Arbitration Decision Issued in Colonial Downs - Norglass Construction Dispute
NEW KENT, Va.--(BUSINESS WIRE)--Aug. 13, 1999--Colonial Downs Holdings, Inc. (NASDAQ: Small Cap: CDWN) which, through its subsidiaries, holds the only unlimited licenses to own and operate a pari-mutuel horse racing course and satellite wagering facilities in Virginia, has been engaged in a contract dispute under the Construction Agreement, dated February 10, 1997 (the "Construction Contract") between Colonial Downs, L.P. (the "Partnership"), a subsidiary of the Company, and Norglass, Inc. ("Norglass"), a related party.
Pursuant to the terms of the Construction Contract, the Partnership filed a claim before a three person panel of the American Arbitration Association ("AAA") against Norglass, the general contractor engaged to manage the original construction of the Company's New Kent County Virginia racetrack. In the proceeding, the Company challenged the validity of Norglass' mechanic's liens for approximately $11.8 million (subsequently reduced to $6.5 million) and asserted a damage claim against Norglass for approximately $7.7 million. Norglass filed a counterclaim against the Partnership for $5.8 million (as announced in a hearing on December 14, 1998).
Yesterday the AAA panel issued its decision in which, among other matters, it denied the Partnership's claim and granted Norglass' counterclaim in the amount of $1,965,000 against the Partnership (plus interest at prime plus 2% from December 27, 1997). The panel also ordered the Partnership to reimburse Norglass approximately $97,700 for the arbitration panel's fees and expenses and certain AAA administrative fee and expenses. Norglass is an affiliate of a major stockholder in Colonial Downs.
"We are obviously disappointed by the arbitration panel's decision. However, the Company will continue to honor its legal obligations. The Company has a strong balance sheet with several unencumbered assets and other means to secure the funds necessary," stated Company CEO Jeffrey P. Jacobs. |
