Nov. 7, 2007 — After more than six years of delays, numerous extensions to its casino license, lawsuits by environmentalists and competitors and a Senate agreement to fund a $32 million conference center, Golden Gaming's plans to build a resort have come to a close with foreclosure and auction of the lands.
Paul Golden of Golden Gaming has tried to develop a casino resort costing several hundred million dollars on St. Croix's south shore since 2001. (See "Golden Gaming CEO Remains Steadfast in His Vision.")
On Dec. 1, 2006, the Connecticut-based hedge fund Silver Point Capital loaned Golden Gaming $15 million, secured by a mortgage on the casino development company's land holdings. Notice of default was received by Golden Gaming on June 12 and, on Aug. 30, Silver Point filed foreclosure papers on all of Golden Gaming's land holdings, claiming the lands in payment of the debt. On Oct. 25 a judgment was entered in Superior Court on St. Croix, saying the parties have agreed to terms of the foreclosure.
"Golden Resorts has defaulted on its obligations under the loan documents as of March 31, 2007," the judgment says. Default was caused by "among other things, failing to obtain an irrevocable commitment letter from Scotia Bank or other such institutional lender reasonably acceptable to SPCP in an amount not less than $125 million as required under the loan agreement."
As of September 18, 2007 the amount due under the loan document totaled $12,046,601.
The land is to be sold at auction Jan. 15 unless another "event of default" occurs before then. Golden Gaming's land consists of a number of adjacent parcels on St. Croix in Estates Great Pond and Hartman. Under the mutually agreed upon terms of the foreclosure, the lands will be "sold as a whole at public sale at the Office of the Superior Court Marshal, St. Croix," according to the written judgment.
Proceeds from the sale are to be allocated to pay principal and interest on Silver Point's loan, then to any attorney's fees, taxes and other expenses paid by Silver Point to protect and preserve the property. The consent agreement between Golden Gaming and Silver Point allows Golden Gaming to bid on the property as a third party, but does not allow Golden Gaming to bid against Silver Point.
The judgment puts Silver Point in the best position to purchase the land.
"(Silver Point) may bid a credit against its (j)udgment and interest thereon, plus costs and expensed, without tender of cash," it says. "The terms of sale to all other persons or parties bidding shall be cash."
This means Silver Point does not have to come up with cash and, in essence, gets to deduct all of its expenses from the sale price.
The Golden Gaming project was ill starred from the beginning, meeting considerable opposition and permit difficulty. Golden Gaming waited all of 2004 for action on its request for a Coastal Zone Management permit. In January 2005, the Board of Land Use Appeals granted the permit by default due to the CZM's failure to act.
The project, which was expected to be worth more than $275 million, has faced fierce opposition from environmentalists, who were concerned about its ecologically sensitive location near St. Croix's Great Pond. In February 2005, Andrew Simpson and the V.I. Conservation Society (VICS) filed suit in V.I. Superior court to block the permit, arguing the BLUA did not have jurisdiction to make the decision.
When the suit came before the court, Judge Maria Cabret ruled in favor of Golden Gaming. VICS filed a writ of review in Superior Court in 2005. The society asked the court to review the Board of Land Use Appeal's decision to grant Golden a coastal-zone permit. However, in May, Judge Maria Cabret upheld the issuance of the permit. The society has appealed Cabret's decision, and that appeal is still pending.
Traxco, the company that operates the Randall "Doc" James racetrack on St. Croix, also filed suit, disputing the legality of the CZM permit on technical grounds. Traxco is owned by Treasure Bay, which also owns Divi Carina Bay Casino and Resort.
On several occasions Paul Golden has said he would be able to secure funding for the project as soon as all suits filed against the project were settled, but that large lenders will not commit funds while there is a legal cloud over the project. The aforementioned delays affected the ability of Golden Gaming to obtain large-scale financing for the project under the terms of its mortgage agreement with Silver Point, leading to the default and subsequent foreclosure.
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