KENTUCKY HORSE PARK HOTEL PARTNERSHIP FILES COMPLAINT IN FRANKLIN CIRCUIT COURT

Partnership says the Commonwealth wrongfully breached contract.

Lexington, KY -- In a complaint filed today in Franklin Circuit Court, the Bluegrass Equine & Tourism Foundation, Inc. and KHPWESLUX - LLC, the partnership formed to develop a hotel and conference center at the Kentucky Horse Park, asserts that the project failed because of the Commonwealth's unilateral decision to terminate the ground lease agreement signed last year.

The Partnership says that it had met all requirements of the contract and the project would have been completed well in advance of the 2010 World Equestrian Games had the state not terminated the contract without grounds, causing lenders to drop support for the project.

In the complaint, the Partnership says that the Commonwealth's attempt to terminate the Lease in the absence of default caused financial institutions and lenders who were poised to provide the required financing to conclude that they should not get involved.

The complaint further states that public announcements made by state officials that the project was not essential and might not be completed before the World Equestrian Games, despite assurances from the Partnership that the project would be operational no later than five months prior to the Games, also contributed to decisions by financial institutions, lenders and others to steer away from the project.

A hotel and conference center is a part of the master plan for the Kentucky Horse Park and has long been considered essential to the Park's ability to become profitable. Presently, the Horse Park loses about $ 1.6 million per year.

Organizers of the 2010 FEI World Equestrian Games promised that a hotel and conference center would be constructed for the Games. In December, 2004 former governor Ernie Fletcher said, "Without these improvements and the hotel, Kentucky would not have been selected as the home of the 2010 Games."

RESPONSE FROM STATE GOVERNMENT:

Statement from Finance and Administration Cabinet on the lawsuit filed by the former Kentucky Horse Park Hotel developer

Since 2004, a hotel at the Kentucky Horse Park has been envisioned as a public/private partnership. The state would lease a portion of the Kentucky Horse Park to the developer who would design, build and provide financing for the hotel. This aspect of the transaction was clear and consistently relayed to the developers.

Upon assuming office in December 2007, the Beshear Administration reviewed the project and thought that it possessed merit while recognizing that the sub-prime market situation would present financing challenges. Finance Cabinet officials worked with the developers to create an enhanced financing package that included considerably more state participation than originally envisioned.

The Cabinet set a deadline of April 15, 2008 for the developer to obtain financing. This was done to avoid the risk of an unfinished hotel or unsightly construction remnants present during the World Equestrian Games at the Kentucky Horse Park in 2010. Unfortunately, the developer failed to secure financing by that deadline.

The Cabinet denies the developer's claim that there was a breach of contract. The Cabinet acted prudently and in the best interest of the Commonwealth at all times during this process. This project may be viable at another time. The Commonwealth will make that decision after the World Equestrian Games in 2010.