MYRTLE BEACH -- The majority of Freestyle Music Park's board of directors have stepped down in the wake of a foreclosure suit against the park, former president Steve Baker said this week.
A single member, appointed by the park's Russian investors, stayed on the board and continues to try to sell the park, said Baker, who also resigned. All other members of FPI MB Entertainment LLC, the park's owner, resigned after the park's mortgage holder, FPI US LLC, filed a foreclosure suit on Aug. 5, he said.
Baker said he could not confirm the identity of the remaining board member with FPI MB Entertainment.
The future of the park looks grim, Baker said this week.
"I don't think it's dead ... but I'm not real optimistic because I don't think there's anyone close to buying it," he said.
Attorneys Nate Fata, representing FPI MB Entertainment, and David Slough, representing FPI US, could not be reached.
The park failed twice in two years after lackluster seasons: first as Hard Rock Park in 2008, then as Freestyle in 2009. The park did not reopen for a 2010 season as the owners searched for new investors. FPI MB Entertainment bought the park out of bankruptcy for $25 million after it was developed for $400 million as Hard Rock Park.
The resignations leave Russian investors on both sides of the foreclosure suit. The mortgage holder, FPI US LLC, is a US division of MT Development, a Russian developer. FPI US formed a joint venture with MB Entertainment LLC to start the park under the name FPI MB Entertainment LLC, according to court documents, and appointed its own representative to the resulting company's board.
FPI MB Entertainment responded to the foreclosure suit Friday, admitting most of the claims against it, according to court documents. FPI MB Entertainment affirmed that it owes more than $25 million on the park, is in default on its loans and is unable to pay the outstanding amount. The park owes $25.36 million as of Aug. 25, including interest, which adds $9,558 each day the mortgage goes unpaid.
"They're pretty much admitting a debt is owed and they're pretty much admitting there's a mortgage and there's going to be a foreclosure," said Joe Wachter, a Myrtle Beach attorney not affiliated with either party.
The response said that FPI MB Entertainment should not be responsible for its debt beyond what can be repaid if the property is auctioned off. That's the only claim denied outright although the park owner asked for more evidence on several other claims that it did not admit to.
The foreclosure suit stands to be first in the line of creditors asking to be paid by the park, making it unlikely that others who are owed will ever see compensation. With a weak real estate market, even paying off the original mortgage may be a struggle if the land eventually is sold at a foreclosure auction.
The response indicates a change in the legal approach for FPI MB Entertainment, which has responded sporadically to lawsuits. Local and federal courts have issued at least eight rulings against the firm for failure to respond to lawsuits.
When the suit is heard in court depends on how fast all parties involved can be served and how backed up court dockets are, Wachter said.
"My guess is if they're lucky they might get it up before the end of the year," he said.
More than 20 companies and individuals that were named in the suit as having claims against Freestyle must be officially notified, and that can draw out the process, Wachter said.
Board members had been working to find a new buyer for the park before their resignations, Baker said. The foreclosure suit puts additional urgency on the park to find new investors and will make it more difficult to sell, he said.
"The Myrtle Beach market can support a park, and I think that market can be attractive," Baker said. "But I think time is not on the investors' side."
The park is dead, and it is time to bury it, amusement park consultant Dennis Speigel said in an interview last week. No one in the industry is looking at buying the park, Speigel said.
An amusement park could succeed in that location off U.S. 501, but it would need the right investment and a conservative budget, Baker said. Baker declined to comment on why the park did not succeed during its 2009 season.
The park would have to be sold to new owners to reopen, and they could decide whether to bring in former Freestyle leadership to operate the park, he said. Baker continues to work as president and chief executive of Baker Leisure Group, a consultant and management company, and is pursuing new business, he said. The company, founded in 1988, has done projects in North and South America, Europe and Asia, including work with big names such as Coca-Cola and FIFA, organizer of the World Cup.
Baker said he is done with Freestyle. "It's not a pleasant thing, it's something we've been trying very hard to fix," Baker said. "We've resigned, so we're done."