June 05--VIRGINIA BEACH -- A long-running legal battle that led to the pending sale of the iconic Cavalier Hotel has been tentatively settled.

The settlement, subject to court approval, shows the Dixon family would buy out Virginia Beach resident Curtis Colgate and other minority shareholders of the Disthene Group for $1,978 a share, according to documents obtained by The Pilot -- a deal that's worth more than $77 million and includes the world's largest kyanite mine, in Buckingham County.

It appears the sale of The Cavalier would continue as planned, according to the settlement agreement. Developer Bruce L. Thompson has signed a contract to buy the hotel and its surrounding property for $35.1 million, according to court documents. If a judge approves the sale June 10, the deal would close 40 days afterward.

Thompson, who was in London on Tuesday, said he had not been contacted about the tentative settlement and had no knowledge of how it would affect his bid for the hotel.

William Rakes, attorney for defendant Gene Dixon Jr., declined to comment on the proposed settlement until it had been filed.

Three parcels, including the 86-year-old Cavalier on the Hill and its surrounding land, went up for sale early this year after a circuit judge ordered the breakup of Disthene, a privately held company. A court-appointed receiver took over the hotel to sell it and other Disthene assets, including the kyanite mine.

The order last year was the result of a 2011 lawsuit brought by Colgate and his sister against their uncle and cousin, who controlled Disthene. The lawsuit alleged that Gene Dixon Jr. and Guy Dixon, Disthene's majority shareholders, tried to deny Colgate and his sister the full value of their shares in the company and mismanaged its assets.

That decision had appeared to be headed for the Supreme Court of Virginia. The settlement would resolve all the outstanding legal matters, reflecting the parties' desire to finally end all current litigation, it says.

Gabriella Souza, 757-222-5117, [email protected]

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