Sizing up a proposed half-billion dollar finance agreement for outstanding debt on The Greenbrier Hotel, lawyers for an affiliate of rival Omni Hotel & Resorts are not impressed.
Attorneys for White Sulphur Springs Holdings, which is vying in a federal court case for control of the historic Greenbrier, contend the term sheet is being characterized as solid while it’s actually a delay tactic.
They argue the lawyers for the owners of The Greenbrier, Senator Jim Justice and his family, are “substantively hiding” the document’s details, obscuring the opportunity to test its enforceability and certainty.
“In short, Defendants have identified a partner who has agreed to conduct due diligence and who has made clear it can walk away at any time, for any reason, without consequence,” wrote the attorneys for White Sulphur Springs Holdings, which is in a federal court dispute over control of The Greenbrier.
“This is a far cry from Defendants securing financing to satisfy their indebtedness to WSSH in full.”
The lawyers for White Sulphur Springs Holdings were responding to a financing proposal for up to $500 million between the Justice family business and Kennedy Lewis Investment Management, a New York-based alternative asset management firm.
The Justices own The Greenbrier. White Sulphur Springs Holdings bought $300 million in rights to loans on The Greenbrier and related assets earlier this year.
White Sulphur Springs Holdings is a subsidiary of TRT Holdings, parent company of the national Omni Hotel chain. After buying the debt, White Sulphur Springs Holdings filed a federal lawsuit to name a receiver at The Greenbrier and force the Justices out.
Lawyers for the Justices want that federal lawsuit to be paused for a couple of months, contending the arrangement with Kennedy Lewis could pay off the debt and make the lawsuit moot.
To try to prove that, attorneys for the Justices this week submitted a redacted term sheet on the financing. They are offering to also provide an unredacted term sheet that the judge could view privately.
Although the document submitted so far is heavily redacted, it does convey some significant information, including the name of the lender and the potential half-billion dollar amount.
The primary parties include Justice Family Group LLC and a new holding company and subsidiary to be created prior to closing.
The loan is to be secured on a first-lien basis by a pledge of 100% equity in the borrower and all Greenbrier assets. Collateral also includes development projects, land and timber farms.
It also includes personal guarantees by some of the parties, although specific names are redacted in the exhibit. Jim Justice and several of his family members have signed personal guarantees in past financial arrangements.
In its own filing in response, White Sulphur Springs Holdings expresses skepticism of the financing arrangement.
“The limited unredacted provisions of the Non-Binding Term Sheet evidence the highly speculative nature of this proposed refinancing. There is no closing or drop-dead date established,” the lawyers wrote.
“And as one would expect with a loan of this magnitude, the term sheet anticipates extensive due diligence that could take several months to complete with a complex asset like The Greenbrier and its related property and operations. This is inconsistent with Defendants’ assertion that they ‘expect’ to close on this transaction within 45 days.”
The lawyers for White Sulphur Springs Holdings also questioned whether even a half-billion dollars will go far enough, given what it would take to pay down the already existing loans. Both sides in this case have said The Greenbrier needs upgrades.
“Further, to pay off known creditors having liens on The Greenbrier Collateral alone will require over $420,000.000. This begs the question as to whether a possible $500,000,000 loan is sufficient to resolve all The Greenbrier’s financial problems, as Defendants suggest,” wrote the White Sulphur Springs Holdings attorneys.
“Moreover, once the full magnitude of The Greenbrier debts, deferred maintenance and capital expenditure deficiencies are uncovered in due diligence, WSSH believes there is a significant probability that the lender will simply walk away from this transaction without liability.”
White Sulphur Springs Holdings expressed strong opposition to submitting an unredacted financing term sheet under seal for private view by the judge. And lawyers for the holding company said what has been submitted already is too redacted.
White Sulphur Springs Holdings has offered to review the unredacted term sheet under a confidentiality agreement or protective order instead.
“Defendants cannot simultaneously rely upon the term sheet as affirmative evidence intended to defeat WSSH’s claims while simultaneously depriving WSSH a meaningful opportunity to test its enforceability, conditions precedent, contingencies, and financing certainty.”