U.S. Senator Jim Justice said his family business group and the owner of Omni Hotels & Resorts had a verbal agreement for control of the historic Greenbrier Hotel — and then it went poof.
That version of recent events is laid out in court filings on behalf of the Justices, including new information in the form of emails between the parties, now entered into the federal court record.
Potential for cooperation — and then conflict — developed rapidly since the start of this month when longtime lender Carter Bank & Trust sold nearly $300 million in first-lien debt plus binding legal documents to the newly formed White Sulphur Springs Holdings, a corporate affiliate of Omni.
Now the two sides are fighting in court over control of The Greenbrier, its 710 guest rooms, four golf courses and casino.
Commentary by Hoppy Kercheval: Who will save The Greenbrier this time?
There was a brief moment of potential collaboration — brokered in person and then called up abruptly with an email.
A high-profile meeting occurred April 6, a Monday, at The Greenbrier with high-profile players: Justice, who bought The Greenbrier out of bankruptcy in 2009; Texas billionaire Robert Rowling, who is the owner of TRT Holdings, which owns the Omni hotels; and his son Blake Rowling, president of TRT Holdings.
During the meeting, the group and their advisers discussed what it might look like to work together. One of the ideas hatched, according to a Justice court filing was an arrangement for TRT to acquire a 50% ownership interest in The Greenbrier in exchange for forgiving $200 million in debt.
The parties broke for lunch — club sandwiches in an office for the Justice representatives and Draper’s Cafe for the Rowlings, “after which the TRT defendants would propose more specific terms.”
The Justices, in a lawsuit they filed in Greenbrier County, say the proposal was this: A joint venture would be formed with TRT acting as the general partner and managing the resort’s operations while the Justice family would retain a “significant role” at the resort.
Jim Justice, according to the filing, agreed to the offer that day, with the court filing noting that he had “few palatable options” after TRT’s acquisition of the loans.
TRT, according to the Justice court filing, committed to providing a written term sheet just two days later, the morning of April 8.
It didn’t work out that way.
Yet another filing by the Justices, this one in federal court, provides an email exchange to show a friendly tone between the negotiators and then a sudden breakup.
The email flurry starts friendly enough with an email at 1:54 p.m. that Tuesday, April 7, from Paul Jorge, senior vice president and general counsel at TRT Holdings.
“Gentlemen: Thank you for your time and hospitality yesterday,” Jorge began. “We enjoyed meeting all of you and thought most of the conversation was constructive. We promised to be back in touch with you quickly.”
Then the tone turned.
“With this goal in mind, we spent several hours last night and this morning discussing these ideas among our team, including our external advisors, and we have concluded that there is not a transaction that can ultimately get done to meet our respective objectives,” Jorge wrote to the Justice representatives.
“Specifically, we think it would be very difficult for the Justice family to have equity in a ‘Newco’ when some creditors are not paid in full.”
Jorge signed off his note by saying, “Therefore, we want to promptly notify you that we are not able to send any proposal, including any proposal to extend or further forbear on the collection of the debt. Accordingly, we encourage you to pursue all other options available to you.”
Hard stop.
Steve Ruby, a Charleston lawyer representing the Justices, responded that afternoon.
“We are certainly disappointed and puzzled by your drastic change in position from just 24 hours ago. That said, and in light of your encouragement to pursue other options, we intend to exercise our payoff right under the forbearance agreement. Please send us the wiring instructions for the payoff.”
The next day, 11:29 a.m. April 8, Jorge followed up: “Attached are the wire instructions for the payoff, which are the same wire instructions that the interest payments have been sent to.”
The amount of the payoff was roughly $341 million.
“Plaintiffs promptly obtained terms from another lender to provide the funds to payoff the Loans in the agreed-upon amount,” the lawyer for the Justices wrote in their Greenbrier County lawsuit.
But before any payoff occurred, TRT’s representatives sent The Greenbrier a notice of default and termination of the forbearance agreement that had provided a grace period on the debt in exchange for the Justices making concessions on their property.
By April 9, that Thursday, TRT’s White Sulphur Springs Holdings had filed in federal court for a receiver to be named to carry out The Greenbrier’s functions, potentially pushing the Justices aside.
“WSSH files this complaint and seeks a receiver for the protection of its collateral, and ultimately for the protection of The Greenbrier Resort, its employees, and the other individuals who depend upon that resort for their livelihood,” wrote the lawyers for the holding company in the lawsuit against the Justices.
“The track record of these Defendants more than justifies this request.”