corporations Act and, consequently, is exempt from the operation
of certain provisions of the Trust Indenture Act, pursuant to Rule 4d-9
thereunder. The statements under this caption relating to the Notes and the
Indenture are summaries and do not purport to be complete, and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Indenture including the definitions of certain terms therein. Unless otherwise
indicated, references under this caption to sections, "sec." or articles are
references to the Indenture. Where reference is made to particular provisions of
the Indenture or to defined terms not otherwise defined herein, such provisions
or defined terms are incorporated herein by reference.
For the purposes of this "Description of the Notes" all references herein
to "Notes" shall be deemed to refer collectively to the Original Notes and the
Exchange Notes and any references to the date of the Indenture refer to October
9, 2003, in each case unless otherwise indicated or the context otherwise
requires.
GENERAL
The Notes will be senior unsecured obligations of the Company and will
mature on October 15, 2013. The Notes will be issued initially in a total
principal amount of $350 million. The Company may issue additional notes of the
same series under the Indenture from time to time, subject to the "Limitation on
Debt and Preferred Shares" covenant, without the consent of the holders of the
Notes. The Notes and any additional notes of this series subsequently issued
under the Indenture will be treated as a single class for all purposes under the
Indenture, including, without limitation, waivers, amendments, redemptions and
offers to purchase.
The Notes bear interest at the rate per annum shown on the front cover of
this Prospectus from October 9, 2003, payable semi-annually on April 15 and
October 15 of each year, commencing April 15, 2004, to the Person in whose name
the Note (or any predecessor Note) is registered at the close of business on the
preceding April 1 or October 1, as the case may be. The Notes will bear interest
on overdue principal and premium, if any, and, to the extent permitted by law,
overdue interest at the rate per annum shown on the front cover of this
Prospectus plus 1%. Interest on the Notes will be computed on the basis of a
360-day year of twelve 30-day months. The yearly rate of interest that is
equivalent to the rate payable under the Notes is the rate payable multiplied by
the actual number of days in the year and divided by 360 and is disclosed herein
solely for the purpose of providing the disclosure required by the Interest Act
(Canada). (sec.sec. 301, 309 and 312)
26
Principal of and premium, if any, and interest on the Notes will be
payable, and the Notes may be presented for registration of transfer and
exchange, at the office or agency of the Company maintained for that purpose in
the Borough of Manhattan, The City of New York, provided that, at the option of
the Company, payment of interest on the Notes may be made by check mailed to the
address of the Person entitled thereto as it appears in the Note Register. Until
otherwise designated by the Company, such office or agency will be the corporate
trust office of the U.S. Trustee, as Paying Agent and Registrar. (sec.sec. 301,
305 and 1002)
The Notes will be issued in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. (sec. 302) No service
charge will be made for any registration of transfer or exchange of Notes, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (sec. 305)
Upon any exchange of Original Notes for a like principal amount of
Exchange Notes in connection with the Exchange Offer, the Original Notes so
exchanged shall be cancelled and shall no longer be deemed outstanding for any
purpose. The Original Notes and the Exchange Notes shall constitute one class of
securities for all purposes under the Indenture, including, without limitation,
amendments, waivers and redemptions and the Original Notes and the Exchange
Notes shall evidence the same indebtedness created upon issuance of the Original
Notes.
RANKING
The Notes will be senior unsecured obligations of the Company and
indebtedness evidenced by the Notes will rank pari passu in right of payment
with all other existing and future senior unsecured obligations of the Company
and senior in right of payment to all existing and future obligations of the
Company expressly subordinated in right of payment to the Notes. Holders of
secured obligations of the Company will, however, have claims that are prior to
the claims of the holders of the Notes with respect to the assets securing such
obligations. In addition, the Notes effectively will be subordinated to all
existing and future indebtedness and other liabilities of the Company's
Subsidiaries. As of September 30, 2003, after giving pro forma effect to the
sale of the Original Notes and the application of the net proceeds of such sale,
the Company would have had approximately $760.4 million of senior unsecured
indebtedness and $50.8 million of senior secured indebtedness, and the Company's
Subsidiaries would have had $777.0 million of liabilities.
OPTIONAL REDEMPTION
General
The Notes will be subject to redemption at the option of the Company, in
whole or in part, at any time on or after October 15, 2008 and prior to maturity
upon not less than 30 nor more than 60 days' notice mailed to each Holder of
Notes to be redeemed at such Holder's address appearing in the Note Register, in
amounts of $1,000 or an integral multiple of $1,000, at the following Redemption
Prices (expressed as percentages of the principal amount) plus accrued interest
to but excluding the Redemption Date (subject to the right of Holders of record
on the relevant Regular Record Date to receive interest due on an Interest
Payment Date that is on or prior to the Redemption Date), if redeemed during the
12-month period beginning October 15 of the years indicated:
REDEMPTION
YEAR PRICE
---- ----------
2008........................................................ 103.75%
2009........................................................ 102.50%
2010........................................................ 101.25%
2011 and thereafter......................................... 100.00%
If less than all the Notes are to be redeemed, the Trustees shall select,
in such manner as they shall deem fair and appropriate, the particular Notes to
be redeemed or any portion thereof that it is an integral multiple of $1,000.
(sec.sec. 204, 1101, 1104, 1105 and 1007)
27
The Notes will not have the benefit of any sinking fund obligations.
Redemption for Changes in Canadian Withholding Tax
The Notes will be subject to redemption at the option of the Company, as a
whole but not in part, at any time upon not less than 30 nor more than 60 days'
notice mailed to each Holder of Notes at the addresses appearing in the Note
Register at a redemption price equal to 100% of the principal amount of the
Notes plus accrued interest to but excluding the Redemption Date if the Company
has become or would become obligated to pay on the next date on which any amount
would be payable under or with respect to the Notes, any Additional Amounts as a
result of any change or amendment to the laws (or regulations promulgated
thereunder) of Canada (or any political subdivision or taxing authority thereof
or therein), or any change in or interpretation or administration of such laws
or regulations by the relevant taxing authority, which change or amendment is
announced or becomes effective on or after the date of the Indenture. See
"-- Additional Amounts for Canadian Taxes." (sec. 1101)
FALL-AWAY EVENT
In the event that the Notes are rated Investment Grade by Moody's and S&P
and no Event of Default or Default shall have occurred and be continuing (the
occurrence of the foregoing events, being collectively referred to as the
"Fall-away Event"), upon the request of the Company certain of the covenants
described under "-- Covenants" will no longer be applicable to the Company and
its Restricted Subsidiaries. The covenants that will be released upon the
Fall-away Event are "Limitation on Debt and Preferred Shares," "Limitation on
Sale and Leaseback Transactions," "Limitation on Restricted Payments,"
"Limitation on Asset Dispositions," "Transactions with Affiliates and Related
Persons," "Change of Control" and clauses (iii) and (iv) under "Amalgamations,
Mergers, Consolidations and Certain Sales of Assets." As a result, upon the
occurrence of the Fall-away Event the Notes will be entitled to substantially
less covenant protection. (sec. 1019)
COVENANTS
The Indenture provides that all of the following restrictive covenants
will be applicable to the Company and its Restricted Subsidiaries unless and
until the Fall-away Event occurs. In such event, the Company will be released
from its obligations to comply with certain of the restrictive covenants
described below as well as certain other obligations. See "-- Fall-away Event."
Limitation on Debt and Preferred Shares
The Company may not Incur any Debt, and may not permit any Restricted
Subsidiary to Incur any Debt or issue any Preferred Shares, unless, after giving
pro forma effect to the Incurrence of such Debt or the issuance of such
Preferred Shares and the receipt and application of the proceeds thereof, (i)
the Consolidated Cash Flow Coverage Ratio of the Company would be greater than
1.5 to 1 and (ii) the Consolidated Net Debt Ratio of the Company would be no
greater than 0.6 to 1 (clauses (i) and (ii) above, collectively being the "Debt
Incurrence Provisions").
Notwithstanding the foregoing limitation, the Company and any Restricted
Subsidiary will be permitted to Incur and issue the following:
(a) Debt evidenced by the Notes;
(b) Debt of the Company to any Restricted Subsidiary and Debt of any
Restricted Subsidiary to, or Preferred Shares of any Restricted
Subsidiary owned by, the Company or another Restricted Subsidiary;
(c) Debt Incurred or Preferred Shares issued by a Person and outstanding
at the time such Person became a Restricted Subsidiary, or such Person
is merged into a Restricted Subsidiary, or a Restricted Subsidiary
merges into or consolidates or amalgamates with such Person (in a
transaction in which the resulting entity is or becomes a Restricted
Subsidiary), excluding Debt or
28
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 Restricted Subsidiary or such merger,
consolidation or amalgamation;
(d) Debt Incurred by the Company or any Restricted Subsidiary secured by a
Lien on an asset and outstanding at the time such asset was acquired
by the Company or any Restricted Subsidiary, excluding Debt incurred
in connection with the transaction pursuant to which such asset was
acquired;
(e) Debt of the Company or any Restricted Subsidiary Incurred under a
Qualifying Construction Loan;
(f) Debt of the Company or any Restricted 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 (i) 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, (ii) all such Debt
could have been Incurred under the Debt Incurrence Provisions on the
date the first Cdn.$1.00 of such Debt was Incurred (the "Development
Start Date") and (iii) for purpose of the calculation of the Debt
Incurrence Provisions, the full amount of Debt Incurred pursuant to
this clause (f) 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;
(g) Debt of the Company or any Restricted 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 Restricted Subsidiary after the date of the
Indenture; provided that (i) with respect to any revolving credit
facility which becomes available to the Company or any Restricted
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 Cdn.$1.00 of such
Debt was Incurred and (ii) for purpose of the calculation of the Debt
Incurrence Provisions, the full amount of each revolving credit
facility available to the Company or any Restricted Subsidiary shall
be considered to be outstanding as of the later of the date of the
Indenture and the date the first Cdn.$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 Restricted
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);
(h) Debt of the Company or any Restricted Subsidiary which is Incurred or
Preferred Shares of any Restricted Subsidiary issued in exchange for,
or the proceeds of which are used to renew, extend, repay, redeem,
purchase, refinance or refund (each a "refinancing," and "refinance"
and "refinanced" shall have meanings correlative to the foregoing),
any Debt of the Company or any Restricted Subsidiary or Preferred
Shares of any Restricted Subsidiary outstanding on the date of the
Indenture or permitted to be Incurred pursuant to the Debt Incurrence
Provisions, this clause (h) and clauses (a), (c), (d), (f) and (g)
above; provided, however, that (i) the Debt which is Incurred or
Preferred Shares which are issued shall not exceed the aggregate
principal amount of all Debt and the aggregate Preferred Share Amounts
with respect to all Preferred Shares which are so exchanged or
refinanced at such time, plus the amount of any premium required to be
paid in connection with such exchange or refinancing pursuant to the
terms of the Debt or Preferred
29
Shares which are so exchanged or refinanced or the amount of any premium
reasonably determined by the Company or the relevant Restricted
Subsidiary as necessary to accomplish such exchange or refinancing by
means of a tender offer or privately negotiated agreement, plus the
expenses of the Company and the relevant Restricted Subsidiary Incurred
in connection with such exchange or refinancing; (ii) Debt the proceeds
of which are used to refinance Debt of the Company which is pari passu
with or subordinate in right of payment to the Notes shall only be
permitted if (x) in the case of any refinancing of Debt of the Company
which is pari passu to the Notes, the refinancing Debt is made pari
passu to the Notes or subordinated in right of payment to the Notes, and
(y) in the case of any refinancing of Debt which is subordinated in
right of payment to the Notes, the refinancing Debt is made subordinate
in right of payment to the Notes at least to the same extent as the Debt
being refinanced; (iii) the refinancing Debt by its terms, or by the
terms of any agreement or instrument pursuant to which such Debt is
issued, (1) does not provide for payments of principal of such Debt at
the stated maturity thereof or by way of a sinking fund applicable
thereto or by way of any mandatory redemption, defeasance, retirement or
repurchase thereof (including any redemption, defeasance, retirement or
repurchase which is contingent upon events or circumstances, but
excluding any retirement by virtue of acceleration of such Debt upon any
event of default thereunder), in each case prior to the stated maturity
of the Debt being refinanced and (2) does not permit redemption or other
retirement (including pursuant to an offer to purchase) of such Debt at
the option of the holder thereof prior to the final Stated Maturity of
the Debt being refinanced, other than a redemption or other retirement
at the option of the holder of such Debt (including pursuant to an offer
to purchase) which is conditioned upon provisions substantially similar
to those described under "-- Change of Control" and "-- Limitation on
Asset Dispositions;" and (iv) in the case of any refinancing of Debt
Incurred by the Company, the refinancing Debt may be Incurred only by
the Company, and in the case of any refinancing of Debt Incurred by a
Restricted Subsidiary, the refinancing Debt may be Incurred by any
Restricted Subsidiary or the Company; and
(i) Debt of the Company or any Restricted Subsidiary arising by operation
of law or (i) consisting of reimbursement obligations under letters
of credit or similar facilities, (ii) in respect of surety bonds and
performance bonds provided in the ordinary course of business or
(iii) 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. (sec. 1008)
Limitation on Sale and Leaseback Transactions
The Company may not enter into any Sale and Leaseback Transaction unless
the Sale and Leaseback Transaction is treated as an Asset Disposition and all of
the conditions of the Indenture described under the "Limitation on Asset
Disposition" covenant (including the provisions concerning the application of
Net Available Proceeds) are satisfied with respect to such Sale and Leaseback
Transaction, treating all of the consideration received in such Sale and
Leaseback Transaction as Net Available Proceeds for purposes of such covenant.
(sec. 1009)
Limitation on Restricted Payments
The Company (i) may not, and may not permit any Restricted Subsidiary of
the Company to, directly or indirectly, declare or pay any dividend or make any
distribution (including any payment in connection with any merger, amalgamation
or consolidation derived from assets of the Company or any Restricted
Subsidiary) in respect of its Capital Stock or to the holders thereof, excluding
(a) any dividends or distributions by the Company payable solely in shares of
its Capital Stock (other than Redeemable Stock), and (b) in the case of a
Restricted Subsidiary, dividends or distributions payable (1) to the Company or
a Restricted Subsidiary and (2) to other holders of Capital Stock of such
Restricted Subsidiary, provided that at least a pro rata amount is paid to the
Company and/or a Restricted Subsidiary, as the case may be, except for any
dividend or distribution required to be paid or made to other holders of Capital
Stock of such Restricted Subsidiary pursuant to the terms of such Capital Stock
or any distribution required to be made to other holders of Capital
30
Stock of such Restricted Subsidiary pursuant to an agreement entered into in the
ordinary course of business, the terms of which expressly contemplate that such
distribution be made without a corresponding pro rata amount being paid to the
Company and/or a Restricted Subsidiary, as the case may be, (ii) may not, and
may not permit any Restricted Subsidiary to, directly or indirectly, purchase,
redeem, or otherwise acquire or retire for value (a) any Capital Stock of the
Company or any Related Person of the Company or (b) any options, warrants or
other rights to acquire Capital Stock of the Company or any Related Person of
the Company or any securities convertible or exchangeable into Capital Stock of
the Company or any Related Person of the Company(excluding Debt of the Company
which is convertible into Capital Stock of the Company), (iii) may not make, or
permit any Restricted Subsidiary to make, any Investment (other than a Permitted
Investment) in any Unrestricted Subsidiary or any Related Person of the Company,
other than an Investment in a Person that will become or be merged into or
amalgamated or consolidated with a Restricted Subsidiary as a result of such
Investment and (iv) may not, and may not permit any Restricted Subsidiary to,
redeem, repurchase, defease or otherwise acquire or retire for value prior to
any scheduled maturity, repayment or sinking fund payment, Debt of the Company
which is subordinate in right of payment to the Notes (each of clauses (i)
through (iv) being a "Restricted Payment") if:
(1) an Event of Default, or an 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 or would result from such Restricted
Payment; or
(2) after giving pro forma effect to such Restricted Payment as if such
Restricted Payment had been made at the beginning of the applicable
four-fiscal-quarter period, the Company could not Incur at least $1.00
of additional Debt pursuant to the Debt Incurrence Provisions; or
(3) upon giving effect to such Restricted Payment, the aggregate of all
Restricted Payments from August 19, 1998 exceeds the sum of (a) 50% of
the cumulative Consolidated Net Income (or, in the case the cumulative
Consolidated Net Income shall be negative, less 100% of such deficit)
of the Company from January 1, 1998 through the last day of the last
full fiscal quarter ending immediately preceding the date of such
Restricted Payment for which quarterly or annual financial statements
are available (taken as a single accounting period), plus (b) 100% of
the aggregate net cash proceeds received by the Company after August
19, 1998 from contributions of capital or the issuance and sale (other
than to a Restricted Subsidiary) of Capital Stock (other than
Redeemable Stock) of the Company, options, warrants or other rights to
acquire Capital Stock (other than Redeemable Stock) of the Company and
Debt of the Company that has been converted into or exchanged for
Capital Stock (other than Redeemable Stock and other than by or from a
Restricted Subsidiary) of the Company after August 19, 1998, provided
that any such net proceeds received by the Company from an employee
stock ownership plan financed by loans from the Company or a
Restricted Subsidiary of the Company shall be included only to the
extent such loans have been repaid with cash on or prior to the date
of determination, plus (c) an amount equal to the net reduction in
Investments by the Company and its Restricted Subsidiaries, subsequent
to August 19, 1998, in any Person subject to clause (iii) of the first
paragraph of this section upon the disposition, liquidation or
repayment (including by way of dividends) thereof or from
redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries, but only to the extent such amounts are not included in
Consolidated Net Income and not to exceed in the case of any one
Person the amount of Investments previously made by the Company and
its Restricted Subsidiaries in such Person. Prior to the making of any
Restricted Payment the Company shall deliver to the Trustees an
Officers' Certificate setting forth the computations by which the
determinations required by clauses (2) and (3) above were made and
stating that 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, has occurred and is continuing or will result from such
Restricted Payment.
Notwithstanding the foregoing, so long as 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 or would result
therefrom, (i) the Company and any Restricted Subsidiary of the Company may pay
any dividend on Capital Stock of any class within 60 days after the declaration
thereof if, on the date when the
31
dividend was declared, the Company or such Restricted Subsidiary could have paid
such dividend in accordance with the foregoing provisions, provided that in no
event shall such dividend payment be more than Cdn.$9,000,000, (ii) the Company
may refinance any Debt otherwise permitted by clause (h) of the second paragraph
under the "Limitation on Debt and Preferred Shares" covenant or solely in
exchange for or out of the net proceeds of the substantially concurrent sale
(other than from or to a Restricted Subsidiary or from or to an employee stock
ownership plan financed by loans from the Company or a Restricted Subsidiary of
the Company) of shares of Capital Stock (other than Redeemable Stock) of the
Company, (iii) the Company may purchase, redeem, acquire or retire any shares of
Capital Stock of the Company solely in exchange for or out of the net proceeds
of the substantially concurrent sale (other than from or to a Restricted
Subsidiary or from or to an employee stock ownership plan financed by loans from
the Company or a Restricted Subsidiary of the Company) of shares of Capital
Stock (other than Redeemable Stock) of the Company, (iv) the Company may
purchase or redeem any Debt from Net Available Proceeds to the extent permitted
under the "Limitation on Asset Dispositions" covenant and (v) the Company and
any Restricted Subsidiary may make payments or distributions to or in connection
with an amalgamation, consolidation, merger or transfer of assets that complies
with the provisions set forth under the "Amalgamations, Mergers, Consolidations
and Certain Sales of Assets" covenant. Any payment made pursuant to clause (i),
(ii) or (iii) of this paragraph shall be a Restricted Payment for purposes of
calculating aggregate Restricted Payments pursuant to the preceding paragraph.
Any payments made by the Company to purchase, redeem, or pay dividends on, the
NRP Shares in accordance with the terms of the NRP Shares shall not be deemed a
Restricted Payment for purposes of calculating aggregate Restricted Payments
pursuant to the preceding paragraph. (sec. 1010)
Limitation on Liens
The Indenture provides that the Company will not issue, assume or
guarantee any Debt for borrowed money secured by any Lien on any property or
assets now owned or hereafter acquired by the Company without making effective
provision whereby any and all Notes then or thereafter outstanding will be
secured by a Lien on such property or assets equally and ratably with any and
all other obligations thereby secured for so long as any such obligations shall
be so secured; provided that the foregoing restrictions will not apply to
Permitted Liens. (sec. 1011)
Limitation on Asset Dispositions
The Company may not, and may not permit any Restricted Subsidiary to, make
any Asset Disposition in one or more related transactions, unless: (i) the
Company or the Restricted Subsidiary, as the case may be, receives consideration
for such disposition at least equal to the fair market value for the assets sold
or disposed of as determined by the Board of Directors in good faith and
evidenced by a resolution of the Board of Directors filed with the Trustees;
(ii) at least 75% of the consideration for such disposition consists of cash or
readily marketable cash equivalents and (iii) all Net Available Proceeds, less
any amounts invested within 360 days of such disposition in assets related to
the business of the Company and its Restricted Subsidiaries or applied within
360 days of such disposition to the payment of Debt of the Company or a
Restricted Subsidiary, are applied within 360 days of such disposition (1)
first, to make an Offer to Purchase outstanding Notes at 100% of their principal
amount plus accrued interest to the date of purchase and, to the extent required
by the terms thereof, any other Debt of the Company that is pari passu with the
Notes at a price no greater than 100% of the principal amount thereof plus
accrued interest to the date of purchase, and (2) second, to the extent of any
remaining Net Available Proceeds, to any other use as determined by the Company
which is not otherwise prohibited by the Indenture. (sec. 1012)
Notwithstanding the foregoing, the Company shall not be required to
purchase more than 25% of the original aggregate principal amount of the Notes
in the aggregate pursuant to clause (1) above prior to the day following the
fifth anniversary of the original issuance of the Notes, and the maximum amount
to be applied to the purchase of the Notes in connection with any Offer to
Purchase made pursuant to clause (1) above having a purchase date prior to the
day following the fifth anniversary of the original issuance of the Notes shall
be the lesser of (x) the remaining Net Available Proceeds required to be applied
to such Offer to Purchase and (y) 25% of the original principal amount of the
Notes less the aggregate principal amount of Notes purchased
32
pursuant to all previous Offers to Purchase made pursuant to clause (1),
provided, however, that the Company shall be required, promptly after the fifth
anniversary of the original issuance of the Notes, to make an Offer to Purchase
Notes, in accordance with the requirements described in clause (i), in an
aggregate amount equal to the aggregate amount of Net Available Proceeds in
excess of 25% of the original principal amount of Notes that was not applied to
Offers to Purchase Notes pursuant to the provisions of this paragraph. (sec.
1012)
Transactions with Affiliates and Related Persons
The Company may not, and may not permit any Restricted Subsidiary to,
enter into any transaction (or series of related transactions) with an Affiliate
or Related Person of the Company (other than the Company or a Restricted
Subsidiary) other than in the ordinary course of business, either directly or
indirectly, unless such transaction is on terms no less favorable to the Company
or such Restricted Subsidiary than those that could be obtained in a comparable
arm's-length transaction with an entity that is not an Affiliate or Related
Person of the Company or such Restricted Subsidiary and is in the best interests
of the Company or such Restricted Subsidiary; provided that the foregoing
restrictions will not apply to transactions (or series of related transactions)
carried out pursuant to arrangements entered into prior to the date of the
Indenture or undertakings, agreements or instruments entered into in connection
with such arrangements after such date. For any transaction required to satisfy
the above criteria that involves in excess of Cdn.$2,000,000 but less than or
equal to Cdn.$5,000,000, the Chief Executive Officer or Chief Financial Officer
of the Company shall determine that the transaction satisfies the above criteria
and shall evidence such a determination by a certificate filed with the
Trustees. For any such transaction that involves in excess of Cdn.$5,000,000, a
majority of the disinterested members of the Board of Directors shall determine
that the transaction satisfies the above criteria and shall evidence such a
determination by a resolution of the Board of Directors filed with the Trustees.
For any such transaction that involves in excess of Cdn.$10,000,000, the Company
shall also obtain an opinion from a nationally recognized expert in the United
States or Canada with experience in appraising the terms and conditions of the
type of transaction (or series of related transactions) for which the opinion is
required stating that such transaction (or series of related transactions) is on
terms no less favorable to the Company or such Restricted Subsidiary than those
that could be obtained in a comparable arm's-length transaction with an entity
that is not an Affiliate or Related Person of the Company, which opinion shall
be filed with the Trustees. The foregoing requirements shall not apply to any
transaction pursuant to agreements or arrangements in existence on the date of
the Indenture. (sec. 1013)
Amalgamations, 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
Company, or directly or indirectly transfer, convey, 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 Trustees in form
satisfactory to the Trustees, all of the Company's obligations under
the Indenture and the Notes;
(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 Restricted
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
33
or such Restricted Subsidiary or such Person at the time of the
transaction, the Company or such Restricted Subsidiary or such Person,
as the case may be, could Incur at least $1.00 of additional Debt
pursuant to the Debt Incurrence Provisions; 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 Restricted
Subsidiaries. (Article Eight)
Change of Control
Within 30 days of the occurrence of a Change of Control Triggering Event,
the Company will be required to make an Offer to Purchase all Outstanding Notes
at a purchase price equal to 101% of their principal amount plus accrued
interest to the date of purchase. A "Change of Control Triggering Event" will be
deemed to have occurred if both a Change of Control and a Rating Decline occur.
A "Change of Control" will be deemed to have occurred at the earliest of such
time as either (a) any Person or any Persons acting together that would
constitute a "group" (a "Group") for purposes of Section 13(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), or any successor provision thereto,
together with any Affiliate or Related Persons thereof, shall beneficially own
(within the meaning of Rule 13d-3 under the Exchange Act, or any successor
provision thereto) more than 50% of the aggregate voting power of all classes of
Voting Stock of the Company; or (b) any Person or Group, together with any
Affiliates or Related Persons thereof, shall succeed in having a sufficient
number of its nominees elected to the Board of Directors of the Company such
that such nominees, when added to any existing director remaining on the Board
of Directors of the Company after such election, who was a nominee of or is an
Affiliate or Related Person of such Person or Group, will constitute a majority
of the Board of Directors of the Company. A "Rating Decline" will be deemed to
have occurred if at any time within 90 days (which period shall be extended so
long as the rating of the Notes is under publicly announced consideration for a
possible downgrade by any Rating Agency) after the date of public notice of a
Change of Control, or the intention of the Company or any Person to effect a
Change of Control, the rating of the Notes, or the Company's 10.50% Senior Notes
due 2010, is decreased by any Rating Agency by one or more Gradations and the
rating by such Rating Agency on the Notes or the Company's 10.50% Senior Notes
due 2010 following such downgrade is below Investment Grade. In the event that
neither the Notes nor the Company's 10.50% Senior Notes due 2010 are rated by
any of the Rating Agencies, and a Change of Control shall have occurred, the
Company shall obtain from one of the Rating Agencies pro forma ratings on the
Notes both prior to and within 90 days after the date of public notice of the
Change of Control, or the intention of the Company or any Person to effect a
Change of Control. A Rating Decline will be deemed to have occurred in such
circumstances if such latter pro forma rating reflects a decrease from such
former pro forma rating by such Rating Agency of one or more Gradations and such
latter pro forma rating by such Rating Agency on the Notes following the Change
of Control is below Investment Grade.
If an Offer to Purchase is made, there can be no assurance that the
Company will have funds sufficient to pay the purchase price and accrued
interest described above for all of the Notes that might be tendered by Holders
seeking to accept the Offer to Purchase. The failure of the Company to make the
Offer to Purchase and the failure of the Company to pay the purchase price and
accrued interest described above on the date specified therefor will give the
Trustees and the Holders of Notes the rights described under "-- Events of
Default."
In the event that the Company makes an Offer to Purchase the Notes, the
Company intends to comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1 under,
the Exchange Act. (sec. 1014)
34
Provision of Financial Information
Whether or not the Company is required to be subject to Section 13(a) or
15(d) of the Exchange Act or any successor provision thereto, the Company shall
file with the United States Securities and Exchange Commission (the
"Commission") the annual reports, quarterly reports and other documents which
the Company would have been required to file with the Commission pursuant to
such Section 13(a) or 15(d) or any successor provision thereto if the Company
were so required, such documents to be filed with the Commission on or prior to
the respective dates (the "Required Filing Dates") by which the Company would
have been required so to file such documents if the Company were so required.
The Company shall also in any event (a) within 15 days of each Required Filing
Date (i) transmit by mail to all Holders, as their names and addresses appear in
the Note Register without cost to such Holders and (ii) file with the Trustees,
copies of the annual reports, quarterly reports and other documents which the
Company files with the Commission pursuant to such Section 13(a) or 15(d) or any
successor provision thereto or would have been required to file with the
Commission pursuant to such Section 13(a) or 15(d) or any successor provisions
thereto if the Company were required to be subject to such Sections and (b) if
filing such documents by the Company with the Commission is not permitted under
the Exchange Act, promptly upon written request supply copies of such documents
to any prospective Holder. (sec. 1015)
UNRESTRICTED SUBSIDIARIES
The Company may designate any Subsidiary of the Company to be an
"Unrestricted Subsidiary" as provided below, in which event such Subsidiary and
each other Person that is then or thereafter becomes a Subsidiary of such
Subsidiary will be deemed to be an Unrestricted Subsidiary. "Unrestricted
Subsidiary" means (1) any Subsidiary designated as such by the Board of
Directors as set forth below where (a) neither the Company nor any of its other
Subsidiaries (other than another Unrestricted Subsidiary) (i) provides credit
support for, or Guarantee of, any Debt of such Subsidiary or any Subsidiary of
such Subsidiary (including any undertaking, agreement or instrument evidencing
such Debt) or (ii) is directly or indirectly liable for any Debt of such
Subsidiary or any Subsidiary of such Subsidiary, and (b) no default with respect
to any Debt of such Subsidiary or any Subsidiary of such Subsidiary (including
any right which the holders thereof may have to take enforcement action against
such Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Debt of the Company and its Subsidiaries (other than another
Unrestricted Subsidiary) to declare a default on such other Debt or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, any other Subsidiary of the Company which is not a Subsidiary of
the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary,
provided that either (x) the Subsidiary to be so designated has total assets of
Cdn.$10,000 or less or (y) immediately after giving effect to such designation,
the Company could incur at least Cdn.$1.00 of additional Debt pursuant to the
Debt Incurrence Provisions and provided further that the Company could make a
Restricted Payment in an amount equal to the greater of the fair market value
and book value of such Subsidiary pursuant to the "Limitation on Restricted
Payments" covenant and such amount is thereafter treated as a Restricted Payment
for the purpose of calculating the aggregate amount available for Restricted
Payments thereunder. (sec. 101)
ADDITIONAL AMOUNTS FOR CANADIAN TAXES
All payments made by or on behalf of the Company under or with respect to
the Notes will be made free and clear of and without withholding or deduction
for, or on account of, any present or future tax, duty, levy, impost, assessment
or other governmental charge imposed or levied by or on behalf of the Government
of Canada or of any province or territory thereof or by any authority or agency
therein or thereof having power to tax (hereinafter "Taxes"), unless the Company
or other payer is required to withhold or deduct Taxes by law or by the
interpretation or administration thereof. If the Company or other payer is so
required to withhold or deduct any amount for or on account of Taxes from any
payment made under or with respect to the Notes, the Company or other payer will
pay such additional amounts ("Additional Amounts") as may be necessary so
35
that the net amount received by each Holder (including Additional Amounts) after
such withholding or deduction will not be less than the amount the Holder would
have received if such Taxes had not been withheld or deducted, provided that no
Additional Amounts will be payable with respect to a payment made to a Holder in
respect of a beneficial owner of Notes (an "Excluded Holder") (i) with which the
Company does not deal at arm's length (within the meaning of the Income Tax Act
(Canada)) at the time of making such payment or (ii) which is subject to such
Taxes by reason of any connection between such beneficial owner and Canada or
any province or territory thereof other than the mere holding of Notes or the
receipt of payments thereunder. The Company will also (i) make such withholding
or deduction and (ii) remit the full amount deducted or withheld to the relevant
authority in accordance with and in the time required by applicable law. The
Company will furnish to the Holders of the Notes, within 30 days after the date
the payment of any Taxes is due pursuant to applicable law, certified copies of
tax receipts evidencing such payment by the Company. The Company will indemnify
and hold harmless each Holder (other than all Excluded Holders) for the amount
of (i) any Taxes not withheld or deducted by the Company and levied or imposed
and paid by such Holder or beneficial owner as a result of payments made under
or with respect to the Notes, (ii) any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto and (iii) any Taxes
imposed with respect to any reimbursement under clauses (i) or (ii) above.
Holders shall be required to complete and file any applicable forms with, or
provide certification to, the relevant tax authorities as requested by the
Company.
At least 30 days prior to each date on which any payment under or with
respect to the Notes is due and payable, if the Company is aware that it will be
obligated to pay Additional Amounts with respect to such payment, the Company
will deliver to the Trustees an Officers' Certificate stating the fact that such
Additional Amounts will be payable, the amounts so payable and will set forth
such other information necessary to enable the Trustees to pay such Additional
Amounts to Holders on the payment date. Whenever in the Indenture there is
mentioned, in any context, the payment of principal (and premium, if any),
interest or any other amount payable under or with respect to any Note, such
mention shall be deemed to include mention of the payment of Additional Amounts
provided for in this section to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof. (sec. 1016)
The foregoing provisions shall survive any defeasance or termination of
obligations pursuant to the Indenture or any termination of the Indenture.
CERTAIN DEFINITIONS
Set forth below is a summary of defined terms used in the Indenture.
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. (sec.
101)
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" by the Company or any Restricted Subsidiary means any
transfer, conveyance, sale, lease or other disposition by the Company or any
such Restricted Subsidiary (including a consolidation or merger or other sale of
a Restricted Subsidiary with, into or to a Person other than the Company in a
transaction in which such Restricted Subsidiary ceases to be a Restricted
Subsidiary), of (i) shares of Capital Stock or other ownership interests of a
Restricted Subsidiary, (ii) substantially all of the assets of the Company or
any Restricted Subsidiary representing a significant division or line of
business constituting in excess of 10% of the Company's consolidated assets or
consolidated net income at the time of determination or (iii) other assets or
rights of the Company or any Restricted Subsidiary outside of the ordinary
course of business, provided in each of the foregoing instances that the
aggregate consideration for such transfer, conveyance, sale, lease or other
disposition is equal to Cdn.$25,000,000 or more. Notwithstanding the foregoing,
"Asset Disposition" shall be deemed not to include (i) any transfer, conveyance,
sale, lease or other
36
disposition of properties and assets that is governed by the provisions under
the "Amalgamations, Mergers, Consolidations and Certain Sales of Assets"
covenant, (ii) any transfer, conveyance, sale, lease or other disposition in any
one transaction or series of related transactions between the Company and any
Restricted Subsidiary or between any Restricted Subsidiaries, (iii) a
simultaneous exchange by the Company or any Restricted Subsidiary of real
property, fixtures, buildings or equipment of a resort (collectively, "resort
assets") for other resort assets of similar type, provided that the resort
assets received by the Company or such Restricted Subsidiary have at least
substantially equal fair market value to the Company or such Restricted
Subsidiary determined in good faith by the Board of Directors, whose
determination shall be evidenced by a resolution of the Board of Directors and
(iv) the designation of any Subsidiary as an Unrestricted Subsidiary or the
contribution to the capital of any Unrestricted Subsidiary, in either case in
compliance with the applicable provisions of the Indenture.
"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.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
any other equity participations, including partnership interests, whether
general or limited, of such Person, but excludes any debt securities
exchangeable or convertible into equity of such Person.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow Available for Fixed Charges" means, for any
period, the consolidated revenues less the consolidated expenses of the Company
for such period, plus (i) Consolidated Net 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, plus (iv) consolidated depreciation expense of the
Company for such period, plus (v) consolidated amortization expense 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
items.
"Consolidated Cash Flow Coverage Ratio" for purposes of the calculation of
the Debt Incurrence Provisions means, as of the date such calculation is being
made, the ratio of (i) Consolidated Cash Flow Available for Fixed Charges for
the period of the most recently completed four consecutive fiscal quarters for
which quarterly or annual financial statements of the Company are available to
(ii) Consolidated Fixed Charges for such period; provided, however, that
Consolidated Fixed Charges shall be adjusted to give effect on a pro forma basis
to any Debt that has been Incurred by the Company or any Restricted Subsidiary
and any Preferred Shares that have been issued by any Restricted Subsidiary
during or after such period that remain outstanding and to the Debt that is
proposed to be Incurred or the Preferred Shares that are proposed to be issued,
as the case may be, in respect of which such calculation is being made, as if in
each case such Debt had been Incurred or Preferred Shares had been issued on the
first day of such period and as if any Debt or Preferred Shares that are no
longer or will no longer be outstanding as a result of the Incurrence of such
Debt or issuance of such Preferred Shares had not been outstanding as of the
first day of such period; provided, however, that in making such computation,
the Consolidated Interest Expense of the Company and its Restricted Subsidiaries
attributable to interest on any Debt or dividends on any Preferred Shares
bearing a floating interest or dividend rate shall be computed on a pro forma
basis as if the rate in effect on the date of such calculation had been the
applicable rate for the entire period; and provided, further that, in the event
the Company or any of its Restricted Subsidiaries had made acquisitions or
dispositions of assets (including acquisitions of other Persons by merger,
consolidation or purchase of Capital Stock) during or after such
37
period, such calculation shall be made on a pro forma basis as if such
acquisitions or dispositions had taken place on the first day of such period;
and provided, further that, such computation shall not be adjusted with regard
to the Limited Recourse Notes.
"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 Fixed Charges" for any period means the sum of (i)
Consolidated Net Interest Expense and (ii) the consolidated amount of interest
capitalized by the Company and its Restricted Subsidiaries during such period
calculated in accordance with generally accepted accounting principles.
"Consolidated Income Tax Expense" for any period means the consolidated
provision for income taxes of the Company and its Restricted Subsidiaries for
such period calculated on a consolidated basis in accordance with generally
accepted accounting principles, excluding any effects of extraordinary items.
"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 Debt Ratio" for purposes of the calculation of the Debt
Incurrence Provisions means, as at the date such calculation is being made, the
ratio of (i) the sum of Consolidated Net Debt and Consolidated Preferred Share
Amounts as of the last day of the period of the most recently completed four
consecutive fiscal quarters for which quarterly or annual financial statements
of the Company are available to (ii) Consolidated Net Tangible Assets as of the
last day of such period; provided that, the foregoing calculations shall be
adjusted to give effect on a pro forma basis to any Debt that has been Incurred
by the Company or any Restricted Subsidiary and any Preferred Shares that have
been issued by any Restricted Subsidiary since the end of such period that
remain outstanding and to the Debt that is proposed to be Incurred or the
Preferred Shares that are proposed to be issued, as the case may be, in respect
of which such calculation is being made, as if in each case such Debt had been
Incurred or Preferred Shares had been issued as of the last day of such period
and as if any Debt or Preferred Shares that are no longer or will no longer be
outstanding as a result of the Incurrence of such Debt or issuance of such
Preferred Shares had not been outstanding as of the last day of such period;
provided, further that, in the event the Company or any of its Restricted
Subsidiaries had made acquisitions or dispositions of assets (including
acquisitions of other Persons by merger, consolidation or purchase of Capital
Stock) since the end of such period, such calculation shall be made on a pro
forma basis as if such acquisitions or dispositions had taken place on the last
day of such period; and provided, further that, such calculation shall be made
without regard to the Limited Recourse Notes or the assets to which the Limited
Recourse Notes relate.
"Consolidated Net Income" for any period means the consolidated net income
(or loss) of the Company and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by the Company or a Restricted
Subsidiary in a pooling-of-interests transaction for any period prior to the
date of such transaction, (b) the net income (or loss) of any Person that is not
a Restricted Subsidiary except to the extent of the amount of dividends or other
distributions actually paid to the Company or a Restricted Subsidiary by such
Person during such period, (c) gains or losses on Asset Dispositions, (d) all
extraordinary gains and extraordinary losses, (e) non-cash gains or losses
resulting from fluctuations in currency exchange rates and (f) the tax effect of
any of the items described in clauses (a) through (e) above; provided, further
that, for purposes of any determination pursuant to the provisions described
under the "Limitation on Restricted Payments" covenant, there shall further be
excluded therefrom the net income (but not net loss) of any Restricted
Subsidiary that is subject to a restriction which prevents the payment of
dividends or the making of distributions to the Company or another Restricted
Subsidiary to the extent of such restriction.
"Consolidated Net Interest Expense" means, for any period, the
consolidated interest expenses 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
38
Capital Lease Obligation included in Consolidated Debt that is allocable to
interest expense for such period and (ii) 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 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 Restricted 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.
"DBRS" means Dominion Bond Rating Service Limited and its successors.
"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.
"Gradation" means a gradation within a Rating Category or a change to
another Rating Category, which shall include (i) "+" and "-," in the case of
S&P's current Rating Categories (e.g., a decline from BB+ to BB would constitute
a decrease of one gradation); (ii) "1," "2" and "3," in the case of Moody's
current Rating Categories (e.g., a decline of B1 to B2 would constitute a
decrease of one gradation); (iii) "(high)" and "(low)," in the case of DBRS's
current Rating Categories (e.g., a decline from BB (high) to BB would constitute
a decrease of one gradation); or (iv) the equivalent in respect of successor
Rating Categories of S&P, Moody's and DBRS, or Rating Categories used by Rating
Agencies other than S&P, Moody's or DBRS.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing any Debt of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, and including, without
limitation, any obligation of such Person, (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Debt, (ii) to purchase property, securities or services for the purpose of
assuring the holder of such Debt of the payment of such Debt or (iii) to
maintain working capital, equity capital or other financial statement condition
or liquidity of the primary obligor so as to enable the
39
primary obligor to pay such Debt (and "Guaranteed," "Guaranteeing" and
"Guarantor" shall have meanings correlative to the foregoing); provided,
however, that the Guarantee by any Person shall not include endorsements by such
Person for collection or deposit, in either case, in the ordinary course of
business.
"Incur" means, with respect to any Debt or other obligation of any Person,
the first (and only the first) to occur of the creation, issuance, incurrence
(by conversion, exchange or otherwise), assumption or Guarantee by such Person,
or such Person otherwise becoming liable, in respect of such Debt or other
obligation including by acquisition of Restricted Subsidiaries or the recording,
as required pursuant to generally accepted accounting principles, of such Debt
or other obligation on the balance sheet of such Person (and "Incurrence,"
"Incurred," "Incurable" and "Incurring" shall have meanings correlative to the
foregoing).
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of cash
or other property to others or payments for property or services for the account
or use of others, or otherwise) to, or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidence of Debt issued by, any
other Person, including any payment on a Guarantee of any obligation of such
other Person, but shall not include trade accounts receivable in the ordinary
course of business on credit terms made generally available to the customers of
such Person. For purposes of compliance with any provision of the Indenture, the
amount of any Investment consisting of the transfer of property shall be the
book value of such property.
"Investment Grade" means BBB- or above, in the case of S&P (or its
equivalent rating under any successor Rating Categories of S&P), Baa3 or above,
in the case of Moody's (or its equivalent rating under any successor Rating
Categories of Moody's), and the equivalent rating in respect of the Rating
Categories of any Rating Agencies substituted for S&P or Moody's, provided,
however, that if the Notes are not rated by either S&P or Moody's at the time of
determination, then "Investment Grade" shall mean A or above, in the case of
DBRS (or its equivalent rating under any successor Rating Categories of DBRS),
and the equivalent rating in respect of the Rating Categories of any Rating
Agencies substituted for DBRS.
"IPP Excluded Debt" means up to Cdn.$41,000,000 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 Cdn.$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.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment for security, deposit arrangement,
security interest, lien, charge, encumbrance, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
on or with respect to such property or assets (including, without limitation,
any title retention agreement having substantially the same economic effect as
any of the foregoing).
"Limited Recourse Notes" means certain limited recourse notes of Copper
Mountain, Inc. in the original amount of $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.
"Moody's" means Moody's Investor Service, Inc. and its successors.
40
"Net Available Proceeds" from any Asset Disposition means cash or readily
marketable cash equivalents received therefrom by the Company or any Restricted
Subsidiary, net of (i) all legal, title and recording tax expenses, commissions
and other fees and expenses Incurred and all federal, state, provincial, foreign
and local taxes required to be paid or accrued as a liability by the Company or
such Restricted Subsidiary as a consequence of such Asset Disposition, (ii) all
payments made by the Company or any Restricted Subsidiary on any Debt which are
required in accordance with the terms of any undertaking, agreement or
instrument in respect of, or Lien securing, such Debt as a result of such Asset
Disposition, (iii) all distributions and other payments made to minority
interest holders in Restricted Subsidiaries as a result of such Asset
Disposition and (iv) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve in accordance with
generally accepted accounting principles against any liabilities associated with
such Asset Disposition and retained by the Company or any Restricted Subsidiary,
as the case may be, after such Asset Disposition, including, without limitation,
liabilities under any indemnification obligations and severance and other
employee termination costs associated with such Asset Disposition, in each case
as determined by the Board of Directors, in its reasonable good faith judgment
evidenced by a resolution of the Board of Directors filed with the Trustees,
provided, however, that any reduction in such reserve within twelve months
following the consummation of such Asset Disposition will be treated for all
purposes of the Indenture and the Notes as a new Asset Disposition at the time
of such reduction with Net Available Proceeds equal to the amount of such
reduction.
"Non-Recourse Debt" means Debt or that portion of Debt as to which neither
the Company nor any of the Restricted Subsidiaries (i) is directly or indirectly
liable (including by recourse to their assets, other than the assets subject to
a Lien securing such Debt) or (ii) constitutes the lender.
"NRP Shares" means the Non-Resort Preferred Shares of the Company.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Company by first class mail, postage prepaid, to each Holder at his address
appearing in the Note Register on the date of the Offer offering to purchase up
to the principal amount of Notes specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to the Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the "Expiration Date") of the Offer to Purchase which shall be, subject to any
contrary requirements of applicable law, not less than 30 days nor more than 60
days after the date of such Offer and a settlement date (the "Purchase Date")
for purchase of Notes within five Business Days after the Expiration Date. The
Company shall notify the Trustees, at least 15 Business Days (or such shorter
period as is acceptable to the Trustees) prior to the mailing of the Offer, of
the Company's obligation to make an Offer to Purchase, and the Offer shall be
mailed by the Company or, at the Company's request, by the Trustees, in the name
and at the expense of the Company. The Offer shall contain information
concerning the business of the Company and its Restricted Subsidiaries which the
Company in good faith believes will enable such Holders to make an informed
decision with respect to the Offer to Purchase (which at a minimum will include
(i) the most recent annual and quarterly financial statements and "Management's
Discussion and Analysis" contained in the documents required to be filed with
the Trustees pursuant to the Indenture (which requirements may be satisfied by
delivery of such documents together with the Offer), (ii) a description of
material developments in the Company's business subsequent to the date of the
latest of such financial statements referred to in clause (i) (including a
description of the events requiring the Company to make the Offer to Purchase),
(iii) if applicable, appropriate pro forma financial information concerning the
Offer to Purchase and the events requiring the Company to make the Offer to
Purchase and (iv) any other information required by applicable law to be
included therein. The Offer shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Offer to
Purchase. The Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer to Purchase
is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Notes offered to be
purchased by the Company pursuant to the Offer to Purchase (including,
if less than 100%, the manner by which such has been determined
pursuant to the Section hereof requiring the Offer to Purchase) (the
"Purchase Amount");
41
(4) the purchase price to be paid by the Company for each $1,000 aggregate
principal amount of Notes accepted for payment (as specified pursuant
to the Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Notes registered
in the name of such Holder and that any portion of a Note tendered
must be tendered in an integral multiple of $1,000 principal amount;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not purchased
by the Company pursuant to the Offer to Purchase will continue to
accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Note being accepted for payment pursuant to the
Offer to Purchase and that interest thereon shall cease to accrue on
and after the Purchase Date;
(9) that each Holder electing to tender a Note pursuant to the Offer to
Purchase will be required to surrender such Note at the place or places
specified in the Offer prior to the close of business on the Expiration
Date (such Note being, if the Company or the Trustees so require, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to, the Company and the Trustees, duly executed by the
Holder thereof or his attorney duly authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of Notes
tendered if the Company (or their Paying Agent) receives, not later
than the close of business on the Expiration Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Note the Holder tendered, the certificate
number of the Note the Holder tendered and a statement that such
Holder is withdrawing all or a portion of his tender;
(11) that (a) if Notes in an aggregate principal amount less than or equal
to the Purchase Amount are duly tendered and not withdrawn pursuant to
the Offer to Purchase, the Company shall purchase all such Notes and
(b) if Notes in an aggregate principal amount in excess of the
Purchase Amount are tendered and not withdrawn pursuant to the Offer
to Purchase, the Company shall purchase Notes having an aggregate
principal amount equal to the Purchase Amount on a pro rata basis
(with such adjustments as may be deemed appropriate so that only Notes
in denominations of $1,000 or integral multiples thereof shall be
purchased); and
(12) that in the case of any Holder whose Note is purchased only in part,
the Company shall execute, and a Trustee shall authenticate and
deliver to the Holder of such Note without service charge, a new Note
or Notes, of any authorized denomination as requested by such Holder,
in an aggregate principal amount equal to and in exchange for the
unpurchased portion of the Note so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with
the Offer for such Offer to Purchase.
"Permitted Interest Rate or Currency Protection Agreement" of any Person
means any interest rate or currency protection agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which has a notional
amount no greater than the payments due with respect to the Debt being hedged
thereby.
"Permitted Investment" means any Investment in any Affiliate or Related
Person (or any Person that would become an Affiliate or Related Person as a
result of such Investment) that is engaged to a significant extent in a business
which is conducted by the Company, or which the Company has announced an
intention to conduct, on the date of the Indenture or a reasonable expansion or
extension thereof or a business ancillary or related thereto or supportive
thereof.
42
"Permitted Liens" means, as of any particular time, any one or more of the
following:
(i) Liens existing on the date on which the Notes are originally issued
or provided for under the terms of agreements existing on such date;
(ii) Liens on property or assets acquired by the Company from another
Person which are existing at the time of such acquisition, provided
that such Liens (a) were not Incurred in contemplation of the
acquisition of such property or assets and (b) are applicable only
to such property or assets;
(iii) Liens on any property or assets of the Company existing at the time
of acquisition thereof (including acquisition through merger or
consolidation) to secure or securing the payment of all or any part
of the purchase price, cost of improvement or construction cost
thereof or securing any indebtedness Incurred prior to, at the time
of or within 120 days after, the acquisition of such property or
assets or the completion of any such improvement or construction,
whichever is later, for the purpose of financing all or any part of
the purchase price, cost of improvement or construction cost thereof
or to secure or securing the repayment of money borrowed to pay in
whole or any part of such purchase price, cost of improvement or
construction cost of any vendor's privilege or lien on such property
securing all or any part of such purchase price, cost of improvement
or construction cost, including title retention agreements and
leases in the nature of title retention agreements (provided such
Liens are limited to such property or assets and to improvements on
such property);
(iv) any Lien securing the Notes;
(v) Liens in favor of the Company or a Restricted Subsidiary;
(vi) Liens to secure Debt that is permitted to be Incurred under clause
(e), (f), (g) or (i) under the "Limitation on Debt and Preferred
Shares" covenant;
(vii) any interest or title of a lessor to any property subject to a
Capital Lease Obligation which is permitted to be Incurred under the
Indenture;
(viii) any right of set-off, refund or charge-back available to any bank or
other financial institution;
(ix) Liens to secure Permitted Interest Rate or Currency Protection
Agreements; or
(x) Liens to secure Debt Incurred to renew, extend, refinance or refund,
in whole or in part, Debt secured by any Lien referred to in the
foregoing clauses (iv), (v), (vi), (viii) and (ix) so long as such
Lien does not extend to any other property and the principal amount
of the Debt so secured does not exceed the principal amount of Debt
so renewed, extended, refinanced or refunded.
"Preferred Shares" of any Person means shares of such Person 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 Person, to shares of any other class of such
Person.
"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 Cdn.$7,500,000 in the
case of a Project in Canada or $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 Cdn.$40,000,000, or (ii) substantially all space other than commercial
space and common areas is being developed for sale and
43
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.
"Rating Agencies" means (i) S&P, Moody's and DBRS or (ii) if S&P, Moody's
and DBRS or any of them are not making ratings of the Notes publicly available,
a nationally recognized U.S. rating agency or agencies, as the case may be,
selected by the Company, which will be substituted for S&P or Moody's or both,
as the case may be, or a nationally recognized Canadian rating agency or
agencies, as the case may be, selected by the Company, which will be substituted
for DBRS.
"Rating Categories" means (i) with respect to S&P, any of the following
categories (any of which may include a "+" or "-"): AAA, AA, A, BBB, BB, B, CCC,
C and D (or equivalent successor categories); (ii) with respect to Moody's, any
of the following categories (any of which may include a "1," "2" or "3"): Aaa,
Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); (iii)
with respect to DBRS, any of the following categories (any of which may include
a "(high)" or "(low)"): AAA, AA, A, BBB, BB, B, CCC, CC, and C; and (iv) the
equivalent of any such categories of S&P, Moody's or DBRS used by another Rating
Agency, if applicable.
"Redeemable Stock" of any Person means any Capital Stock of such Person
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or otherwise (including upon the occurrence of
an event) matures or is required to be redeemed (pursuant to any sinking fund
obligation or otherwise) or is convertible into or exchangeable for Debt or is
redeemable at the option of the holder thereof, in whole or in part, at any time
prior to the final Stated Maturity of the Notes.
"Related Person" of any Person means any other Person directly or
indirectly owning (i) 5% or more of the outstanding Common Stock of such Person
(or, in the case of a Person that is not a corporation, 5% or more of the equity
interest in such Person) or (ii) 5% or more of the combined voting power of the
Voting Stock of such Person.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of the Indenture, unless such Subsidiary is an
Unrestricted Subsidiary.
"S&P" means Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. and its successors.
"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 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 day on which such
arrangement may be terminated by the lessee without payment of a penalty.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or Persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying
44
shares) shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person or by such Person and one or more Wholly
Owned Restricted Subsidiaries of such Person.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture: (a) failure to
pay principal of (or premium, if any, on) any Note when due; (b) failure to pay
any interest on any Note when due, continued for 30 days; (c) default in the
payment of principal and interest on Notes required to be purchased pursuant to
an Offer to Purchase as described under "-- Covenants -- Change of Control" and
"-- Covenants -- Limitation on Asset Dispositions" when due and payable; (d)
failure to perform or comply with the provisions described under "-- Covenants
-- Amalgamations, Mergers, Consolidations and Certain Sales of Assets;" (e)
failure to perform any other covenant or agreement of the Company under the
Indenture or the Notes continued for 30 days after written notice to the Company
by the Trustees or Holders of at least 25% in aggregate principal amount of
Outstanding Notes; (f) default under the terms of any instrument evidencing or
securing Debt for money borrowed by the Company or any Restricted Subsidiary
having an outstanding principal amount of Cdn.$25,000,000 individually or in the
aggregate which default results in the acceleration of the payment of all or any
portion of such Debt or constitutes the failure to pay all or any portion of
such Debt when due, provided, however, that for such purpose Debt shall not
include any Non-Recourse Debt; (g) the rendering of a final judgment or
judgments (not subject to appeal) against the Company or any Subsidiary in an
amount in excess of Cdn.$25,000,000 which remains undischarged or unstayed for a
period of 60 days after the date on which the right to appeal has expired; and
(h) certain events of bankruptcy, insolvency or reorganization affecting the
Company or any Subsidiary. (sec. 501) Subject to the provisions of the Indenture
relating to the duties of the Trustees, if an Event of Default (as defined)
shall occur and be continuing, the Trustees will be under no obligation to
exercise any of their rights or powers under the Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to the
Trustees reasonable indemnity. (sec. 603) Subject to such provisions for the
indemnification of the Trustees the Holders of a majority in aggregate principal
amount of the Outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding or any remedy available to the Trustees
or exercising any trust or power conferred on the Trustees. (sec. 512)
If an Event of Default (other than an Event of Default described in clause
(h) above) shall occur and be continuing, either the Trustees or the Holders of
at least 25% in aggregate principal amount of the Outstanding Notes may
accelerate the maturity of all Notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of Outstanding Notes may, under
certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the non-payment of accelerated principal, have been cured or
waived as provided in the Indenture. If an Event of Default specified in clause
(h) above occurs, the Outstanding Notes will ipso facto become immediately due
and payable without any declaration or other act on the part of a Trustee or any
Holder. (sec. 502) For information as to waiver of default, see "-- Modification
and Waiver."
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustees written notice of a continuing Event of
Default and unless also the Holders of at least 25% in aggregate principal
amount of the Outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustees to institute such proceeding as trustee,
and the Trustees shall have not received from the Holders of a majority in
aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. (sec. 507) However, such limitations do not apply to a suit instituted by
a Holder of a Note for enforcement of payment of the principal of and premium,
if any, or interest on such Note on or after the respective due dates expressed
in such Note. (sec. 508)
The Company will be required to furnish to the Trustees quarterly a
statement as to the performance by the Company of certain of its obligations
under the Indenture and as to any default in such performance. (sec. 1017)
45
SATISFACTION AND DISCHARGE OF THE INDENTURE
The Indenture will cease to be of further effect as to all outstanding
Notes (except as to (i) rights of registration of transfer and exchange and the
Company's right of optional redemption, (ii) substitution of apparently
mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of Holders to
receive payment of principal and interest and Additional Amounts on the Notes,
(iv) rights, obligations and immunities of the Trustees under the Indenture and
(v) rights of the Holders of the Notes as beneficiaries of the Indenture with
respect to any property deposited with the Trustees payable to all or any of
them), if (x) the Company will have paid or caused to be paid the principal of
and interest on the Notes as and when the same will have become due and payable
and (y) all outstanding Notes (except lost, stolen or destroyed Notes which have
been replaced or paid) have been delivered to a Trustee for cancellation
(Article Twelve).
DEFEASANCE
The Indenture provides that, at the option of the Company, (a) if
applicable, the Company will be discharged from any and all obligations in
respect of the Outstanding Notes (other than its ongoing obligations in respect
of the payment of Additional Amounts) or (b) if applicable, the Company may omit
to comply with certain restrictive covenants and that such omission shall not be
deemed to be an Event of Default under the Indenture and the Notes, in either
case upon irrevocable deposit with a Trustee, in trust, of money and/or U.S.
government obligations which will provide money in an amount sufficient in the
opinion of a nationally recognized firm of independent certified public
accountants to pay the principal of and premium, if any, and each installment of
interest, if any, on the Outstanding Notes. With respect to clause (b), the
obligations under the Indenture other than with respect to such covenants and
the Events of Default other than the Events of Default relating to such
covenants above shall remain in full force and effect. Such trust may only be
established if, among other things, (i) with respect to clause (a), the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling or there has been a change in law, which in the opinion of counsel
qualified to practice in the United States provides that Holders of the Notes
will not recognize gain or loss for U.S. federal income tax purposes as a result
of such deposit and defeasance and will be subject to U.S. federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred, or, with
respect to clause (b), the Company has delivered to the Trustees an opinion of
counsel qualified to practice in the United States to the effect that the
Holders of the Notes will not recognize gain or loss for U.S. federal income tax
purposes as a result of such deposit and defeasance and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such deposit and defeasance had not occurred;
(ii) the Company has delivered to the Trustees an opinion of counsel qualified
to practice in Canada or an advance income tax ruling from the Canada Customs
and Revenue Agency to the effect that the Holders of the Notes will not
recognize income, gain or loss for Canadian federal or provincial income tax or
other Canadian tax purposes as a result, in and of itself, of such deposit and
defeasance and will be subject to Canadian federal or provincial income tax and
other Canadian tax on the same amounts, in the same manner and at the same times
as would have been the case had such deposit and defeasance not occurred (and
for the purposes of such opinion such Canadian counsel shall assume that Holders
of the Notes include Holders who are not resident in Canada); (iii) such
deposit, defeasance and discharge will not result in a breach or violation of,
or constitute a default under any material agreement or instrument to which the
Company or any Restricted Subsidiary is party or by which the Company or any
Restricted Subsidiary is bound; (iv) no Event of Default or event that with the
passing of time or the giving of notice or both, shall constitute an Event of
Default shall have occurred and be continuing; (v) the Company has delivered to
the Trustees an opinion of counsel to the effect that such deposit shall not
cause the Trustees or the trust so created to be subject to the Investment
Company Act of 1940; and (vi) certain other customary conditions precedent are
satisfied. (Article Four)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustees with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Notes; provided,
46
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Note affected thereby, (a) change the Stated Maturity
of the principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of (or the premium), or interest on, any Note, (c) change the
place or currency of payment of principal of (or premium), or interest on, any
Note, (d) impair the right to institute suit for the enforcement of any payment
on or with respect to any Note, (e) reduce the above-stated percentage of
Outstanding Notes necessary to modify or amend the Indenture, (f) reduce the
percentage of aggregate principal amount of Outstanding Notes necessary for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, (g) modify any provisions of the Indenture relating to the
modification and amendment of the Indenture or the waiver of past defaults or
covenants, except as otherwise specified, (h) following the mailing of any Offer
to Purchase, modify any Offer to Purchase for the Notes required under the
"Limitation on Asset Dispositions" and the "Change of Control" covenants
contained in the Indenture in a manner materially adverse to the Holders thereof
or (i) modify the Additional Amounts provisions of the Indenture. (sec. 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Notes, on behalf of all Holders of Notes, may waive compliance by the Company
with certain restrictive provisions of the Indenture. (sec. 1018) Subject to
certain rights of the Trustees, as provided in the Indenture, the Holders of a
majority in aggregate principal amount of the Outstanding Notes, on behalf of
all Holders of Notes, may waive any past default under the Indenture, except a
default in the payment of principal, premium or interest or a default arising
from failure to purchase any Note tendered pursuant to an Offer to Purchase.
(sec. 513)
GOVERNING LAW
The Indenture is, and the Notes will be, governed by the laws of the State
of New York.
THE TRUSTEES
JPMorgan Chase Bank is the U.S. Trustee under the Indenture. Its address
is 450 West 33rd, 15th Floor, New York, New York, 10001. The Company has
appointed the U.S. Trustee as the initial Registrar and as the initial Paying
Agent under the Indenture. CIBC Mellon Trust Company is the Canadian Trustee
under the Indenture. Its address is Suite 1600, 1066 West Hastings Street,
Vancouver, British Columbia, V6E 3X1.
The Indenture provides that, except during the continuance of an Event of
Default, the Trustees will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustees will exercise such rights and powers vested in each of them under the
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. (sec. 603)
The Indenture contains limitations on the rights of the Trustees should a
Trustee become a creditor of the Company, to obtain payment of claims in certain
cases or to realize on certain property received by a Trustee in respect of any
such claim as otherwise. The Trustees are permitted to engage in other
transactions with the Company or any Affiliate, provided, however, that if a
Trustee acquires any conflicting interest (as referred to in the Indenture), it
must eliminate such conflict or resign. (sec. 608)
CONSENT TO JURISDICTION AND SERVICE
The Indenture provides that the Company will irrevocably consent to the
non-exclusive jurisdiction of any court of the State of New York or any United
States federal court sitting in the Borough of Manhattan, New York, New York,
United States of America, and any appellate court from any thereof, and has
waived immunity from the jurisdiction of such courts over any suit, action or
proceeding or objection thereto on ground of venue, residence/domicile or
inconvenient forum that may be brought in connection with the Indenture and the
Notes. The Company has irrevocably appointed PTSGE Corp., 925 Fourth Avenue,
Suite 2900, Seattle, Washington, 98104-1158, as its authorized agent upon which
all writs, process and summonses may be served in any suit, action or proceeding
brought in connection with the Indenture or the Notes against the Company in any
court of the State of New York or any United States federal court sitting in
47
the Borough of Manhattan, New York City and has agreed that such appointment
shall be irrevocable so long as any of the Notes remain outstanding or until the
irrevocable appointment by the Company of a successor in the United States as
its authorized agent for such purpose and the acceptance of such appointment by
such successor.
ENFORCEABILITY OF JUDGMENTS
Since a substantial portion of the assets of the Company and its
subsidiaries are outside the United States, any judgment obtained in the United
States against the Company, including judgments with respect to the payment of
principal, premium, if any, or interest on the Notes may not be collectible
within the United States.
The Company has been informed by its Canadian counsel, McCarthy Tetrault
LLP, that the laws of the Province of British Columbia and the federal laws of
Canada applicable therein permit an action to be brought in a court of competent
jurisdiction in the Province of British Columbia (a "British Columbia Court") on
a final and conclusive judgment in personam against the Company of a federal or
state court in the State of New York (a "New York Court") that is subsisting and
unsatisfied respecting the enforcement of the Notes or the Indenture, that is
not impeachable as void or voidable under the law of the State of New York and
that is for a sum certain if (i) the New York Court that rendered such judgment
had jurisdiction over the judgment debtor, as recognized by a British Columbia
Court (and submission by the Company in the Notes or the Indenture to the
jurisdiction of the New York Court will be deemed sufficient for such purpose),
(ii) such judgment was not obtained by fraud or in a manner contrary to natural
justice, and the enforcement thereof would not be inconsistent with public
policy as the term is defined by a British Columbia Court or contrary to any
order made by the Attorney General of Canada under the Foreign Extraterritorial
Measures Act (Canada), (iii) the enforcement of such judgment in British
Columbia does not constitute, directly or indirectly, the enforcement of foreign
revenue, expropriatory or penal laws, (iv) in an action to enforce a default
judgment, the judgment does not contain a manifest error on its face and (v) the
action to enforce such judgment is commenced within six years of the date of
such judgment; provided that a British Columbia Court may stay an action to
enforce a foreign judgment if an appeal of a judgment is pending or the time for
appeal has not expired; and provided further that under the Currency Act
(Canada), a British Columbia Court may only give judgment in Canadian dollars.
EXCHANGE OFFER; REGISTRATION RIGHTS
The Company has entered into the Registration Rights Agreement with the
Initial Purchasers pursuant to which the Company has agreed, for the benefit of
the holders of the Original Notes, at the Company's cost, (i) to use its best
efforts to file a registration statement (the "Exchange Offer Registration
Statement") within 60 days following the date of original issue of the Original
Notes (the "Issue Date") with the Commission with respect to the Exchange Offer
for the Exchange Notes, (ii) to use its best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act within
180 days following the Issue Date and (iii) to use its best efforts to
consummate the Exchange Offer within 45 days after the Exchange Offer
Registration Statement has been declared effective. Upon the Exchange Offer
Registration Statement being declared effective, the Company will offer the
Exchange Notes in exchange for surrender of the Original Notes. The Company will
keep the Exchange Offer open for not less than 30 calendar days (or longer if
required by applicable law) after the date notice of the Exchange Offer is
mailed to the holders of the Original Notes. For each Original Note surrendered
to the Company pursuant to the Exchange Offer, the holder of such Original Note
will receive an Exchange Note having a principal amount equal to that of the
surrendered Original Note.
The Company is making the Exchange Offer in reliance on the position of
the staff of the Commission as set forth in certain no-action letters to other
parties in other transactions. However, the Company has not sought its own
no-action letter and there can be no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Offer as in such
other circumstances. Based upon these interpretations by the staff of the
Commission, the Company believes that Exchange Notes issued pursuant to the
Exchange Offer in exchange for Original Notes may be offered for resale, resold
and otherwise transferred
48
by a holder thereof (other than any holder which is (i) a broker-dealer who
purchased such Original Notes directly from the Company for resale pursuant to
Rule 144A or other available exemptions under the Securities Act, (ii) a
broker-dealer who acquired such Original Notes as a result of market-making or
other trading activities or (iii) a person that is an Affiliate of the Company)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such Exchange Notes. Holders of Original Notes accepting the Exchange Offer for
the purpose of participating in a distribution of the Exchange Notes may not
rely on the position of the staff of the Commission as set forth in these
no-action letters and would have to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transaction. A secondary resale transaction in the United States by a
holder of Original Notes who is using the Exchange Offer to participate in the
distribution of Exchange Notes must be covered by an effective registration
statement containing the selling securityholder information required by Item 507
of Regulation S-K under the Securities Act.
Each broker-dealer (other than an Affiliate of the Company) that receives
Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it acquired the Original Notes as a result of market-making
activities or other trading activities and will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes. The Letter of Transmittal states that by so acknowledging, and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act even though it may
be deemed to be an underwriter for purposes thereof. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Original
Notes where such Original Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period ending on the earlier of the 180th day after the Exchange
Offer has been completed or such time as broker-dealers no longer own any
Registrable Securities (as defined in the Registration Rights Agreement), it
will make this Prospectus, as amended or supplemented, available to any such
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." Any broker-dealer who is an affiliate of the Company may not rely
on such no-action letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transactions.
In the event that any changes in the applicable interpretations of the
staff of the Commission do not permit the Company to effect the Exchange Offer
for the purposes set forth in the Registration Rights Agreement, or if the
Exchange Offer is not completed within 225 days following the Issue Date, or if
any holder of the Original Notes is not eligible to participate in the Exchange
Offer, the Company will, at its cost, (a) as promptly as practicable, but no
later than 30 days after the time such obligation arises, file a shelf
registration statement pursuant to the Securities Act relating to resales of the
Original Notes (the "Shelf Registration Statement"), (b) use its best efforts to
cause the Shelf Registration Statement to be declared effective under the
Securities Act within 120 days after such Shelf Registration Statement is filed
and (c) use its best efforts to keep effective the Shelf Registration Statement
until two years after its effective date. The Company will, in the event of the
filing of a Shelf Registration Statement, provide to each holder of the Original
Notes copies of the prospectus which is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for the
Original Notes has become effective and take certain other actions as are
required to generally permit unrestricted resales of the Original Notes. A
holder of Original Notes that sells such Original Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement which are applicable to such a
holder (including certain indemnification obligations). In addition, each holder
of the Original Notes will be required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on the
Shelf Registration Statement within the time periods set forth in the Shelf
Registration Rights Agreement in order to have their Original Notes included in
the Shelf Registration
49
Statement and to benefit from the provisions regarding liquidated damages set
forth in the following paragraph.
In the event that either (i) the Exchange Offer Registration Statement is
not filed with the Commission on or prior to the 60th day following the Issue
Date or the Shelf Registration Statement is not filed with the Commission on or
prior to the 30th day following the date an obligation to file arises, (ii) such
Exchange Offer Registration Statement or Shelf Registration Statement is not
declared effective on or prior to the 180th day following the Issue Date or the
120th day after such Shelf Registration Statement is filed, respectively, (iii)
the Exchange Offer is not completed within 45 days after the initial effective
date of the Exchange Registration Statement or (iv) the Exchange Offer
Registration Statement or Shelf Registration Statement is declared effective but
thereafter ceases to be effective or useable (each such event referred to in
clauses (i) through (iv) above, a "Registration Default" and each period during
which a Registration Default has occurred and is continuing, a "Registration
Default Period"), then special interest, in addition to the interest set forth
on the cover hereof, shall accrue on the Original Notes at a per annum rate of
0.5% for the first 90 days of the Registration Default Period, and at a per
annum rate of 1.0% thereafter for the remaining portion of the Registration
Default Period. Upon cure of the Registration Default, the special interest
shall no longer accrue and the Notes will bear interest at the original rate;
provided, however, that if, after any such cure, a different Registration
Default occurs, then special interest shall again accrue in accordance with the
foregoing provisions.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is available upon request to the Company.
TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES
GLOBAL NOTES
The Exchange Notes will be represented by one or more fully registered
global notes without coupons (the "Global Notes") and will be deposited upon
issuance with the U.S. Trustee as custodian for DTC, in New York, New York, and
registered in the name of DTC or its nominee. Except as set forth below, the
Global Notes may be transferred in whole and not in part only to DTC or another
nominee of DTC.
So long as DTC or its nominee is the registered owner thereof, DTC or such
nominee, as the case may be, will be considered the sole owner or Holder of the
Exchange Notes represented by the Global Notes for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in the
Global Notes will not be entitled to have the Exchange Notes represented by the
Global Notes registered in their names, will not receive or be entitled to
receive physical delivery of the Exchange Notes in definitive form and will not
be considered the owners or Holders thereof under the Indenture.
The following is based on information furnished by DTC:
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
("Direct Participants") include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is owned
by a number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to DTC's system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participant"). The rules applicable to DTC and its
Participants are on file with the Commission.
50
Purchases of the Exchange Notes under DTC's system must be made by or
through Direct Participants, which will receive a credit for such the Exchange
Notes on DTC's records. The ownership interest of each actual purchaser of each
the Exchange Note represented by a Global Note ("Beneficial Owner") is in turn
to be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participants through which such Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Global
Notes representing the Exchange Notes are to be accomplished by entries made on
the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners of the Global Notes representing the Exchange Notes will not receive the
Exchange Notes in definitive form representing their ownership interests
therein, except in the event that use of the book-entry system for such the
Exchange Notes is discontinued or upon the occurrence of certain other events
described herein.
To facilitate subsequent transfers, all Global Notes representing the
Exchange Notes which are deposited with DTC are registered in the name of DTC's
nominee, Cede & Co. The deposit of Global Notes with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Global Notes representing the
Notes; DTC's records reflect only the identity of the Direct Participants to
whose accounts such Notes are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants or Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Global
Notes representing the book-entry Exchange Notes. Under its usual procedures,
DTC mails an omnibus proxy (an "Omnibus Proxy") to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts
the Exchange Notes are credited on the applicable record date (identified in a
listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Global Notes
representing the Exchange Notes will be made to DTC. DTC's practice is to credit
Direct Participants' accounts on the applicable payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payment on such date. Payments by Participants
to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the account of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participant and not of DTC, the Trustees or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal, premium, if any, and interest to DTC is the responsibility
of the Company or the Trustees, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants. Neither the Company nor the Trustees will have any
responsibility or liability for the disbursements of payments in respect of
ownership interests in the Notes by DTC or the Direct or Indirect Participants
or for maintaining or reviewing any records of DTC or the Direct or Indirect
Participants relating to ownership interests in the Notes or the disbursement of
payments in respect thereof.
DTC may discontinue providing its services as securities depositary with
respect to the Exchange Notes at any time by giving reasonable notice to the
Company or the Trustees. Under such circumstances, and in the event that a
successor securities depositary is not obtained, Exchange Notes in definitive
form are required to be printed and delivered. The Company may decide to
discontinue use of the system of book-entry transfers through DTC or a successor
securities depositary.
According to DTC, the foregoing information with respect to DTC has been
provided to the members of the financial community for informational purposes
only and is not intended to serve as a representation, warranty, or contract
modification of any kind.
51
The information in this section concerning DTC and DTC's system has been
obtained from sources that the Company believes to be reliable, but is subject
to any changes to the arrangements between the Company and DTC and any changes
to such procedures that may be instituted unilaterally by DTC.
CREDIT RATINGS
The Notes have been assigned a rating of B+ by Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies Inc. ("S&P"), and a rating of
B1 by Moody's Investors Service, Inc. ("Moody's"). S&P rates debt instruments by
rating categories from a high of AAA to a low of D, with a "+" or "-" indicating
relative strength within the rating category. Moody's rates debt instruments by
rating categories from a high of Aaa to a low of D, with a "1", "2" or "3"
indicating relative strength within the rating category. Prospective recipients
of the Exchange Notes pursuant to the Exchange Offer should consult with the
rating agencies with respect to the interpretation of the foregoing ratings and
the implication of those ratings. The credit ratings accorded to the Notes are
not recommendations to buy, sell or hold the Notes and may be subject to
revision or withdrawal by S&P and Moody's at any time.
PLAN OF DISTRIBUTION
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Original Notes in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Original Notes pursuant to the Exchange Offer must acknowledge that
it will deliver this Prospectus in connection with any resale of such Exchange
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer who holds Original Notes acquired for its own
account as a result of market-making activities or other trading activities (an
"Exchanging Dealer") in connection with resales of Exchange Notes received in
exchange for Original Notes. The Company has agreed that for a period beginning
when Exchange Notes are first issued in the Exchange Offer and ending on the
earlier of the 180th day after the Exchange Offer has completed or such time as
broker-dealers no longer own any Registrable Securities (as defined in the
Registration Rights Agreement) (the "Resale Period"), it will make this
Prospectus, as amended or supplemented, available to any Exchanging Dealer for
use in connection with any such resale.
The Company will not receive any proceeds from the exchange of Original
Notes for Exchange Notes. Exchange Notes received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, or at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through broker-dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account in exchange for Original Notes pursuant to the Exchange Offer and any
person that participates in the distribution of such Exchange Notes may be
deemed an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Notes and any commissions or concessions received
by any such broker-dealers may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver, and by delivering, a prospectus a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
Until the Resale Period has expired, the Company will promptly send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that acquired Original Notes for its own account
as a result of market-making activities or other trading activities and that
requests such documents in the Letter of Transmittal applicable thereto. The
Company has agreed to pay all expenses incident to the Exchange Offer other than
commissions or concessions of any broker-dealers and will
52
indemnify the holders of the Original Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes in exchange for Original Notes pursuant to the Exchange Offer
agrees that, upon receipt of notice from the Company of (i) the issuance by the
Commission of any stop order or cease trade order suspending the effectiveness
of the Registration Statement or the qualification for distribution of the
Exchange Notes or the initiation of any proceedings for that purpose; (ii) the
receipt by the Company of any notification with respect to the suspension of the
qualification or qualification for distribution of the Exchange Notes included
therein for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; or (iii) the happening of any event that requires
the making of any changes in the Registration Statement or this Prospectus so
that, as of such date, the Registration Statement or this Prospectus does not
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein (in the case of this Prospectus, in
light of the circumstances under which they were made) not misleading (which
notice the Company agrees to advise to any broker-dealer that has provided in
writing to the Company a telephone or facsimile number and address for notices),
such broker-dealer will suspend the use of this Prospectus until the Company has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
broker-dealer or until it is advised in writing by the Company that the use of
this Prospectus may be resumed and has received copies of any amendments or
supplements thereto. If the Company gives any such notice to suspend the use of
this Prospectus, it will extend the Resale Period by the number of days during
the period from and including the date of the giving of such notice to and
including the date when broker-dealers shall have received (x) copies of the
supplemented or amended Prospectus necessary to permit resales of Exchange Notes
or (y) the advice in writing.
NO "UNDERWRITER" WITHIN THE MEANING OF APPLICABLE CANADIAN SECURITIES
LEGISLATION HAS BEEN INVOLVED IN THE PREPARATION OF THIS PROSPECTUS OR PERFORMED
ANY REVIEW OF THE CONTENTS OF THIS PROSPECTUS.
53
CERTAIN INCOME TAX CONSEQUENCES
Holders of Original Notes who exchange such Original Notes for Exchange
Notes should consult their own tax advisers with respect to their particular
circumstances and with respect to the effects of U.S. federal, Canadian federal,
state, provincial, local or foreign tax laws to which they may be subject.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income
tax consequences of the exchange of the Original Notes for the Exchange Notes
and the ownership and disposition of the Exchange Notes. This summary is based
on the United States Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof (all as of the date hereof
and all of which are subject to change, possibly with retroactive effect).
Except as specifically set forth herein, this summary deals only with Exchange
Notes acquired by a U.S. Holder (as defined below) pursuant to the Exchange
Offer and held as capital assets within the meaning of Section 1221 of the Code.
It does not discuss all of the tax consequences that may be relevant to holders
in light of their particular circumstances or to holders subject to special
rules, such as banks, insurance companies, tax-exempt organizations, dealers in
securities or foreign currencies, persons that own or are treated as owning 10%
or more of the stock of the Company (by vote or value), persons holding the
Exchange Notes as part of a hedging transaction, "straddle," conversion
transaction, or other integrated transaction, or U.S. persons whose functional
currency (as defined in Section 985 of the Code) is not the U.S. dollar.
ACCORDINGLY, INVESTORS CONSIDERING EXCHANGING ORIGINAL NOTES FOR EXCHANGE NOTES
SHOULD CONSULT WITH THEIR OWN TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE
UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS
TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
As used herein, the term "U.S. Holder" means a beneficial owner of an
Exchange Note that for United States federal income tax purposes is (i) a
citizen or individual resident of the United States, (ii) a corporation or
partnership created or organized in or under the laws of the United States or
any political subdivision thereof, (iii) an estate, the income of which is
subject to United States federal income taxation regardless of its sources, or
(iv) a trust, if both: (A) a United States court is able to exercise primary
supervision over the administration of the trust, and (B) one or more United
States persons have the authority to control all substantial decisions of the
trust. It should be noted that certain "single member entities" are disregarded
for U.S. federal income tax purposes. Holders that are single member
non-corporate entities should consult with their own tax advisors to determine
the U.S. federal, state, local and other tax consequences that may be relevant
to them.
Stated Interest
Interest paid on an Exchange Note generally will be taxable to a U.S.
Holder as ordinary interest income at the time it accrues or is received, in
accordance with the U.S. Holder's method of accounting for U.S. federal income
tax purposes. Such interest on the Exchange Notes generally will be considered
foreign source "passive income" or "financial services income" for foreign tax
credit purposes.
Exchange Offer
Pursuant to the Exchange Offer contemplated herein, an exchange of
Original Notes for Exchange Notes should not be a taxable event for United
States federal income tax purposes under Treasury regulation Section 1.1001-3
because the Exchange Notes should not be considered to differ materially in kind
or in extent from the Original Notes. A U.S. Holder's tax basis in the Exchange
Notes will be the same as such holder's tax basis in the Original Notes
exchanged therefor immediately before such exchange, and the holding period of
the Exchange Notes received will include the holding period of the Original
Notes exchanged therefor.
54
Amortizable Note Premium
A U.S. Holder that purchased an Original Note for an amount in excess of
its principal amount will be considered to have purchased the Original Note at a
"premium." A U.S. Holder may elect to amortize the premium over the remaining
term of the Original Note on a constant yield method. The amount amortized in
any year will be treated as a reduction of the U.S. Holder's interest income
from the Original Note. The premium on an Original Note held by a U.S. Holder
that does not make such an election will decrease the gain or increase the loss
otherwise recognized on the sale or disposition of the Original Note. The
election to amortize the bond premium on a constant yield method, once made,
applies to all debt obligations held or subsequently acquired by the electing
U.S. Holder on or after the first day of the taxable year to which the election
applies and may not be revoked without the consent of the United States Internal
Revenue Service ("IRS"). An Exchange Note received in exchange for an Original
Note will be deemed to have an equal amount of premium, which will be subject to
the same rules as premium on the Original Note.
U.S. Holders are urged to consult with their own tax advisors regarding
the application of the premium rules to their particular circumstances.
Sale, Exchange or Retirement of an Exchange Note
Upon the sale, exchange or retirement of an Exchange Note, a U.S. Holder
generally will recognize taxable gain or loss equal to the difference between
the amount realized on the sale, exchange or retirement (reduced by any amounts
attributable to accrued but unpaid interest, which will be taxable as such) and
such holders' adjusted tax basis in the Exchange Note. Any such gain should be
treated as U.S. source gain and, it appears that any such loss should also be
treated as U.S. source loss.
As noted above, a U.S. Holder's adjusted tax basis in an Exchange Note
generally will be the same as such holder's adjusted tax basis in the Original
Notes exchanged therefor (generally, the cost of such Original Note adjusted as
required by law.) Gain or loss on the sale, exchange or retirement of an
Exchange Note generally will be a capital gain or loss. Such capital gain or
loss will be a long-term capital gain or loss if the U.S. Holder's holding
period for the Exchange Note is more than one year. The deductibility of capital
losses is subject to limitations.
Backup Withholding
Certain non-corporate U.S. Holders may be subject to backup withholding at
a rate of 28% on payments of principal and interest on, and the proceeds of a
disposition of, an Exchange Note. Backup withholding will apply only if the U.S.
Holder (i) fails to furnish its Taxpayer Identification Number ("TIN") which, in
the case of an individual, would be his or her social security number, (ii)
furnishes an incorrect TIN, (iii) is notified by the IRS that it has failed to
properly report payments of interest or dividends, or (iv) under certain
circumstances, fails to certify, under the penalty of perjury, that it has
furnished a correct TIN and has not been notified by the IRS that it is subject
to backup withholding. U.S. Holders should consult their tax advisors regarding
their qualification for exemption from backup withholding and the procedure for
obtaining such an exemption if applicable.
Any amounts withheld under the backup withholding rules from a payment to
a U.S. Holder would be allowed as a refund or a credit against such holder's
U.S. federal income tax provided that the required information is timely
furnished to the IRS.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal Canadian federal income tax
consequences generally applicable to a holder of Exchange Notes acquired
pursuant to the Exchange Offer who at all relevant times, for purposes of the
Income Tax Act (Canada) (the "Act"), is not resident in Canada, deals at arm's
length with the Company, holds the Exchange Notes as capital property and does
not use or hold and is not deemed to use or hold the Exchange Notes in carrying
on a business in Canada (a "Holder"). For the purposes of the Act, related
persons (as therein defined) are deemed not to deal at arm's length. It is a
question of fact
55
whether persons not related to each other deal at arm's length. This summary
does not address the special tax consequences which may apply to a Holder of
Exchange Notes who is an insurer carrying on business in Canada and elsewhere
for the purposes of the Act.
This summary is based on the current provisions of the Act and the
regulations thereunder, the Company's understanding of the current published
administrative practices of the Canada Customs and Revenue Agency, and all
specific proposals to amend the Act and the regulations publicly announced by
the Minister of Finance prior to the date hereof. This summary does not
otherwise take into account or anticipate changes in the law, whether by
judicial, governmental or legislative decisions or action, nor does it take into
account tax legislation or considerations of any province or territory of Canada
or any jurisdiction other than Canada.
The exchange by a Holder of an Original Note for an Exchange Note should
not constitute a taxable event for purposes of the Act. Accordingly, a Holder
will not be subject to tax under the Act in respect of the exchange.
The payment of interest, principal or premium, if any, to a Holder of the
Exchange Notes will be exempt from Canadian withholding tax. No other tax on
income or capital gains will be payable under the Act in respect of the holding,
redemption or disposition of the Exchange Notes by a Holder.
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND DOES NOT CONSTITUTE LEGAL OR
TAX ADVICE TO ANY PARTICULAR HOLDER OF EXCHANGE NOTES. NO REPRESENTATION IS MADE
WITH RESPECT TO THE TAX CONSEQUENCES TO ANY PARTICULAR HOLDER. CONSEQUENTLY,
HOLDERS OF EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THEIR PARTICULAR CIRCUMSTANCES.
LEGAL MATTERS
Certain legal matters in connection with the Exchange Offer will be passed
upon for the Company by McCarthy Tetrault LLP, Vancouver, British Columbia, with
respect to matters of Canadian law and by Preston Gates & Ellis LLP, Seattle,
Washington, with respect to matters of United States law. The partners and
associates of McCarthy Tetrault LLP and of Preston Gates & Ellis LLP own less
than 1% of any securities of the Company.
EXPERTS
The consolidated financial statements for the years ended June 30, 2003
and 2002 have been incorporated by reference herein and in the Registration
Statement of which this Prospectus forms a part, in reliance upon the report of
KPMG LLP, Chartered Accountants, also incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to certain of the informational requirements of the
Exchange Act, and in accordance therewith, files reports and other information
with the Commission. Under a multijurisdictional disclosure system adopted by
the United States, such reports and other information may be prepared in
accordance with the disclosure requirements of Canada, which requirements are
different from those of the United States. The Company will continue to follow
the financial reporting requirements set forth in Canadian securities
legislation which include the provisions of annual and interim financial
statements to shareholders within 140 days after the fiscal year and 60 days
after the quarter end as appropriate. Such reports and other information filed
with the Commission may be inspected and copied at the public reference facility
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
56
The Company has filed with the Commission a registration statement on Form
F-10 under the Securities Act (the "Registration Statement"), as amended, with
respect to the Exchange Notes offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Exchange
Notes offered hereby, reference is made to the Registration Statement and the
exhibits thereto, which may be inspected without charge at, and copies thereof
may be obtained at prescribed rates from, the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the Commission at 1-800-SEC-0330 for further information on the
Public Reference Room. The Commission maintains a World Wide Web site that
contains certain reports of the Company filed electronically with the Commission
and which are available free of charge. The address of the site is
http://www.sec.gov.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the Commission as part of the
Registration Statement of which this Prospectus forms a part: the Annual
Information Form of the Company dated September 15, 2003, including Management's
Discussion and Analysis, for the year ended June 30, 2003; the Information
Circular of the Company dated September 26, 2003 distributed in connection with
the Company's annual general meeting held on November 10, 2003; the Annual
Consolidated Financial Statements; the Interim Consolidated Financial
Statements; interest coverage calculations as at and for the 12 months ended
June 30, 2003 and September 30, 2003; consent of KPMG LLP; consent of McCarthy
Tetrault LLP; consent of Preston Gates & Ellis LLP; powers of attorney executed
by certain directors and officers of the Company; the Registration Rights
Agreement; the Indenture; Statement of Eligibility on Form T-1 of the U.S.
Trustee for the Indenture; Letter of Transmittal; Notice of Guaranteed Delivery;
Letter to Brokers, Dealers, Commercial Banks and other Nominees; and Brokers'
Letter to Clients.
57
---------------------------------------------------------
---------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
PAGE
----
SPECIAL NOTE REGARDING FORWARD-LOOKING
INFORMATION............................ 2
DOCUMENTS INCORPORATED BY REFERENCE...... 2
CERTAIN DEFINITIONS AND STATISTICAL
INFORMATION............................ 3
ENFORCEABILITY OF CERTAIN CIVIL
LIABILITIES............................ 3
PROSPECTUS SUMMARY....................... 4
RISK FACTORS............................. 9
RECENT DEVELOPMENTS...................... 13
CONSOLIDATED CAPITALIZATION.............. 14
USE OF PROCEEDS.......................... 14
THE COMPANY.............................. 15
INTEREST COVERAGE........................ 17
THE EXCHANGE OFFER....................... 18
DESCRIPTION OF THE NOTES................. 26
CREDIT RATINGS........................... 52
PLAN OF DISTRIBUTION..................... 52
CERTAIN INCOME TAX CONSEQUENCES.......... 54
LEGAL MATTERS............................ 56
EXPERTS.................................. 56
AVAILABLE INFORMATION.................... 56
DOCUMENTS FILED AS PART OF THE
REGISTRATION STATEMENT................. 57
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US$350,000,000
INTRAWEST CORPORATION
7.50% SENIOR EXCHANGE NOTES
DUE OCTOBER 15, 2013
------------------------
LOGO
------------------------
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PART II
INFORMATION NOT REQUIRED TO BE DELIVERED TO
OFFEREES OR PURCHASERS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Canada Business Corporations Act (the "CBCA"), which governs
Intrawest Corporation (the "Registrant") except in respect of an action by or on
behalf of a corporation or other entity to procure a judgement in its favor, a
corporation may indemnify a present or former director or officer of such
corporation or a person who acts or acted at the corporation's request as a
director or officer or an individual acting in a similar capacity, of another
entity, against all costs, charges and expenses, including an amount paid to
settle an action or satisfy a judgment, reasonably incurred by such individual
in respect of any civil, criminal, administrative, investigative or other
proceeding in which he or she is involved because of that association with the
corporation or other entity and provided that such individual acted honestly and
in good faith with a view to the best interests of the corporation or, as the
case may be, to the best interests of the other entity for which the individual
acted as director or officer or in a similar capacity at the corporation's
request, and, in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, had reasonable grounds for believing
that his conduct was lawful. Such indemnification may be made in connection with
a derivative action only with court approval. A director or officer (or other
individual as described above) is entitled to indemnification from the
corporation as a matter of right in respect of all costs, charges and expenses
reasonably incurred by such individual in connection with the defence of a
civil, criminal, administrative, investigative or other proceeding to which he
or she is made a party because of their association with the corporation or
other entity if such individual was not judged by the court or other competent
authority to have committed any fault or omitted to do anything that the
individual ought to have done and has fulfilled the conditions set forth above.
The by-laws of the Registrant provide that the Registrant shall indemnify
a present or former director or officer of the Registrant or another individual
who acts or acted at the Registrant's request as a director or officer or an
individual acting in a similar capacity, of another entity, and his or her heirs
and legal representatives thereof, to the extent permitted by the CBCA or
otherwise by law.
The Registrant maintains directors' and officers' liability insurance
which insures the directors and officers of the Registrant and its subsidiaries
against certain losses resulting from any wrongful act committed in their
official capacities for which they become obligated to pay to the extent
permitted by applicable law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 as amended (the "Act") may be permitted to directors, officers or
persons controlling the Registrant pursuant to the foregoing provisions, the
Registrant has been informed that in the opinion of the U.S. Securities and
Exchange Commission (the "Commission") such indemnification is against public
policy as expressed in the Act, and is therefore unenforceable.
II-1
EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*4.1 Annual Information Form of the Registrant dated September
15, 2003, including Management's Discussion and Analysis,
for the year ended June 30, 2003 (incorporated by reference
to the Registrant's Report on Form 40-F for the year ended
June 30, 2003, filed on November 6, 2003 with the
Commission).
*4.2 Information Circular of the Registrant dated September 26,
2003 distributed in connection with the Registrant's Annual
General Meeting of Shareholders held on November 10, 2003.
*4.3 Annual consolidated financial statements of the Registrant
for the years ended June 30, 2003 and 2002 (incorporated by
reference to the Registrant's Annual Information Form
included in the Registrant's Report on Form 40-F filed on
November 6, 2003 with the Commission).
*4.4 Unaudited consolidated financial statements of the
Registrant for the three months ended September 30, 2003
(incorporated by reference to the Registrant's Reports on
Form 6-K filed on November 28, 2003 with the Commission).
*4.5 Interest Coverage calculations as at and for the twelve
months ended June 30, 2003 and September 30, 2003.
*5.1 Consent of KPMG LLP.
*5.2 Consent of McCarthy Tetrault LLP.
*5.3 Consent of Preston Gates & Ellis LLP.
*6.1 Powers of Attorney (see signature page).
*7.1 Exchange and Registration Rights Agreement, dated October 9,
2003, among the Registrant, Deutsche Bank Securities Inc.,
Scotia Capital (USA) Inc., CIBC World Markets Corp., U.S.
Bancorp Piper Jaffray Inc., Credit Lyonnais Securities (USA)
Inc. and Wachovia Capital Markets, LLC.
*7.2 Indenture dated as of October 9, 2003 among the Registrant,
JPMorgan Chase Bank, as U.S. Trustee, and CIBC Mellon Trust
Company, as Canadian Trustee.
*7.3 Statement of Eligibility on Form T-1 of the U.S. Trustee
with regard to the Notes.
8.1 Form of Letter of Transmittal.
8.2 Form of Notice of Guaranteed Delivery.
8.3 Letter to Brokers, Dealers, Commercial Banks and other
Nominees.
8.4 Brokers' Letter to Clients.
---------------
* previously filed
II-2
PART III
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
ITEM 1. UNDERTAKING.
The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to the securities registered pursuant to this Form F-10 or to
transactions in said securities.
ITEM 2. CONSENT TO SERVICE OF PROCESS.
The Registrant has filed with the Commission a written irrevocable consent
and power of attorney on Form F-X.
CIBC Mellon Trust Company has filed with the Commission a written
irrevocable consent and power of attorney on Form F-X.
III-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-10 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Vancouver, Province of British Columbia, Country of
Canada, on this 12th day of December, 2003.
INTRAWEST CORPORATION
By: *
------------------------------------
Name: Joe S. Houssian
Title: Chairman, President and
Chief Executive Officer
POWERS OF ATTORNEY
Each person whose signature appears below constitutes and appoints each of
Daniel O. Jarvis and Ross J. Meacher, his true and lawful attorney-in-fact and
agent, each acting alone, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all Amendments (including post-effective Amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by or on behalf of the following
persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman, President and December 12, 2003
------------------------------------ Chief Executive Officer
Joe S. Houssian (Principal Executive Officer)
* Executive Vice President and December 12, 2003
------------------------------------ Chief Financial Officer and
Daniel O. Jarvis Director (Principal Financial
Officer)
* Vice President and December 12, 2003
------------------------------------ Corporate Controller
David C. Blaiklock (Principal Accounting Officer)
* Director December 12, 2003
------------------------------------
R. Thomas M. Allan
* Director December 12, 2003
------------------------------------
David A. King
Director
------------------------------------
Gordon H. MacDougall
III-2
SIGNATURE TITLE DATE
--------- ----- ----
* Director December 12, 2003
------------------------------------
Paul M. Manheim
Director
------------------------------------
Paul A. Novelly
* Director December 12, 2003
------------------------------------
Bernard A. Roy
* Director December 12, 2003
------------------------------------
Khaled C. Sifri
* Director December 12, 2003
------------------------------------
Nicholas C.H. Villiers
*By: /s/ ROSS J. MEACHER December 12, 2003
------------------------------
Attorney-in-fact
III-3
Pursuant to the requirements of Section 6(a) of the Securities Act of
1933, the undersigned has signed this Registration Statement, solely in the
capacity of the duly authorized representative of Intrawest Corporation in the
United States, in the City of Vancouver, Province of British Columbia, Country
of Canada, on this 12th day of December, 2003
By: Intrawest U.S. Holdings Inc.
By: *
----------------------------------
Name: Joe S. Houssian
Title: President
*By: /s/ ROSS J. MEACHER December 12, 2003
------------------------------
Attorney-in-fact
III-4
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE NUMBER
------- ----------- -----------
*4.1 Annual Information Form of the Registrant dated September
15, 2003, including Management's Discussion and Analysis,
for the year ended June 30, 2003 (incorporated by reference
to the Registrant's Report on Form 40-F for the year ended
June 30, 2003, filed on November 6, 2003 with the
Commission).
*4.2 Information Circular of the Registrant dated September 26,
2003 distributed in connection with the Registrant's Annual
General Meeting of Shareholders held on November 10, 2003.
*4.3 Annual consolidated financial statements of the Registrant
for the years ended June 30, 2003 and 2002 (incorporated by
reference to the Registrant's Annual Information Form
included in the Registrant's Report on Form 40-F filed on
November 6, 2003 with the Commission).
*4.4 Unaudited consolidated financial statements of the
Registrant for the three months ended September 30, 2003
(incorporated by reference to the Registrant's Reports on
Form 6-K filed on November 28, 2003 with the Commission).
*4.5 Interest Coverage calculations as at and for the twelve
months ended June 30, 2003 and September 30, 2003.
*5.1 Consent of KPMG LLP.
*5.2 Consent of McCarthy Tetrault LLP.
*5.3 Consent of Preston Gates & Ellis LLP.
*6.1 Powers of Attorney (see signature page).
*7.1 Exchange and Registration Rights Agreement, dated October 9,
2003, among the Registrant, Deutsche Bank Securities Inc.,
Scotia Capital (USA) Inc., CIBC World Markets Corp., U.S.
Bancorp Piper Jaffray Inc., Credit Lyonnais Securities (USA)
Inc. and Wachovia Capital Markets, LLC.
*7.2 Indenture dated as of October 9, 2003 among the Registrant,
JPMorgan Chase Bank, as U.S. Trustee, and CIBC Mellon Trust
Company, as Canadian Trustee.
*7.3 Statement of Eligibility on Form T-1 of the U.S. Trustee
with regard to the Notes.
8.1 Form of Letter of Transmittal.
8.2 Form of Notice of Guaranteed Delivery.
8.3 Letter to Brokers, Dealers, Commercial Banks and other
Nominees.
8.4 Brokers' Letter to Clients.
---------------
* previously filed
III-5