The West Virginia Lottery Commission decided to approve the casino license for The Greenbrier under its new ownership structure.
Commissioners voted their approval Wednesday after the New York financial firm Kennedy Lewis Investment Management assumed 51% control of The Greenbrier and a majority of seats on the hotel corporation’s 5-member governing board.
The other 49% and two seats on the board are controlled by Senator Jim Justice and his family, who have owned The Greenbrier since 2009.
The iconic, 710-room Greenbrier in White Sulphur Springs features a private casino, four golf courses and a spa.
“I know this is a new direction that the Greenbrier is going in, which makes us excited. And it is a crown jewel of our state, and it’s recognized worldwide,” said acting Lottery Director David Bradley.
“Kennedy Lewis brings a good reputation, strong financial background; the expertise that they bring, and, you know, we talk about all the the good, but the the main thing is is that I think is is that they bring stability in ensuring a positive growth to the financial integrity of The Greenbrier, which is, you know, what we we were looking at.”
Although the Lottery Commission last week indicated that discussion of the ownership structure and casino license would be in a closed session, the finances, ownership and casino license wound up being discussed in public today.
The three representatives of Kennedy Lewis on the governing board of The Greenbrier are Brian Dubin and Doug Gerowski, both directors at Kennedy Lewis, and Lloyd Charles Nathan, who is designated as the chairman.
Jill Justice, the senator’s daughter is the fourth member of the board. The fifth hasn’t been named yet.
Prior correspondence between Lottery and The Greenbrier had indicated that James C. Justice III, the senator’s son known as Jay, would be named to the board. His name was not mentioned at the Wednesday meeting.
Gov. Patrick Morrisey, a Republican political rival to Justice, issued a statement shortly after the Lottery meeting “on Lloyd Nathan, Chairman of the Board of The Greenbrier Resort, for gaining majority control of The Greenbrier Casino.”
Morrisey said, “As Lloyd Nathan, the new Chairman of the Board of the Greenbrier Resort, becomes more acquainted with the Greenbrier Valley, we are committed to working with him to refurbish and enhance this historic property.”
The governor added, “I am hopeful that the new controlling owner will bring much needed financial stability to the iconic Greenbrier resort.”
The deal came about after an affiliate of Omni Hotels & Resorts bought millions of dollars in first-lien debt on The Greenbrier and sued in federal court to have a receiver named to run the property and push out the Justices. The Omni representatives said their collateral was at risk and that the hotel was being neglected while the Justices used profits to prop up their other businesses.
The Justices worked out a roughly $500 million dollar deal with Kennedy Lewis, a private credit and alternative asset firm, that focuses on companies facing cyclical, secular or regulatory disruptions. The deal is both a loan and a joint venture.
The deal paid down the Omni affiliate, although the final amount is not publicly known. At one point, the demanded payoff amount was disclosed as $388 million, but it’s unclear if that changed.
It also allowed payment of millions of dollars in tax debt. Charleston attorney Steve Ruby, who represents the Justices, said that amounts to more than $10 million, “which is again one of the the many many upsides benefits that that we’re very happy we were able to achieve by closing.”
Of the total, he specified that about $2.6 million in state taxes were paid at closing. There were additional multi‑million‑dollar local property taxes paid to Greenbrier County. And millions of dollars in federal taxes were paid, he said.
Greenbrier representatives have said the deal would also provide tens of millions of dollars for improvements and deferred maintenance.
“We believe that the reports that have appeared in various places, including in court filings by Omni, of the physical plant problems at The Greenbrier have been exaggerated,” Ruby said.
“But that being said, there’s no question that the new financial flexibility and resources that the Greenbrier has to catch up on deferred maintenance and improve the guest experience — those are very important and beneficial aspects of the transaction that that just closed.”
Ruby said the new oversight personnel, including Nathan, will be assessing early on “what are the strengths in the current operation that The Greenbrier has and what are the weaknesses, or what are the areas that need to be improved?
“And that will be the focus of the additional capital and perhaps additional management expertise that will be brought to bear to to get those aspects of the operation to where they need to be.”
He outlined that Kennedy Lewis does hold 51% of the newly formed Greenbrier Holdco LLC, which is the ultimate parent company of The Greenbrier.
The finances for Greenbrier Holdco, he said, will be in a ring fence, which is a legal barrier that separates a specific portion of a company’s financial operations from the rest, “meaning that money that the Greenbrier makes stays in the Greenbrier Holdco organization.”
He acknowledged ongoing concerns over money flowing between Justice companies, making it difficult to track obligations, although he described that as a routine business practice.
“And while there’s nothing improper about those loans — intercompany loans are very common in business organizations with multiple entities — what this transaction will do or has done is separate The Greenbrier from the rest of the Justice family companies, and all Greenbrier earnings will now stay in the Greenbrier joint venture,” Ruby said.
Ruby concluded his overview by telling the commissioners that “this transaction is a huge win for the Greenbrier. It’s a huge win for the Greenbrier’s employees. It places the the institution that is The Greenbrier on a more stable financial footing than it has been in a long time. It’s a win for Greenbrier County, for the surrounding area.
“It’s a win for the state, and most importantly, for purposes of the decision that the commission is making today, we believe it’s a win for the Lottery because ultimately, what the Lottery wants is financially stable licensees who have the wherewithal to operate their businesses effectively and grow and prosper and ultimately generate gaming revenue for the state.”