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Article in the Golf Business News
Edition 88 November 2007
Written by Matthew Pitt
CLUBS MONITORING PROGESS OF LANG LANG SHARE ISSUE |
In an innovative attempt to wipe out $360,000 of debt, Lang Lang Golf Club in South Gippsland has offered its members a financial share in the club, and it's a scheme that is being closely monitored by a number of other Victorian golf clubs according to Club President Rob Walker.
"The club's current situation is typical of many other country golf clubs around Victoria and a number of other clubs are taking a close interest in the progress of the share issue," he told Golf Business News.
Under new State Government legislation, the club plans to establish an unlisted public company with members as the shareholders. This company will be known as Lang Lang Holdings, which will hold the title to the land with the club continuing to trade as the Lang Lang Golf Club Incorporated.
The members who become shareholders will own a percentage of the title of the club and will have voting rights, with the company having a board of five directors, nominated and elected by the shareholders, who will oversee the purchase and hold of the title. Members who do not purchase shares will retain their playing rights but will not have shareholder voting rights. The released a prospectus in September with 70,000 shares being made available at $10 each to finanical members of the club.
As one of the architects of the share plan, Walker remains optimistic the venture will be successful with the club looking to raise at least $400,000 of a possible $700,000 on offer. He stressed however that the future of the club was now in the hands of the members and that the club would not be able to stabilise its financial position unless members embraced the scheme.
"We are looking to pay out any debt incurred over the last few years to take the club forward," he said. "We've held information meeting and tried to make the point to our members that if they do get on board, we can take control of the situation. On the other hand, if a good percentage of the members don't subscribe, their fees will have to rise."
Brian Paynter, a club member and chartered accountant who was also instrumental in devising the share offer is also very confident the new scheme will succeed. "We want to keep the club in the members' hands and we're giving them a vehicle to do that," Paynter said "It's going to be hugely dependant on the members putting up their hands to extend the funds." Paynter said that the expressions of interest declared prior to the share issue indicated the club would be able to pay off a substantial portion of the debt.
Lang Lang Golf Club was designed by the 1937 Australian Open winner, George Naismith, and was built in 1963 on Victoria's sandbelt in Nyora on the South Gippsland Highway. In the mid 1990's, the Bass Coast Shire made the totle to the golf course available for sale with the club borrowing approximately $170,000 to complete the purchase.
However in the intervening years, a decline in memberships and revenue has seen the club's debt climb to unmanageable levels. In 2006, the club's committee seriously considered selling the club to a private investor, and had been preparing to have members vote on whether to accept an offer of sale when the idea of a share issue was first investigated.
With an annual subscription for seven-day membership at $495 and 300 members currently on their books, Rob Walker indicated that the club was in a good financial trading position and that the long-term prospects appeared sound if the remaining debt could be eradicated. Share applications were released on October 17 with a closing date for acceptances of October 31. A minimum share purchase of 10 shares per member is available. |
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