Shortland Waters Golf Club members say they feel “dudded” after retirement village developer Aveo bought the 50-hectare course for just $1.25 million.
Club president Ron Freeman said Shortland Waters had no option but to sell to Aveo after going into voluntary administration this year.
The club has been suffering a cash-flow crisis after a delay in the construction of new holes to replace those lost to an Aveo retirement village being built in the middle of the course.
The club agreed to sell off part of the course to Aveo two years ago in a deal which rescued the club, at least temporarily, from financial difficulty. Aveo took out a caveat over the course which has thwarted the club’s attempts to borrow money to trade out of its difficulties.
The company told the Newcastle Herald in August that it “would not be a candidate” to take over managing the course. It has now entered into a deed of company arrangement with administrator Rapsey Griffiths to pay $1.25 million for the club and lease it back to members for 20 years.
A prominent Hunter developer with detailed knowledge of the course’s value said the land next to Newcastle University had redevelopment potential.
He said $1.25 million was a “steal” and about 20 per cent of the land’s market value.
A former Shortland Waters club director said Aveo had “behaved as you would expect a developer to behave”.
“They had intimate knowledge of the club’s finances and have positioned themselves beautifully to take advantage of the club’s situation,” he said.
“Their offer of $1.25 million is grossly inadequate given that it includes the land area of an 18-hole golf course as well as a new $3 million clubhouse and car park.”
Club members and creditors, most of whom are club employees, voted last month to accept Aveo’s offer, which includes a 20-year lease for $1 a year and a buy-back option if members can find $3.5 million seven years from now.
Mr Freeman said there was a “great possibility” the club could be back in financial trouble in three years’ time if golfers did not return to the course.
“I think everybody’s aware of that,” he said.
Aveo has agreed not to start further residential development on the subject land while the club’s lease is in place.
READ MORE: Club takes swing at developer
Mr Freeman said Aveo had the club over a barrel.
“There was nothing we could do about it. We are disappointed with the offer, because anybody with any commonsense would know that’s a cheap buy, but we had no alternative.
“We had to accept the offer, otherwise it probably would have gone to public auction. A developer might have bought it and there might have been houses on it.”
Mr Freeman, who has been on the club board for 18 years, said about $550,000 of the sale price would be used to pay off creditors, including the administrator.
He said he did not regret entering into the agreement with Aveo two years ago, saying the club would have “closed anyway” without the cash injection.
“We were desperate; that’s why we accepted Aveo’s offer. Their offer was very ordinary, about $2 million short of what it should have been. We accepted that. We felt we’d be able to get out of it [financial trouble].
“The big crux in all of this is the caveat Aveo had on the property. That was the killer for the club. They wouldn’t lift the caveat to let the Greater building society put first mortgage on it.
“We had finance approved for $350,000 in March. If we’d got that $350,000, we’d be laughing now.
“It’s all come out of Aveo. They’ve played their cards pretty well.
“I’ll leave it to others to reach their own conclusions about how they view Aveo’s conduct.”
Rapsey Griffiths said it was finalising the sale to Aveo after the parties executed the deed of company arrangement a week ago.
It is understood the sale will be completed next week.
“Through the voluntary administration process, Rapsey Griffiths has consulted with the club’s board, members and creditors regarding the club’s financial situation,” the administrator said in a statement.
“This is a positive outcome for 15 staff and 492 members of the golf club and will provide continuity of this important asset for the local community.”
The administrator entertained expressions of interest from two Hunter golf clubs for amalgamation and another from a developer.
Two of these proposals included cutting the course from 18 to 12 or 9 holes, but all three fell through.
The Herald approached Aveo for comment.