Saturday, June 23, 2018
Business

Vinik wins Channelside auction but faces court battle

Tampa Bay Lightning owner Jeff Vinik was the winning bidder in Wednesday's auction for Channelside Bay Plaza.

He was also the only real bidder.

According to court records, the winning bid of $7.1 million was made by CBP Development LLC, the new venture Vinik formed to acquire, revive and run Channelside.

Vinik bid on the Channelside building, while the Tampa Port Authority bid $3.5 million for the mortgage on the building. Bidders had the choice of bidding on either asset, or both.

So Vinik had no real competitor. The hedge fund multimillionaire also won the second part of the auction: proving he has the money and means to turn Channelside around. He did that by signing a $10 million letter of credit to prove he would fund the necessary repairs and improvements Channelside desperately needs.

Thus, the auctioneers declared Vinik made the "highest and best offer."

But the Channelside saga isn't over yet.

A bankruptcy judge must approve the results of Wednesday's auction at a July 15 hearing, and that result will be challenged by a rival group that has spent months battling for Channelside in court.

Liberty Channelside LLC tried to buy the complex last year, then sued to scuttle the port's attempt to buy the complex. Earlier this year, Liberty investors Santosh Govindaraju and Punit Shah offered to pay $7 million for Channelside.

Their lawyer attended the New York auction, but Liberty declined to bid.

Instead, Liberty released a statement afterward that questioned the fairness of the auction for Channelside, which is an asset of the Irish Bank Resolution Corp.

"Liberty regrets the fact that the Irish Bank and its lawyers conducted a confusing, ineffective and fundamentally unfair auction procedure that culminated today in an offer that is only $100,000 more than Liberty was prepared to close on last May," the statement said.

Because there is not yet a final resolution, the key players were circumspect in their comments after the auction.

A spokesman for Vinik declined to comment.

The Tampa Port Authority released this cautious statement:

"Port Tampa Bay is pleased that the future appears bright for Channelside Bay Plaza. The port authority is looking forward to continuing to work closely with the IBRC, the U.S. Bankruptcy Court, and CBP Development, LLC in finding a resolution to make the complex into the first-class attraction that the people of Tampa Bay deserve and assuring that it becomes the gem of downtown Tampa."

But the port's governing board has already endorsed Vinik's attempt to win control of Channelside. Board members were enamored with Monday's rollout of Vinik's plans for "Channelside Live," to turn the failing complex into a glitzy waterfront hangout for Lightning fans attending games at the nearby Tampa Bay Times Forum. They voted to start negotiating a lease for Channelside with Vinik's company two days before the actual auction.

That's why the board was hardly a rival bidder. The board had voted to spend as much as $15 million in the Channelside bidding, but only for the loan. The port only entered the auction to have a say in who would redevelop the complex.

"I'm very pleased," said port chairman Steve Swindal, who attended the New York auction. "(Vinik) has proved he can run a great facility in the Tampa Bay Times Forum. I'm sure he'll continue that success and vision at Channelside."

The port owns the land under the complex and has long asserted the right to veto any buyer. So the port's blessing could be a big advantage for Vinik's winning bid when a judge examines it later this month.

But Liberty will no doubt raise the issue of funding for Channelside's repairs. When the Tampa Port Authority rejected Liberty's bid last year, it was partly because it believed Liberty could not adequately fund improvements. The port demanded that Liberty put $8 million in escrow — in a bank account the port could control — to guarantee improvements would be made.

Liberty offered to put $3.5 million in escrow, but negotiations turned hostile and the port voted to kill the Liberty deal.

Vinik took a step to prove he would fund Channelside's improvements by signing the $10 million letter of credit, naming the Tampa Port Authority as the beneficiary. But a letter of credit worth millions is not as ironclad a guarantee as millions placed in escrow.

Vink tried to buy Channelside in 2012 but backed away from the deal when legal complications arose. He hinted he would return to the negotiating table when he could acquire the title free and clear.

The bankruptcy judge could give him that July 15, and that would strengthen Vinik's ability to remake the entire Channel District. He owns the Lightning, the lease to their home, the Times Forum, and 23 empty acres nearby in the last undeveloped corner of downtown.

If Vinik wins Channelside once and for all, his empire along downtown Tampa's waterfront would be nearly complete.

Contact Jamal Thalji at [email protected] or (813) 226-3404. Follow @jthalji.

 
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