April 10, 2010
By Kellie Patrick Gates
PlanPhilly had a mid-day Saturday interview with Foxwoods attorney Fred Jacoby about what is happening in the wake of Wynn’s departure from the casino deal. Jacoby said, among other things, that the Foxwoods project is not over and that the search for a new lender or investor has begun. Jacoby still doesn’t understand why Wynn pulled out of the deal, but said the investors are trying to forge a new plan without him – one that might involve banks or a new partner, and could include a request to build a slots-only casino in a temporary facility.
PlanPhilly: Is this project now over?
Fred Jacoby: “No. An unquestionable no.”
PP: Is Foxwoods looking for a new investor?
Jacoby: “We’re considering our options. We were floored – as Steve Cozen (one of the principals at Jacoby’s firm, Cozen O’Connor) said – we were just shocked and floored by the decision. We never saw it coming. We’ve been working around the clock on this deal.
“We spent a good amount of time yesterday meeting with WPI (the local investors) and conferring FDC (Foxwoods Development Corporation) and their advisors, and we will be resuming conversations Monday. We are aggressively considering a range of alternatives.”
Jacoby said that he has also told Pennsylvania Gaming Control Board Chief Counsel Doug Sherman and Chief Enforcement Counsel Cyrus Pitre that the discussions on what to do next are happening in earnest.
PP: What was their reaction?
Jacoby: “Mr. Pitre and Mr. Sherman are professionals. They said, ‘We look forward to hearing from you.’”
PP: And none of the alternatives being discussed is ending the project?
Jacoby: “I don’t see that as an option. We have no intention of doing it. We thought we had everything in place – a solution.”
PP: When did you find out Wynn was withdrawing from the project?
Jacoby: “We found out he was giving notice of termination at 4:15 on Thursday, when Kim Sinatra, general counsel for Wynn, called Steve Cozen. I’ve told you about the amount of time and effort my team and I have spent, we’ve been working 24-7 getting this deal buttoned up. We signed at 6 p.m. On (April) 2nd.”
A Wynn representative emailed a statement alerting the press that Wynn was withdrawing minutes later – at 4:29 p.m. Thursday.
PP: Before that call, was there ever any indication that the agreement was shaky or uncertain?
Jacoby: “There was never a clue from Wynn. We were prepared, and about to, submit an application for change of control. It was sitting on my desk with the paperwork, ready to be signed.”
PP: So were you told why Wynn changed his mind?
Jacoby: “I wasn’t given any reason. Steve (Cozen) spoke with them. They indicated to Steve that they had, that they were exercising a right pursuant to a provision in the contract regarding due diligence.
PP: So Mr. Wynn found something about the deal that he didn’t like?
Jacoby: Referring to an article in Saturday’s Inquirer in which sources told the paper Wynn got out of the deal because of problems in the relationships between the investors, Jacoby said, “There is no problem between Ron Rubin (a local developer), Ed Snider (Comcast/Spectacor chairman) and Lewis Katz (an attorney). Not only is there no problem, but I just conferred with them yesterday with Steve Cozen – we met with them. And there is no problem with FDC.”
FDC stands for Foxwoods Development Corporation. In other words, the Mashantucket Pequot Tribe. FDC is one of the two original investor groups in Foxwoods casino. The other is Washington Philadelphia Investors – that’s charitable foundations of the Rubin and Katz families, plus Snider.
Jacoby: “FDC has had its own issues but the process has been somewhat healing between us – the negotiating with Wynn. We developed an effective dialogue as part of that process.”
The tribe has been going through tough times financially, which is why a new investor was needed.
Jacoby: “FDC actively participated in the negotiations. People from the tribe were physically in my offices. I’m not aware of any problems between FDC and WPI, or among the local investors. There is nothing regarding the relationships that should have given rise to termination. (The Wynn team)knew everything before they signed the agreement.
“Two Sundays ago, they flew in Saturday night, and we spent the whole day Sunday, hours and hours, going over things. I just had a conference call on Tuesday afternoon with Wynn’s counsel in Colorado, just to go over lose ends. We had agreed that every Monday – I just erased it from my calendar this morning – we would have a conference call to cover lose ends, my team of lawyers and their own.
“I can’t substitute my judgment for theirs, and I’m not saying that they are not telling the truth. But they fully understood every detail,” Jacoby said. “I just don’t understand it. I just don’t. Why do you meet with the mayor? Why meet with Al Greenberger (the head of city planning)? Why have a press conference and talk about the plans? All the cards were up. It is just incredible to me.”
PP: Does the Foxwoods team have any legal recourse against Mr. Wynn for his decision?
Jacoby: “When I talked to (gaming control board staff, Sherman and Pitre) I said there are two things, what happened, and what’s going to happen. Right now, we are focused on what’s going to happen. We are really focusing on the next steps to protect the license and build the casino.”
PP: Does that mean you’ve ruled out any legal action in the future?
Jacoby: “We are not even talking about it. It’s not important. Mr Wynn is Mr. Wynn, and he is going to do what he’s going to do. When the smoke clears, everybody can see what really happened. But right now, we’re focused on filling the gap. We’re exhausted from the process, but we thought we had this thing papered.”
PP: Does ‘filling the gap’ mean finding a new investor?
Jacoby: “I don’t know. It may. When I was in front of the (gaming control) board, I was asked what happens if the Wynn deal doesn’t go through. And I told them we would proceed. We had contingency plans then.”
Jacoby said that those contingency plans had been put aside to focus on the deal with Wynn.
PP: At that meeting, you told the board that if things fell through with the new investor, Foxwoods would proceed with a slots-only casino in a temporary facility. Is that the current thinking?
Jacoby: “It’s a possibility. We need to talk it through, and talk to the board, and get the board’s reaction to what happened, and what they are willing to let us do.”
Jacoby spoke again about how shocked he and everyone on the Foxwoods project are over Wynn’s change-of-heart.
Jacoby: “You just don’t expect that to happen,” he said. “There were contingencies that had to be met, going down the road, but we didn’t expect this.”
Jacoby confirmed that those contingencies included items Wynn listed at a gaming board hearing, including approvals from the city and the gaming board’s approval of petitions to allow table games and put Wynn at the helm of the project. He said Wynn met with the city officials Monday in part to talk about a proposed time line for construction and gauge the leaders’ reaction.
Jacoby: “The meeting went well, and then we submitted the time line (to the board) on Tuesday -not until the city had a chance to see it. Our applications for design change, change of control, and an extension (to open) were pretty much finalized and ready to go in,” he said.
Jacoby said he was also preparing another motion, asking the gaming control board to waive the $2,000-per-day fine the board levied on Foxwoods, retroactive to Dec. 1, for failing to submit the financial plan, time line, site plan and drawings by the original deadline. Foxwoods paid $186,000 on March 3, but the meter has continued to run. Gaming Control Board spokesman Doug Harbach said earlier this week that Wynn/Foxwoods were in compliance with the board order to turn in the financial plan, drawings and other materials. Jacoby said the reason the fine was not lifted at the board’s April 3 meeting is that the board was planning to deal with it at the next meeting, April 29.
PP: Now that Wynn is out, there is no financial plan in place and no drawing. Is there any chance of having those things to the gaming board by the April 29 meeting?
Jacoby: “I can’t really answer that now. I’m still talking with our clients.”
Jacoby said that his firm’s time was spent on negotiations. The design part was handled by Wynn and builder Dan Keating.
Keating’s firm is building Philadelphia’s other casino, SugarHouse.
PP: Will you be asking the gaming control board to set new, later deadlines?
Jacoby: Getting things done by the April 29 meeting “is certainly a challenge. I don’t know yet what we’re going to ask of the board. But the board knows we are focusing on (putting together a new plan to finance and build the casino) very intensely. All I can do is hope we have a proposal for the board sometime early next week. We want to keep an open dialogue.”
Jacoby clarified that he hoped to informally present a working plan of what Foxwoods would do to get the casino open to gaming board and Bureau of Investigations and Enforcement staff early next week.
Jacoby: “At some point, I’m assuming we will file a formal application with the board, at a hearing or a meeting, but I don’t know if that will be on the 29th (of April),” Jacoby said. “I just don’t know at this point. We’re not starting all over again, but we’re certainly starting…we need to get somebody who can provide the financing – I’m not sure if it’s going to be an institutional lender or who it’s gong to be. We are talking to potential investors and lenders.”
Jacoby said he also needs to find out from the board and BIE staff what they expect to happen at the April 29th meeting.
PP: Is there any chance that a bank or investor be found prior to April 29th?
Jacoby: “Anything is possible. We are so high-profile right now – I can’t turn on the radio without hearing about it. So it’s conceivable that we could get something done quickly. I just don’t know. We realize the sense of urgency that exists.”
Wynn declined an opportunity to comment.
Reach the reporter at Kelliespatrick@gmail.com.