Baltimore-based development firm The Cordish Co. and affiliate Power Plant Entertainment LLC have filed a pair of suits alleging improper collusion and bid-rigging in the Seminole Tribe’s $965 million Hard Rock purchase.
The first suit, filed in early December against investment banker Merrill Lynch, alleges that the firm thwarted the developer’s $600 million offer to cash out of its development contract with the tribe, rigged the bidding for the Hard Rock empire in favor of the Seminoles and worked to block Power Plant from entering a bid. The suit also says Merrill Lynch refused to prepare a confidential bid for the Hard Rock when asked to do so and told the company that any bid it submitted wouldn’t be considered.
The suit also alleges Merrill Lynch is guilty of conflict of interest, because the company represents Rank Group PLC, the British entertainment company that sold the Hard Rock holdings to the tribe, as well as Power Plant and the Seminole tribe.
The second suit alleges that the tribe worked with Merrill Lynch to prevent Power Plant and its banker, Goldman Sachs & Co., from offering a bid for Hard Rock, even though they could have made a larger offer. The suit also alleges that the tribe secretly negotiated with Hard Rock Café International management for seven months before plans to sell were announced in July.
The Seminoles agreed to keep Hard Rock managers in place and provide them with "additional financial benefits" if the tribe was the successful bidder, the suit claims.
This increasingly messy saga began in 2001, when Power Plant arranged financing for the tribe, then constructed and began running the Seminole Hard Rock hotel and casino complexes in Tampa and Hollywood, Fla. In exchange, the company inked a 10-year deal with the tribe, under which it would take a 30 percent cut of the profits.
Power Plant hired Merrill Lynch in 2003 to raise $600 million in a debt offering to cash out its contract with the Seminoles. Rather than accept the offering, the Seminoles sued Power Plant claiming the contract it had entered into violated the federal Indian Gaming Regulatory Act and the developer was pocketing too much money. The tribe asked the court to void the agreement; Power Plant filed a countersuit asking that the tribe’s suit be dismissed.
Merrill Lynch denies any wrongdoing.
"Merrill Lynch has not breached any duties to Power Plant and has acted appropriately at all times in its dealings with Power Plant," spokesman Mark Herr told the Miami Herald.
Neither Hard Rock Café International nor the Seminole tribe would comment on the suits.