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The Greenbrier Resort's Parent Company, CSX, Hires Goldman Sachs to
 Conduct "Strategic Review" Following a $35 million Loss in 2008

By Christian M. Giggenbach, The Register-Herald, Beckley, W.Va.McClatchy-Tribune Regional News

Jan. 3, 2009 - WHITE SULPHUR SPRINGS -- Besieged by a thick, red bottom line that's seen losses of nearly $90 million in the last six years, The Greenbrier's parent company, railroad giant CSX, announced Friday the hiring of a prestigious New York banking investment firm to conduct a "strategic review" of the 229-year-old resort.

CSX chairman and CEO Michael J. Ward said the four-star resort was "at a crossroads" and it was "imperative to respond to this situation without delay."

A news release provided by CSX stated Goldman Sachs had been retained to "examine all strategic options for The Greenbrier resort."

"While we have continued to make investments to keep the resort competitive, the market for luxury hospitality services is shrinking rapidly in this economy," Ward said Friday. "The Greenbrier lost $35 million last year, and the resort faces even more difficult challenges in 2009. Our goal is to make The Greenbrier not only one of America's great destinations, but also a viable business entity."

Shares of CSX increased to $34.62 at the close of trading Friday, but that was nearly 50 percent off its 52-week high of $70.70.

CSX spokesman Gary Sease said late Friday that no timelines had been set for any future information that may be gleaned from Goldman Sachs' review, which will also encompass The Greenbrier Sporting Club, the resort's billion-dollar gated community.

"At this point in time there are no timelines concerning the review. However, CSX is certainly not wasting any time and the review will be complete and thorough," Sease said.

A Goldman Sachs spokesman declined to comment on CSX' news release when contacted late Friday.

Myriad labor and financial problems developed in 2008 for CSX and the resort, highlighted by a year-long dispute over their collective bargaining agreement with more than 1,100 union employees at the resort.

That in turn caused several top clients to cancel meetings previously held at the world-famous resort. A 2008 Register-Herald story reported the hotel had suffered losses of nearly $40 million from 2003 to 2007.

Lynn Swann, public relations director for The Greenbrier, said Friday she was "unaware of any dates established by both parties" for contract negotiations this month.

One New York resort industry expert said it was difficult to pinpoint exactly what the future holds for The Greenbrier.

"Goldman Sachs has so many different arms that this could just be a restructuring of the resort's debt and not necessarily the beginning of the sale of the resort," Robert Keon, president of RK Consulting, said. "Obviously something has to be done. They could have also been hired as efficiency experts."

Keon said industry forecasters predict the luxury hotel market will decrease between 8.5 percent and 10 percent in 2009.

The CSX news release also announced the Louisiana-based firm The Innovation Group had been retained to study "the potential of gaming operations" at the resort.

In November, county voters passed a referendum legalizing gambling on the resort's grounds. The results of that study are expected to be included in the "overall review of strategic alternatives," the release said.

CSX also announced that Michael Gordon had been appointed as the new president and managing director of The Greenbrier. Gordon had been the resort's general manager since February 2007.

Gordon takes over for Andrew Fogarty, who will continue to serve on the board of directors of The Greenbrier Sporting Club Development Co.

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