Greenbrier Bought; Bankruptcy, Management Still Pending
By Derek Gale, Senior Editor -- Hotels, 5/13/2009 7:16:00 AM
West Virginia businessman Jim Justice recently acquired The Greenbrier resort and 80% of The Greenbrier Sporting Club through a stock purchase agreement in which CSX Corp., The Greenbrier’s previous owner, transferred 100% ownership of its stock in The Greenbrier Resort and Club Management Co. (The Greenbrier Hotel Corp.’s holding company), to Justice’s company, the Justice Family Group LLC.
The Wall Street Journal reported the transaction cost to be US$20 million.
Justice also has filed a request to seek dismissal of The Greenbrier Hotel Corp.’s Chapter 11 proceedings in federal bankruptcy court in Richmond, Virginia.
The sale of the company to the Justice Family Group LLC in theory negates an asset purchase agreement that The Greenbrier Hotel Corp. had reached in March—the same month as the bankruptcy filing—with Marriott Hotel Services Inc. That transaction was to be subject to a court-supervised auction process in which other qualified purchasers would have an opportunity to bid on the resort.
Part of Justice’s bankruptcy dismissal filing was a request that any order dismissing the bankruptcy also deem the Marriott asset purchase agreement to be terminated, given that certain requirements are met (which include the return of a Marriott deposit and the payment to Marriott of a “break-up fee and expense reimbursement”).
Marriott International spokesmen, meanwhile, have expressed surprise about the resort’s sale to Justice, and have made statements about the company intending to continue pursuing the purchase of The Greenbrier.
Most recently, Arne Sorenson, Marriott International’s new president and COO, said in an interview with HOTELS magazine, “We obviously would love to have The Greenbrier be part of our system. It is a special asset and one we think we can deliver extraordinary value to. It needs a shot in the arm in terms of management and customers, and we’re in a position to provide that. We remain very interested.”
He went on to say that Marriott officials would be talking with Justice and “doing what we can to maximize our chance to have the hotel.” But Sorenson stressed the company’s interest in managing the resort, while downplaying its interest in ownership.
With that in mind, one possible outcome would be for Marriott to offer to manage the resort for Justice, whose background is in the mining and farming industries, and not the hotel industry.
Justice’s stated near-term goal is to “give The Greenbrier a fresh start”—last year the resort lost US$35 million—while also aiming to “take a long-term view by focusing on reclaiming our 5-star status and making the right investments for future growth.” (Under the stock purchase agreement, Justice agreed to continue operating The Greenbrier for at least two years at standards consistent with maintaining a AAA 5-diamond rating)
To that end, since Justice’s purchase, the resort has been calling back its hundreds of furloughed employees. “We’re going to be aggressive and we will return this resort to its rightful place as the leader in the luxury hospitality industry,” Justice says. “To do that, we need all of our team members here and ready to serve our guests.”
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