Couchiching golf club in financial crisis

Author: Frank Matys

Date: Nov 19, 2009

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Frank Matys

A long-time member who spoke with Orillia Today on condition of anonymity said he was “absolutely shocked” by the club’s financial situation.

ORILLIA: The city's “hidden jewel” is facing a financial crisis and requires a substantial injection of cash to stay afloat in the coming year.
In a frankly worded letter to shareholders dated Nov. 9, the board of directors for Couchiching Golf and Country Club Ltd. acknowledges the club has been “plagued with financial difficulties for some time now.
“The reality is that we have failed to show a profit for the past several years. These losses have been financed mostly by increased borrowings from the bank.”
The board, which has scheduled a special meeting of shareholders for Thursday evening, is anticipating an operating loss of about $40,000 for the current year.
The club will require “an additional $100,000 in cash to sustain operations until April of 2010,” based on projections.
“This would bring our company’s bank borrowings to approximately $600,000,” the letter adds.
The board says it has worked “diligently” over the past few weeks to produce “an aggressive” business model and budget that “could ultimately see the company return to profitability.”
Doing so would require that shareholders approve a resolution allowing the company to increase its borrowing limit to $600,000.
“With profits, we could begin to repay our debt,” the board adds.
However, the board says the bank has “made it clear they are not willing to support us in the short term, which makes this financial crisis immediate.”
The bank wants the club’s debt repaid within 10 years and indicated the time had come “for the (shareholders) to step up and address present and future cash needs,” according to the board.
“In summary, we presently do not have any money to meet our short and long-term financial obligations,” the letter states.
Options discussed by the board include: selling the company and its holdings; seeking out other investors or lenders to refinance the club’s financial obligations; levy an assessment on shareholders; selling off portions of the property to settle the debt, then reorganize and continue operating.
Those options are suggestions and not endorsements by the board, the letter notes.
“This is your company and it is the owners that need to decide what is to happen,” it adds. “We need you to consider the problem and comment on any suggestions or make constructive suggestions of your own.”
Enclosed with the letter was a general proxy to ensure shareholders who are unable to attend the meeting can appoint another shareholder to vote on their behalf, should a resolution or motion be introduced.
Approached by Orillia Today, club president Tom Hammell would not comment on the club’s financial situation or the contents of the letter to shareholders.
“It is just an information meeting,” he added of the Thursday meeting.
The downturn in the economy coupled with poor weather had resulted in a drop in green-fee revenues this year, Hammell added.
“It hurts everybody,” he said.
About 350 shareholders own 500 shares in the club, Hammell said.
A long-time member who spoke with Orillia Today on condition of anonymity said he was “absolutely shocked” by the club’s financial situation.
“I knew it had been losing money the last few years, but I was completely dumbfounded when I found out the extent of the current debt,” he said.
The property, located in a northward neighbourhood, “has a fantastic social atmosphere,” he added.
“I would hate to see it sold off and turned into a development,” he said.
Bounded by Peter Street, North Street, Fittons Road and Laclie Street, the land was purchased by the Couchiching Country Club in 1914.
The operation was later bought by a group of golfers under a corporation that issued shares and improved the course in the ensuing years.
The club is semi-private, meaning there are fee-paying members in addition to those who pay as they play.