Representatives of The Greenbrier Hotel say a possible $500 million financing deal remains on track for closure by late this week, although major hurdles still remain.
One is that representatives of the hotel owned by Senator Jim Justice and his family are actively negotiating a release and payoff statement with White Sulphur Springs Holdings, an Omni Hotels affiliate that bought about $300 million in first-lien debt on The Greenbrier earlier this year, “and expect to reach agreement on a final version soon.”
The other is that the financial deal’s closing remains contingent upon regulatory approval from the West Virginia Lottery Commission, which is reviewing how Greenbrier ownership changes would affect the hotel’s gaming license.
That’s the bottom line in two recent status reports filed in federal court by attorneys representing The Greenbrier.
“As of the date of this status report, the financing transaction is proceeding as expected,” wrote lawyers for The Greenbrier in a status report filed Friday in U.S. District Court for the Southern District of West Virginia.
In a dispute over control of The Greenbrier, U.S. District Judge Frank Volk entered an order last week allowing more time to work on a financial deal while also setting deadlines and hearings that could rev up the case again.
Lawyers for White Sulphur Springs Holdings say their collateral is at risk, and they’ve been asking the judge to appoint a third-party receiver to oversee the hotel while pushing out the owners, Justice and his family business.
The Justices and their Greenbrier Hotel Corporation say a $500 million deal could pay off White Sulphur Springs Holdings and other entities owed money while also providing enough to invest in long-needed hotel improvements.
Attorneys for the Justices say completion is getting closer for a $500 million financing deal with the New York firm Kennedy Lewis Investment Management but have been asking the court for more time.
Volk agreed to an extension to this Friday, August 7.
“Nevertheless, these proceedings have now been suspended for over two months, and Defendants’ anticipated timeline has shifted considerably since the original request,” Volk wrote.
“Given the potential for further prejudice to WSSH as a result of any further delay, the Court will set herein a schedule for further proceedings in the event the transaction does not close as anticipated.”
Volk set a prehearing conference date of 10 a.m. Sept. 3 in Charleston, a deadline to submit findings of fact and conclusions of law by Sept. 9 and an evidentiary hearing at 10 a.m. Sept. 16 in Charleston.
The judge also ordered the status reports that were submitted on behalf of The Greenbrier last week.
Lawyers for The Greenbrier have said the deal is complicated because it is not just a loan but, instead, a joint venture.
According to documents outlining the financial scenarios, the transaction involves an internal reorganization where the Justice family and Justice Family Group will create a new holding company and a wholly-owned subsidiary to hold 100% of the equity interests in the Greenbrier Resort assets.
Some of those moves have started becoming apparent in public filings.
A revised deed filed late last month in Greenbrier County shows that the former “Greenbrier Hotel Corporation” has been changed to “Greenbrier Hotel, LLC.”
The limited liability company’s manager is listed as “The Greenbrier Resort and Club Management LLC,” with representatives of the Justice family as officers.
Changes to The Greenbrier’s corporate structure have been filed with the West Virginia Secretary of State’s business and licensing division.
The evolving financial relationship also means the terms have been under review by the West Virginia Lottery Commission because The Greenbrier has a casino license.
Lottery is aware that the Justices, solely in control of The Greenbrier and its casino to this point, will have some sort of new, shared ownership structure.
In a July 10 letter obtained through a Freedom of Information Act request, acting Lottery Director David Bradley “regarding a proposed acquisition and re-organization of the Greenbrier Hotel Corporation, which is currently under the sole control of the Justice Family Group LLC.”
For the review, Bradley wrote that Lottery would need “a completed acquisition application, purchase agreement, operating agreement, financial information, and key personnel information.”
He noted that “To ensure that a change or modification in structure or key persons is met, the Lottery must conduct its due diligence, and perform a comprehensive review prior to approving such a request.”
Lottery commissioners did not review the changes at their most recent meeting, which took place last week, July 29.
During a telephone planning session for that meeting, Bradley emphasized the importance of being careful.
“And I know there’s urgency obviously on the part of The Greenbrier, and until we have received all the documentation that we’re looking for and requiring — and until we have reviewed it and vetted it properly, and we have done our due diligence here — at such time that is done and completed, then we will bring that before the commission and put that on the commission agenda for your review and approval,” he said.
The next Lottery meeting is August 26, with another telephone planning meeting to set the agenda on August 19.
Lawyers for The Greenbrier said they’ve been communicating with Lottery but can’t be certain when the review would conclude.
“Defendants do not anticipate any obstacles to obtaining WVLC approval of the financing transaction, though the date of ultimate approval is solely within the WVLC’s control,” lawyers for The Greenbrier wrote in the latest status report.