Greenbrier Hotel files bankruptcy, looks to sell resort to Marriott

By Caroline Salls

Pittsburgh, March 19 - The Greenbrier Hotel Corp. filed for Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the Eastern District of Virginia and has signed an asset purchase agreement with Marriott Hotel Services, Inc. for the sale of The Greenbrier resort in White Sulphur Springs, W.Va., according to a company news release.

Under the purchase agreement, Marriott expects CSX Corp. to provide $50 million, through an affiliate, to be used in the operation of the resort after completion of the sale.

The Greenbrier Hotel Corp. is a wholly owned subsidiary of The Greenbrier Resort and Management Corp., which is wholly owned by CSX.

According to the release, the CSX funds would be paid over a two-year period following the closing of the transaction.

In turn, Marriott would pay Greenbrier Hotel between $60 million and $130 million within about seven years, with the actual amount depending on the timing of the payment and The Greenbrier's financial performance.

Greenbrier said the transaction, which is not expected to be completed until later in the year, is contingent on the ability of The Greenbrier and its unions to negotiate labor contracts that are satisfactory to Marriott "as The Greenbrier competes in a very difficult market environment."

Marriott would assume management responsibility for the resort as soon as the sale closes, the release said.

The sale is also subject to a court-supervised auction process.

"A sale to Marriott would be a great outcome for everyone associated with The Greenbrier," resort president and managing director Michael Gordon said in the release.

As part of the bankruptcy filing, Greenbrier has requested court approval of $19 million in debtor-in-possession financing from CSX that will be used to support the resort's ability to operate in the normal course in the near term.

The DIP facility will mature on the earliest of June 30, April 13 if the final order has not been entered, the effective date of a plan of reorganization and the date of a sale of substantially all of the company's assets.

Interest will be 10%.

Greenbrier has requested interim access to $4 million of the DIP financing.

The company said the bankruptcy filing should have no effect on the day-to-day operations of the resort or its ability to accept and fulfill advance bookings.

According to court filings, Greenbrier has $50 million to $100 million in assets and $100 million to $500 million in debt. The company did not list any unsecured creditors with claims of $1 million or more.

The White Sulphur Springs, W.Va.-based Greenbrier Hotel Corp. is a wholly owned subsidiary of The Greenbrier Resort and Management Corp. Its Chapter 11 case number is 09-31703.

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