Saturday, Feb. 06, 2010

Freestyle Music Park to close offices, lay off workers until deal made with new investors

Freestyle Music Park is closing its business offices and laying off off-season staff until it makes final negotiations with potential investors.

The park planned to reach an agreement with new investors by the end of January, but the transaction is taking longer than expected and operating money is running low, officials said Friday.

The closure will affect about 30 employees in the administration, finance, IT, technical services and sales and marketing departments, said park spokeswoman Michelle Cantey.

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• Freestyle Music Park to miss deadline on paying debt

  Freestyle Music Park to miss deadline on paying debt

  Freestyle Music Park will miss its deadline today to pay off a $570,000 debt, according to an attorney for the park.

  "Currently, the park has no ability to make the payment," said David Slough, a lawyer with Nexsen Pruet. "They’re working on this like they’re working on all their payment obligation."

  Freestyle inherited the debt when it purchased the park from previous owners of Hard Rock Park. A Delaware bankruptcy court judge had previously ruled that Freestyle had until today to make the payment, the second extension on paying the debt. After the deadline, previous Hard Rock owners could file a certification in court and take more aggressive action toward obtaining compensation.

• Court rules against Freestyle Music Park

  Court rules against Freestyle Music Park

  A federal judge has awarded a Utah company nearly $14 million after the owners of Freestyle Music Park failed to respond to a lawsuit, according to court documents.

  The ruling is the latest in a series of setbacks for the shuttered park, whose owners say they are still searching for new backers.

  Tetra Financial Group filed a lawsuit in September seeking money for outstanding leasing payments, taxes and fees owed by the park.

• Consultant: 'Time to bury' Freestyle Music Park in Myrtle Beach area

  Consultant: 'Time to bury' Freestyle Music Park in Myrtle Beach area

  The mortgage holder for Freestyle Music Park has foreclosed on the park's property, leading one industry consultant to proclaim that it is "time to bury" the shuttered, financially troubled attraction.

  The foreclosure indicates that key Russian investors, who also hold the mortgage and have supported the park since it was bought out of bankruptcy in 2009, have withdrawn their support for Freestyle, which never opened for the 2010 season.

  The foreclosure suit will go to the front of the line of creditors to be paid by the park, making it unlikely that others who are owed - including a girl injured at the park, sign makers and other suppliers - will ever be paid, lawyers and industry experts said. With a weak real estate market, even paying off the original mortgage may be a struggle if the land is eventually sold at a foreclosure auction.

• Freestyle Music Park opening hinges on investors

  Freestyle Music Park opening hinges on investors

  Freestyle Music Park is still working to find investors so the theme park can open this year, a park attorney said today.

  The park doesn't plan to reopen this year unless new investors sign on, attorney David Slough said, adding that the park owners are working to get the park open. Many other regional theme parks opened for the season during the weekend.

  Freestyle has been talking with investors since closing the park for the offseason in the fall after a disappointing debut season. Slough declined to say how close a deal with investors may be, and said these kinds of negotiations take time - especially amid today's tight credit markets.

• Companies push court for rulings on Freestyle Music Park

  Companies push court for rulings on Freestyle Music Park

  A financial firm and automaker are pressing for rulings against Freestyle Music Park, after the park failed to answer lawsuits filed against it.

  Tetra Financial Group and BMW filed separate requests in federal court, calling for a default ruling to be issued against Freestyle for the park's failure to respond. A default ruling would find Freestyle at fault and require it to pay the damages.

  Tetra originally filed suit against Freestyle in September for failure to pay a $400,000 debt, but the park has not reacted by pleading or defending itself, according to court documents filed last week. FPI MB Entertainment, Freestyle's owner, inherited the debt owed to Tetra Financial Group when it bought the former Hard Rock Park out of bankruptcy in 2009.

"While park management continues to pursue negotiations with potential investors, we have limited funds and need to use those assets toward the goal of bringing new investors to the park," Steve Baker, general manager of Freestyle Music Park, said in a statement. "We fully anticipate one of these deals will be satisfactory to the current owners."

Cantey declined to identify the investors. Baker said the potential investors, who are from outside of South Carolina, will remain in Myrtle Beach and are "committed to seeing the deal through."

The current investors, who are Russian, are looking for additional funds for the park because of the economy, he said.

"It's a tedious process and is just taking much longer to come to final agreements than expected. Deals on the table are contingent upon the park opening this season," he said. "With the time difference in Russia, we will be working around the clock to make these deals happen in the coming days - not weeks, days."

The park has been operating with a limited staff throughout the offseason, Baker said.

Members of the park's board of directors and executive management will continue to meet with potential investment groups and communicate with the current owners to finalize the agreement, he said.

Once an agreement is reached, the management team will bring employees back to work, create a plan for vendor repayment and announce plans for the 2010 season.

"Our efforts have been sincere. We've maintained the status quo in order to find new investors," Baker said. "We still take our financial obligations seriously and will do everything we can do to resolve them. There's a great future for this park. It just needs a chance and hasn't had that yet."

Many businesses, entertainers and vendors are still waiting on payment from the park's 2009 debut season. Nine lawsuits and more than a dozen mechanic's liens have been filed against the park owners for unpaid services and supplies since July.

Myrtle Beach resident Jason Casey said he has been trying to get financial assistance from Freestyle Music Park since his wife, a park guest, had to undergo surgery several months ago after her leg snapped when one of the rides did not come to a complete stop as she was stepping off.

Officials from the park initially helped them make a few payments for her medical costs, but it soon stopped, Casey said. He said he has made numerous calls to park officials and even stopped by in person to drop off receipts, but has not received any response or assistance.

"I have mixed feelings," Casey said. "From a personal standpoint, I call that karma. ... The business side of me says I think it's a good fiscal move for them. Maybe they can recoup the funds. I just think some of the upper management has to realign on how they treat their customer base. ... Now that the officers are not even there, I'm not sure if I'm going to hear anything."

On Jan. 12, the automaker BMW filed a suit against FPI MB Entertainment because representatives from the company say cars of Freestyle Music Park's Round About ride look similar to the BMW Mini and that the park hasn't signed a contract with the company to use the likeness in a ride.

The owners of Freestyle Music Park also have less than two weeks to respond to an order from a Delaware bankruptcy judge, who last month gave the owners of Freestyle Music Park 30 more days to pay $570,000 in debt incurred by its predecessor, Hard Rock Park. It was as agreed upon when the owners purchased the park last February.

An attorney for FPI MBE requested that the park get an extension to pay back the debt once it had lined up the new investors.

Another hearing will be held at the United States Bankruptcy Court, District of Delaware on Feb. 16 at 2:30 p.m.

FPI MBE bought the former Hard Rock Park out of bankruptcy last year for $25 million. It re-themed the 55-acre park, created a children's section and added new rides before it opened Memorial Day weekend.

Freestyle Music Park had a slow start in its inaugural season, but attendance numbers swelled in July and August as officials increased marketing efforts and slashed admission prices. The park closed its debut season on Sept. 13.

Officials originally said it was tentatively scheduled to open March 11, but will likely take longer, Cantey said. The park still plans to open in the spring, she said.