Robert Bourne, Chairman of Clubhaus plc, made the following statement on Friday 12th April
As shareholders will be aware from our announcement of the 21 November 2001 and from my comments at the Company’s EGM on 7 January 2002, the results for the 9 months ended 30 September 2001 reflect the material write down of our fixed assets following an independent valuation performed by FPDSavills, Chartered Surveyors. The loss for the period was £102.3 million after exceptional items of £88.9 million and the net liabilities attributable to ordinary shareholders as at 30 September 2001 were £26.7 million.
As set out in the Interim Report sent to shareholders on 5 September 2001, the Board decided to commission an independent valuation of the Group’s properties. The basis of the valuation was an Open Market Value of each property. The majority of the properties were valued by FPDSavills and one of the Group’s properties was valued by Chesterton HMH. The valuations reflected the difficult trading conditions prevailing including the adverse weather and the effect of the foot and mouth disease during the period and the restricted number of purchasers for golf assets, particularly in Germany and France. Moreover, the German properties’ valuation was particularly hard hit given the high rental commitments associated with the leasehold interests and the effect of the disappointing performance of the German economy on the ability to sell high priced memberships. The carrying value of the Group’s property assets in France were written down significantly because the developer who had committed to purchase a number of plots defaulted on his contractual obligations, largely as a result of his inability to make onward sales. FPDSavills also attributed limited value to third party market perception of the development potential at various Group’s sites which Clubhaus itself may be able to realise. Whilst it is disappointing to report the material write down in values, the Board appreciates that one of the main priorities is to improve the Group’s trading performance in order to restore as much of the lost value as possible.
As a consequence of the above, the Company initiated negotiations with its bankers, the holders of the Company’s Senior Loan Notes and its Preference Shareholder with a view to restructuring the Group’s balance sheet. I am pleased to be able to report that these negotiations have been successfully concluded. Full details of the proposed restructuring are included in circulars which are being sent to shareholders and bondholders today and which also include notification of the EGM to be convened at which ordinary shareholders will be asked to approve the proposals. It should be noted that if Ordinary Shareholders, the Preference Shareholder and Bondholders do not approve the proposals, then the Company will have to initiate insolvency proceedings. These financial statements have been prepared on the going concern basis and the auditors’ report draws attention to the inherent uncertainty surrounding the adoption of the going concern basis.
Effect of the restructuring and strategy
If the restructuring is successfully implemented, the Group will have a net asset position restored and will have a greatly reduced interest expense going forward. However, the Group will still have significant indebtedness and it will be necessary in the short term to continue the policy of disposing of non core assets, and restricting developments and acquisitions. The UK Country Clubs have continued to trade satisfactorily. The Board is of the opinion that this niche business offers an attractive investment opportunity and the Group’s existing portfolio still has the potential for further health and fitness developments. Provided that the trading performance from the existing Country Clubs supports the case for further development, the Board will examine the possibilities of raising additional equity capital to allow the prudent further development and expansion of the Country Club business.
Annual General Meeting
The Annual General Meeting will be convened following the conclusion of the restructuring proposals.
If the restructuring proposals are implemented, the board of your Company will be reorganised as follows:
I will stand down as executive chairman of your company but will remain as non-executive chairman. As a consequence I will receive a reduced remuneration package. It has been my wish to continue as Chairman for a short period to oversee the implementation of the reconstruction. A new Chairman will then be found by the Board to take over this role.
Alexander von Spoercken and Guy Buckley will stand down as executive Directors of the Company. No compensation will be paid as a result of these resignations. The directors are currently seeking to identify suitable candidates to strengthen the Board and expect to announce further changes during the course of the current calendar year.
I would like to join with my colleagues to thank all of the Clubhaus employees for their efforts during what has been a difficult time for the Group. The continued increase in members is testament to the high level of service that our staff provided during the period.
The period under review has clearly been highly unsatisfactory both for the Company and also for its shareholders and bondholders. The proposed restructuring will establish a positive net asset value and the Board’s primary objective is to restore as much lost value as possible.
More information about the Board changes was given in the Chairman’s letter to shareholders:
Alexander von Spoercken will resign as a director but will continue to work for the Group as President of the Company’s German operations. Guy Buckley will resign from the Board on 1 June 2002 and will, on that date, commence a 12 month notice period with the Company.
Charles Parker will continue as the Company’s Managing Director and Rupert Horner will continue as the Company’s Finance Director. Both Mr Parker and Mr Horner will continue to be employed on their current terms and conditions save that Mr Parker has agreed to a reduced salary following implementation of the Proposals.
Norman Riddell will continue as a non-executive director of the Company. The Directors are currently seeking to identify suitable candidates to strengthen the Board and expect to announce further changes during the course of the current calendar year.
Clubhaus PLC www.clubhaus.com