The pending merger of Margaritaville Resort and Casino and the Poarch Band of Creek Indians, an Alabama Indian tribe, has ended.
The press were informed that the decision to end the merger was mutual, and was based on the requirement for the casino to be operated under the tribe's Wind Creek brand rather than the Margaritaville brand – a demand which could not be met.
The merger, which was announced for consideration in June, was set to create the first Indian-owned casino in the Shreveport-Bossier market. The sale price would have been a total of $335m, according to court documents.
However, a dispute developed between Bossier Casino Venture (BCV), the company that operates the casino, and Margaritaville Holdings LLC regarding the payment of license fees based on sales, with a minimum rate of $5m a year. When the Poarch Band Tribe made its pitch to buy the casino and hotel it was contingent on the property being "free and clear" of any Margaritaville-related licensing obligations.
According to court documents, BCV took the position it could exit the agreement at any time, provided that it made a $10m payment, equivalent to two years' worth of minimum license payments. Margaritaville "strongly disagreed" with those claims.
Margaritaville accused BCV of breaching the agreement by failing to pay quarterly fees, thus both companies have been involved in arbitration for over a year. The arbitration panel concluded that Margaritaville was entitled to monetary damages against BCV due it its failure to pay license fees.
BCV said its only financial obligation to Margaritaville was to pay the two years of license fees, plus interest, that it owed. The company stated that thereafter it has no further obligation to make any future license payments of any type to Margaritaville for the remainder of the agreement’s term.
According to Paul Alanis, BCV’s CEO, “BCV is pleased to have satisfied in full its financial obligation to Margaritaville and to continue using the Margaritaville brand without further financial obligation for future license fee payments. BCV is committed to continuing to provide a first-class gaming and entertainment experience to its loyal customers under the Margaritaville brand”.
