Future of State Fair of Virginia in question

The State Fair of Virginia has until March 7 to either come up with new financing to maintain operations for a year or submit a way to keep The Meadow Event Park.

If it fails to meet the deadline, a group of lenders could take over operations, including the 360-acre entertainment and meeting complex in Caroline County, and possibly shut down the fair, which has been operating since 1854, according to documents filed with the U.S. Bankruptcy Court in Richmond.

SFVA Inc., the corporation running the fair that filed for bankruptcy protection Dec. 1, and its lenders agreed to the deadline, which could determine its future.

The deal needs to be approved by Bankruptcy Judge Douglas O. Tice Jr. As of Tuesday evening, a signed order had not been filed with the court's electronic filing system, though attorneys close to the case expect he will do so shortly.

The agreement also calls for the lender group, which is owed about $75.6 million, to take over two financial accounts with a total of about $20 million. That money would go toward paying off the debt.

Jonathan L. Hauser, an attorney with Troutman Sanders who is representing SFVA, said Tuesday that he expects the fair to meet next month's deadline.

"SFVA intends to make a proposal to the lender group within the time frame agreed to by the parties," he said.

Curry A. Roberts, SFVA president and CEO, said he would not speculate on what would happen if the lender group did not accept his organization's proposal. The state fair's goal, he said, is to hold onto The Meadow Event Park. "That's what we're focused on." He would not provide specifics.

The Meadow Event Park had been used partly as collateral on loans SFVA took out to help buy and build the complex in Caroline County. But a drop in the value of the state fair's investment portfolio meant SFVA was no longer meeting the terms of its loan agreements, court records show.

As such, the lending group was entitled to take ownership of the property and certain assets. But the December bankruptcy filing temporarily halted that process.

SFVA got into financial trouble because its investment portfolio took a big hit in the stock market's plunge in 2009 and because of poor attendance at the fair in 2009 and 2010, according to documents filed in December.

The portfolio's value in 2007 was about $40 million. As of Nov. 9, the portfolio was worth about $18.3 million, documents filed last month show.

SFVA and the lender group have been working for the past several years to find ways to restructure its debt until the performance of its portfolio improved. SFVA could not make its Dec. 1 interest payment on its loans without endangering near-term operations, court records show. Part of those discussions in the past included cutting the scope of The Meadow Event Park project by $2 million, negotiating a new investment strategy and seeking a $10 million grant to offset the portfolio losses, documents filed in December show.

Michael Mueller, an attorney with Richmond law firm of Christian & Barton who is representing the loan servicer ArborOne, declined to comment Tuesday. As the servicer, ArborOne represents the group of lenders that holds most of the fair's debt.

SFVA completed the complex east of Kings Dominion in 2009 and moved the annual state fair there from its longtime home in eastern Henrico County.

Even after filing for bankruptcy, SFVA's financial woes have continued. According to its most recent monthly operating report filed with the court Jan. 30, SFVA had a net loss of $450,605 in December.