Tuesday, 01 May 2018 21:08

City grants second due diligence extension to theater buyers

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While the potential buyers of the Roanoke Rapids Theater have completed their due diligence, they have not yet obtained satisfactory financing to purchase the property, an agreement on a second extension says.

City council agreed on a split vote this evening to extend the due diligence period for the financing until May 21.

City Attorney Gilbert Chichester indicated following the meeting the financing issue is tied to the McCleans looking beyond just buying the theater  but developing other parcels within what has traditionally been called Carolina Crossroads. “I’m cautiously optimistic that it’s going to go through and the reason is because they are not just looking at buying the theater. They’re looking at developing quite a bit of property out there with buildings and other parts that I can’t talk about right now.”

Chichester said he expects that development would be similar to what was originally planned for Carolina Crossroads in the early 2000s. “If they were just fooling around with trying to buy the theater and that was it, I would have a different opinion about it. But with the work they’ve done, that I know they have done, they’re looking at business plans for the development of the entire area out there.”

In a press release, City Manager Joseph Scherer said “the buyers of the Roanoke Rapids Theater have satisfied their inspections and completed the due diligence process with regard to the building and the grounds. The city is satisfied that the buyers have a sound business plan for the long-term professional management of the facility and anticipate that the buyers’ commitment to the region will lead to additional economic development in the entertainment district.”

Scherer said following the meeting he was not dismayed by the second extension.

During the meeting the city attorney told council while the McCleans have completed due diligence for the building, grounds, equipment and environmental concerns, the securing of the financial contingency has not been completed.

The first extension the city gave the McCleans ended Monday.

The extension offered in the agreement considered tonight was at the end of business May 14.

Because the city attorney said there could be the possibility of another extension after May 14, discussion steered toward possibly making that extension for another seven days.

“I just don’t want them coming back to council when we’ve given them sufficient time,” said Councilman Wayne Smith, who suggested the May 21 deadline.

If the potential buyers can’t meet that deadline, Smith said, “It needs to be put back on the market. If they request another extension, council says ‘no’ and we put it back on the market.”

The city attorney said the city manager has continued to look for other purchasers of the venue even through the initial due diligence period.

The approval of the extension means the city and the McCleans continue to operate under the original contract.

Smith made the motion to extend the financial contingency portion of the due diligence to May 21 with Ernest Bobbitt casting the second.

Carl Ferebee was the sole council member to vote against the measure. “I have no problem with the extension. I have a problem with the earnest money,” he said, referring to a $150,000 deposit made by the potential owners, which he believed the city should be allowed to keep.

If the McCleans decide to terminate the contract within the due diligence period, the earnest money would be refunded to the purchasers, Chichester explained afterward.

Smith, who has long pushed for the sale of the building, said afterward, “I’m getting pessimistic about it. I’m going to give them one more opportunity and then my opinion is going to be to go ahead and put back on the market after the 21st.”

Smith said he didn’t know how much the McCleans were trying to procure through local funding sources and Chichester declined comment.

Smith said, “What’s going to make me feel better is when the 21st comes and they have already made a commitment before then or by the 21st and my understanding is the attorney is going to work on it by before the 14th. I’m hoping it won’t have to go to the 21st.”

If the deal falls through, Smith said, the only alternative is to put the building back on the market. Whether there are other interested buyers, he said, “I don’t know. I’ve been here for five years now and we’ve tried for five years selling this thing. I don’t know whether anybody’s interested or not. I would hope so.”

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