He's Jim Justice. And he did. And his adventure is a fascinating story. True, he's a basketball coach. But he's more. He's the Warren Buffett of West Virginia. The story is of interest to us, because the Greenbrier Hotel and its associated luxury home resort, the Sporting Club, are the region's largest employer and one of its largest purchasers of regional agricultural products. We own farmland in the county and are planning to raise organic, grass-fed cattle.
The previous owner of the hotel property was CSX railroad. In the past decade, the shift of luxury tourism to foreign resorts, cruise ships, and new leisure lifestyles brought hardtimes to the historic hotel. The economic recession capped its defeat. The hotel lost money, lots of money, for several years. In year 2000, it lost one of its stars, becoming a four-star resort. The owner renovated some of the hotels older rooms, but so far has not succeeded in regains its star. It entered bankruptcy earlier this year, while the owner negotiated a buyout agreement with Marriott Corporation.
Enter The Justice Family Trust, headed by Jim Justice (James C. Justice, II). Justice lives in Lewisburg, West Virginia, a small town and the Greenbrier County seat near the hotel. Since 2000, he has coached girls basketball at Greenbrier East High School. But Justice is no rube. He is the largest independent coal operator in West Virginia and worth hundreds of millions of dollars. He owns coal mines in other states, too. Earlier this year, he sold his West Virginia coke-coal operation to a Russian company for over $400 million in cash. He is also a "farmer," reputedly the biggest corn producer east of the Mississippi. We don't know Mr. Justice, but he is obviously a savy capitalist.
To buy the hotel, he simply purchased the holding company that owns it, for $22.7 million. He has taken the hotel out of bankruptcy, and is negotiating with Marriott to be the hotel's marketing agent. He has rehired laid-off workers and given them an investment in the hotel's future by offering them a percentage of future profits from a casino Justice will build at the hotel. He expects to hire over 600 additional workers. He is intent on refurbishing the hotel and regaining its lost star.
Here is an article by Peggy Mackenzie on recent developments from the Mountain Messenger, a weekly newspaper published in Lewisburg. I have taken the liberty of reprinting this article, because Mountain Messenger's web site does not index its articles and it is not easily recoverable on the Web.
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Justice Leaps the Final Hurdle: Greenbrier Bankruptcy Dismissed
Peggy Mackenzie 23.MAY.09
The Greenbrier’s new owner, Jim Justice and chief financial officer Mike McGovern testified before the United States Bankruptcy Court for the Eastern District of Virginia in Richmond on Tuesday, May 19. In a one-hour hearing, the Greenbrier’s bankruptcy filing was dismissed by U. S. Bankruptcy Judge Kevin Huennekens.
"This is a terrific outcome for everyone," said Justice. "It’s a win-win-win for everybody, for the employees, community, CSX, Marriott and The Greenbrier. "Now we can put this behind us and really start moving forward with growing our business and restoring our fifth star to our five-star bloodline."
In his testimony, Justice assured the judge that his company, Justice Family Group, had the financial means to make the plan work. Both Justice and McGovern testified that dismissing the case would be in the best interest of employees, the community and creditors and that the resort’s creditors would be paid in full immediately from a $17 million escrow fund, much sooner than if the Chapter 11 plan were to remain in effect..
During the hearing, the resort’s attorneys profferred testimony of support from Jeff Bryant, principal at Greenbrier East High School where Justice has been the girls’ basketball coach since 2000. Attorneys for Marriott, the Greenbrier Council of Labor Unions, a member of The Greenbrier Sporting Club and an association that meets regularly at the resort were present for the hearing and offered additional endorsements for the dismissal. Justice also brought a stack of letters of support from employees, Greenbrier County residents and elected officials, according to Lynn Swann, Public Relations Director at The Greenbrier.
"Judge Huennekens was very pleased to dismiss this case. He told us that normally, bankruptcy cases do not have happy endings, but this one certainly does," said Justice.
The bankruptcy dismissal quickly followed Justice’s meeting on Friday, May 15th with officials from Marriott Hotel services, Inc.
At that meeting, Justice reiterated his intent to operate the world class resort and not retain any outside management firm. Marriott agreed to withdraw their opposition but asked for the opportunity to assist in marketing The Greenbrier as The Greenbrier. In return, Marriott will receive a commission from any bookings resulting from their efforts. If the parties fail to reach agreement, then Marriott will receive a break-up fee of $7.5 million.
He added there would be no exclusivity clauses in any marketing agreement between the two sides.
As quoted elsewhere, Justice said, "I feel I am better suited to work with the people and run The Greenbrier. Also, in the quest for our fifth star, I would be solely responsible for all capital expenditures. On the other hand, Marriott has a lot of marketing resources and can help us increase our occupancy levels. This will benefit The Greenbrier, Marriott and the people of the Greenbrier Valley."
Fulfilling a promise to move quickly regarding the master collective bargaining agreement with the unions, Jim Justice, met last week with union leaders to draft amendments the agreement ratified on April 30, 2009.
"When I became the owner of The Greenbrier, I promised that one of the first things we would do would be to take another look at the contracts with the unions. I know how hard everyone worked over the past 18 months and I am happy that we were able to make some positive adjustments that will benefit the employees," said Justice.
The new collective bargaining agreement with The Greenbrier’s unionized employees was "sweetened considerably" compared to the deal the workers had agreed to with Marriott.
As quoted in The Charleston Daily Mail, the agreement includes:
Improved healthcare provisions.
A 401 (k) retirement savings plan with up to a 3 percent match.
A meal benefit to eat one meal a day at the resort. Costing The Greenbrier about three-quarters-of-a-million dollars a year, that perk had previously been eliminated. Said Justice, "We put it back in."
Overall, "the package of up grades we put back in probably meant an upgrade to employees of about $3.5 million," Justice added.
In addition, Justice promised when the hotel earns the prestigious five-star rating from the Mobil Guide, they’ll all receive a one-time payment equal to 10 percent of their gross pay. "That’s a big bump," he said.
The Greenbrier lost its 5th star in 2000. Although CSX invested $50 million on improvements, the resort has not regained Mobil’s top rating.
The State Legislature recently revised a law that allows The Greenbrier to operate a casino. It included a provision that a portion of the casino’s handle would go to an employee benefit fund.
"We project that to be at $5 million a year," Justice said.
A day after the bankruptcy dismissal, Jim Justice, standing tall before more than 400 Greenbrier employees at a special meeting, pledged to return the historic resort to its former glory. "It’s over," he said, referring to the bankruptcy filing and the resort’s uncertain future.
With the final hurdle overcome, Justice is ready to start actually running The Greenbrier. The larger question may be "...how to turn The Greenbrier from a money pit to a profitable enterprise," In the opinion of Talkline host Hoppy Kercheval of MetroNews, "That could be the biggest business challenge of his career."
After racking up more than $90 million in losses in the past five years, operating The Greenbrier as a stand-alone, independent property will likely be a big challenge for Justice.
But Justice enthused, "...I’m a guy who will enjoy the actual production of something, whether it be mining a ton of coal or harvesting a bushel of corn or growing an extra 50 Christmas trees.
"I don’t know how this story cannot turn out to be great," Justice said. "I don’t try to impose my conviction on anyone but I believe the Good Lord is guiding this whole process. There were a lot of people hurting. We’ve been able to make a lot of good things happen here. I’m humbled to be a part of all the goodness that is going on.
"It’s been a pretty good daggone 21 days in my book," he exclaimed.
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Here are other news articles about Justice's purchase of the hotel.
"Marriott Corp., Coal Operator Dispute Who Owns The Greenbrier," West Virginia Business Litigation, May 12, 2009.
A glimpse of Justice's businesses is provided by Ken Ward, Jr., "Greenbrier buyer Justice pays off safety fines," The Charleston Gazette, May 14, 2009. See also, Ken Ward, Jr., "Greenbrier buyer ran up $1 million in unpaid MSHA fines," The Charleston Gazette, May 13, 2009.
Eric Eyre, "Taking a gamble: New Greenbrier owner to open $20 million 'Monte-Carlo style' casino," The Charleston Gazette Sunday Gazette-Mail, May 24, 2009.
More information on the Marriott Hotel Corporation side of the deal in George Hohmann, "Greenbrier deal: Justice anxious to move on with plans," Hotel Online, May 19, 2009.
Podcast interview about the hotel purchase with Justice, includes information about Justice's coal mining operation and sale to a Russian company. Jessica Lilly, "Justice talks about The Greenbrier deal," West Virginia Public Broadcasting, May 19, 2009.
Biographical information on Justice provided in George Hohmann, "Greenbrier's new owner successful in many areas," Charleston Daily Mail, May 13, 2009.
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