A second hotel company has expressed interest in buying the Galt House, according to court documents filed in the ongoing battle between Al J. Schneider’s four surviving daughters.
New York City-based Trinity Hotel Investors sent a letter regarding the possible purchase of the 1,300-room Galt House on Jan. 19, according to a document filed in Jefferson County Circuit Court. It doesn’t say if Trinity Hotel Investors made an offer for the hotel property, and the company did not immediately return a call for comment.
Since it was founded in 2002, Trinity Hotel Investors has acquired more than 100 hotels globally, according to its website. However, it only owns two hotels currently: a Doubletree in Arkansas and a Crowne Plaza in Minnesota.
IL previously broke the news that Crestview Hills, Ky.-based hotel management company Columbia Sussex Corp. is believed to be in negotiations with the Al J. Schneider Co. That story identified Columbia Sussex as a potential buyer after the company ran an ABC notice referring to itself as the owner of the Galt House.
Christe Coe and Nancy O’Hearn are fighting their sisters Dawn Hitron and Mary Moseley in court over the sale of the Galt House and other assets owned by Al J. Schneider Co., including office buildings One Riverfront Plaza and Waterfront Plaza. In February, IL broke the news that company had listed Waterfront Plaza and was contemplating selling its other properties.
Moseley runs Al J. Schneider Co., which is governed by an 11-person board of directors. The Alton John Schneider Restated Revocable Trust owns all the stock in the company, and six co-trustees currently govern it.
However, effective May 31, the trust will be dissolved, increasing the number of beneficiaries with voting powers to 21, according to a previous Insider Louisville story. Coe and O’Hearn claim that 15 of the 21 beneficiaries oppose a plan to liquidate Al J. Schneider Co.’s assets, particularly the sale of the Galt House.
In a signed Jan. 7 letter to the trustees and board of directors, Coe, O’Hearn and 13 other beneficiaries urge the board to halt any sale negotiations related to the hotel or other properties. The letter argued members of the board did not consider any possible tax consequences associated with the sales and were not working in the best interest of the beneficiaries.
“Postponing the Proposed Sale, and, in particular, the Hotel Transaction, to allow the Company to investigate and implement cost saving and other pre-sale measures will result in a higher valuation for the Company, which should lead to a higher purchase price,” the letter states.
In a March 17 filing, attorneys for Hitron and Moseley claim some of the signatures on the letter may be fraudulent.
“Some signatures appear to have been photocopied from other documents, and some signatories later indicated that they were ‘coerced’ into signing the document,” the filing states.
The Al J. Schneider Co. has confirmed in court documents that it has received an offer to buy the Galt House for $135 million, $10 million above the minimum price it would accept, but it has not confirmed that Columbia Sussex has put forth the offer. Louisville-based business management consulting firm Mercer Capital is reviewing a draft of the purchase agreement.
Moseley has been negotiating sale details with an unnamed company since October 2015, according to a document filed March 27 on behalf of Hitron and Moseley.
“Significant time and resources have been spent on both sides of this very lucrative deal in the negotiation and due diligence process,” the document states. “If this potential purchaser were to walk away, the Trust stands to lose significantly. …(Hitron and Moseley) are confident that they are acting in the best interest of the Trust and its beneficiaries.”
The attorneys for Hitron and Moseley also argued the sale of the Galt House would allow the company to pay off the $12 million in loans it owes to U.S. Bank National Association, retain ownership of its office buildings, and provide additional cash flow.
Coe and O’Hearn have argued the sale is not in the best financial interest of the beneficiaries. One document submitted by their attorneys looks at 12 Louisville hotels that have sold since May 2013, ranking them based on price per hotel room.
The top ranked hotel on the list was the 140-room Courtyard by Marriott, located 100 S. Second St. The hotel sold in March 2015 for $36.645 million, according to Jefferson County property records. That works out to $261,750 per room.
With 1,300 rooms and a $135 million offer on the table, the Galt House falls to the bottom of the list. At that price, the Galt House would received $103,846 per room.
Hitron and Moseley’s attorneys have argued that the offer is a great price for the hotel and waiting to sell would only result in a decline in market value.
“The board of directors and trustees agreed that the market for hotel sales was at its historic peak and would likely deteriorate,” one court document states. It also notes that the Al J. Schneider Co. “is in the process of liquidating various, but not all of, the company assets.”
The sale of the Galt House is part of a broader liquidation plan Al J. Schneider Co.’s board of directors approved. The liquidation plan sets minimum sale prices (see below) for five properties — Le Centre on Fourth, Waterfront Plaza, Riverfront Plaza, the Crowne Plaza near the Louisville International Airport, and the Galt House.
The board of directors approved the plan in a 10-to-1 vote on Aug. 4, 2015, according to minutes from the meeting. Only board member David Oetken voted against the plan.
That means that both O’Hearn and Coe’s husband Randy Coe — both of whom serve on the board — voted in favor of the liquidation plan. Only later did Coe and O’Hearn raise opposition about the company’s plans to sell many of its assets.
WDRB News first reported on Tuesday that O’Hearn and Coe have filed an emergency appeal to halt the sale of the Galt House, which they believe will occur by the end of this week.
However, another court document stated that the company doesn’t plan to sell any assets on or before April 1.
A previous restraining order signed by a Jefferson County District Court judge preventing the sale of any assets was nullified by an order from Jefferson County Circuit Court Judge Mary Shaw.
No ruling has been made yet on the emergency appeal.