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VOL. 133 | NO. 66 | Monday, April 2, 2018

EDGE Sets Date to Vote on Graceland Expansion Plans

By Patrick Lantrip

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The Economic Development Growth Engine board has set a date to vote on Elvis Presley Enterprises’ Graceland expansion plans.

At the specially called meeting, which will be held Thursday, April 5, at 3 p.m. at the Embassy Suites Hotel on Shady Grove Road, the EDGE board will review both of Graceland’s requests for tax incentives – the approximately 80,000-square-foot exhibition and convention space and the roughly 6,200-seat performance venue.

EDGE board member Tom Dyer called for a special meeting at last month’s regularly scheduled meeting after he recommended the board delay a vote on EPE’s exhibition space plans for the second time.

Dyer cited concerns over being sued as a result of the board’s decision as his impetus for the second delay. However, the delay itself became the reason for a Chancery Court lawsuit Elvis Presley Enterprises filed against EDGE a few days later.

This was the second lawsuit EPE filed in relation to its expansion plans.

Last year, EPE filed a similar suit against the city of Memphis over whether the city partially funding EPE’s expansion plans would violate an operational noncompete agreement with the Grizzlies for FedExForum that, if breached, could cost the city $90 million.

EPE’s original draft, containing only plans for the arena, first surfaced in August; however those plans were eventually scrapped when the possible conflict with the Grizzlies first came up.

In February, EPE settled on plans for a 80,000-square-foot exhibition and convention center space inspired by the Wonders Series Memphis hosted in the 1980s and '90s, but those plans were held at the behest of the city, which asked for more time to review them.

Now both sets of plans will go before the EDGE board Thursday, marking the first time both plans have been on the table at the same time.

While the new application has not been made public as of this time, EPE is also expected to amend the section of its application that references whether anyone with a controlling interest is involved in any pending litigation.

On March 27, The Daily News exclusively reported that despite a “no” answer on the previous application, EPE principal owner Joel Weinshanker had two pending lawsuits against him.

One lawsuit brought by Pyramid Tennessee Management LLC, a third-party hotel management company hired to manage the $92 million Guest House at Graceland, alleges EPE breached its seven-year contract with Pyramid.

According to the lawsuit, the project’s initial lenders required EPE to hire a third-party company with hotel experience to run the Guest House.

After the project was refinanced, Pyramid alleges Weinshanker intentionally decided to breach the contract by getting rid of Pyramid, citing in the lawsuit a meeting between Weinshanker and two Pyramid executives.

“Mr. Weinshanker (who refused even to shake hands) stated that he intended to break the Agreement, switch managers, and he further explained his motive for doing so, specifically relating to his refinancing of the hotel. He stated that he would use litigation to achieve his ends, and then he tried to bully Pyramid out of the Hotel by stating that he would pay management fees through June 2018 (well short of the contractual period that runs until December 2023). Pyramid declined and pointed out the seven-year Agreement.”

The second pending lawsuit stems from bankruptcy proceedings in Delaware involving a company not related to EPE that Weinshanker was in charge of known as Draw Another Circle LLC, a holding company for Hastings Entertainment Inc.

In the suit, liquidating trustee Curtis Smith seeks to collect a debt he alleges Weinshanker and several other business partners owe.

“Weinshanker, after engineering a leveraged buyout of Hastings in July 2014, carried out a strategy of using Hastings as his personal piggybank by causing it to pour millions of dollars into investments that not only conferred no benefit on Hastings, but hastened its demise,” the court documents read in part.

“Weinshanker used Draw Another Circle LLC as a holding company for Hastings,” the trustee alleges in the court documents. “He then used other special-purpose acquisition vehicles to purchase additional businesses using Hastings’ money, including MovieStop LLC and Sports Images Inc.”

In total, the trustee said he believes Weinshanker caused at least $25 million of Hastings’ assets to be “squandered during his reign with nothing to show but the liquidation of a $400 million business with 50 years of history and over 3,500 employees.”

PROPERTY SALES 101 603 9,602
MORTGAGES 92 538 10,616
BUILDING PERMITS 215 1,282 20,958
BANKRUPTCIES 51 408 6,108