Chapter 11 for resort

Greenbrier to sell itself to Marriott for up to $130 million under bankruptcy plan

March 20, 2009|By From Baltimore Sun new services

CHARLESTON, W.Va. - The Greenbrier luxury resort, the white Georgian-style landmark that has hosted 26 presidents since it opened in 1778, filed for Chapter 11 bankruptcy protection yesterday and unveiled a plan to sell itself to hotel giant Marriott International Inc. for up to $130 million.

A recession-fueled drop in demand for luxury hotel rooms helped drive the Greenbrier to a deal that would end nearly a century of ownership by railroad company CSX Corp. and its predecessors. The resort blossomed from an 18th-century sulfur spring retreat to a society hot spot in the roaring 1920s.

Under the sales plan revealed in the bankruptcy filing, Marriott would receive $50 million over two years from Jacksonville, Fla.-based CSX Corp. to operate the resort. Marriott in turn would pay CSX between $60 million and $130 million within seven years, depending on timing and the hotel's financial performance.

The deal is expected to close later this year, pending new labor agreements and approval from a bankruptcy court, which is expected to allow other potential buyers to make bids.

Bethesda-based Marriott would be getting a storied resort on the National Register of Historic Places whose guests have included Dwight Eisenhower and 25 other U.S. presidents, and was once a staple on the social circuit for Judy Garland, the Vanderbilts and the Rockefellers.

The 6,500-acre resort in southeastern West Virginia with 721 rooms is also the site of a once-secret Cold War bunker built to house Congress in case of a nuclear attack. The resort is located in the Allegheny Mountains about 290 miles from Baltimore.

"The resort is a historic national treasure and we're excited by the opportunity," Marriott spokesman Tom Marder said. "There are a number of conditions to work through which we hope will be completed successfully."

Marder said Marriott plans to retain the Greenbrier name.

The Greenbrier has lost more than $90 million in the past five years, including $35 million in 2008, and the bankruptcy filing shows the flow of red ink is speeding up.

Monthly revenue fell to just over $1 million in February from more than $2.7 million in January, according to the filing. The resort reported a pretax loss of $3.74 million in January and $4.96 million last month. Occupancy fell to 33 percent last year from 50 percent the previous five years.

Greenbriar estimated assets of less than $100 million and debt of $100 million to $500 million, according to Chapter 11 papers filed in U.S. Bankruptcy Court in Richmond, Va.

The Greenbrier has asked the court for interim financing so it can operate normally pending the sale, company spokeswoman Lynn Swann said.

The sale is contingent on the ability of Greenbrier and its unions to negotiate labor contracts satisfactory to Marriott, Greenbrier said. Nine unions represent about two-thirds of the hotel's work force, including housekeepers, security staff and spa and food-service employees, Swann said.

The nine labor agreements plus a master agreement expired in January 2008. A no-strike, no-lockout agreement is in effect until Jan. 4, 2010, or until new contracts are reached, Swann said.

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