Colonial Downs Addresses Concerns Regarding License
NEW KENT, Va.--(BUSINESS WIRE)--Dec. 18, 1997--Colonial Downs Holdings, Inc. (NASDAQ NMS:CDWN) "Reports that the Virginia Racing Commission announced its intentions to revoke or suspend Colonial Downs' licenses are grossly inaccurate" stated Ian Stewart, Chief Operating Officer of Colonial Downs Holdings, Inc. The Commission reported after returning from closed door executive session that it discussed the extent of the Commission's authority and the process by which it could consider suspending or revoking Colonial Downs' license or imposing a fine if it found that Colonial Downs was not meeting its statutory and regulatory obligations as a licensee. Representatives of the Commission were quick to note that Commission was not taking such action but only exploring the means for doing so. Chairman of the Commission, John Shenefield, further stated that he was confident that the problems would be resolved.
The Commission expressed its concerns about resolution of a contract dispute with Norglass involving cost overruns at the racetrack on a guaranteed maximum price contract. "The press continues to report the figure at $12 million when the parties agree that the amount in dispute currently is approximately $6 million." said Mr. Stewart. The Company is proceeding with mandatory arbitration before the American Arbitration Association which is expected to be heard in the late spring or early summer of 1998. In addition, the Company agreed to non-binding mediation by the Virginia Racing Commission, which is being conducted by Commissioner Robert Beck, in an effort to secure missing documentation from Norglass, Inc., the general contractor of the racetrack. Based upon information supplied to the Company by Norglass, the Company paid an additional $875,000 directly to subcontractors yesterday.
As the construction contract arbitration proceeds, the Company is completing site work left incomplete by contractors and correcting erosion and sediment control measures incorrectly built by contractors. Only minor work remains to be done in the grandstand building, such as sheet rocking of areas not open to the public. Although the Company does not currently have a certificate of occupancy, none of the work poses a public safety issue, according to New Kent County officials. The Company has agreed to enter into a memorandum of understanding with New Kent County to ensure the timely completion of such matters and the extension of temporary certificates of occupancy. A final certificate of occupancy should be issued upon completion of the work.
"We believe the Commission has made it clear how serious it takes the issue of the Norglass dispute and securing certificates of occupancy, and we consider these to be very serious matters as well. The Norglass dispute is a serious commercial dispute. We have a responsibility to our shareholders to contest those amounts that are not due, and preserve our legal rights. With respect to the certificates of occupancy, we are working closely with New Kent County and expect to have the matter resolved as shortly," stated Ian Stewart, Chief Operating Officer. |
