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Singapore Golf Club Has Severe Cashflow Issues


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Hundreds of Laguna National's pioneer golf club members, who collectively took up tens of millions of dollars in debentures to help finance the construction of the golf club,  are now at a loss as to whether they will get their money back.

 

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Laguna National Singapore

 

According to an article in Singapore’s the Business Times, just a day before the 30-year notes were to be redeemed, the club's current owner Peter Kwee wrote a letter to the trustees, stating that the club was unable to fulfil the redemption "due (to its) current financial position".

 

The club's latest financial statements filed at the end of 2019 stated that a director has undertaken to provide financial support to allow it to continue operating as a going concern "in the foreseeable future".

 

Debenture-holders said they took up the notes because the original consortium behind the initial project included credible organisations. The club was initially owned by a joint venture comprising Singapore-headquartered NatSteel Resorts International (now NSL Resorts International), golf club developer Japan Golf Promotions Inc, and Japanese trading giant Marubeni Corporation.

 

How did three-decade-old debentures get sold to golf-club members?

 

Debentures are a type of unsecured debt instrument often issued to raise capital for an upcoming project or a planned business expansion.

 

In the United States and United Kingdom, they are often used by sporting organisations and carry varying terms, from interest payments to ancillary benefits, like the option to buy tickets at a favourable price.

 

In the case of Laguna National Golf and Country Club, the first batch of members had in 1991 taken up non-interest bearing unsecured notes of S$120,000, that the company had undertaken to "redeem in full" on June 11, 2021.

 

This was on top of paying at least S$40,000 in membership fees, as well as monthly subscription dues.

 

A copy of the unsecured note certificate showed that up to 1,800 such debentures could have been issued. Debenture-holders interviewed said their money was used to finance the building of the club, which was inaugurated in 1993.

 

According to the Monetary Authority of Singapore's inflation calculator, S$120,000 in 1991 would have been worth S$185,000 in 2019.

 

Based on the club's financial statements as at end-2019, there were 612 debenture-holders with fully paid notes, translating to some S$73.4 million. Its 2020 statements are not yet available on the Accounting and Corporate Regulatory Authority's database.

 

Other golf clubs in Singapore that have issued debentures include the Jurong Country Club and Raffles Marina, also owned, and developed by NatSteel Resorts International.

 

Prominent examples of sporting debentures elsewhere include the Wimbledon championships, where debenture holders have been guaranteed Centre Court tickets and exclusive lounge access.

 

Wimbledon is unlikely to be in trouble with all the TV rights , however over the next few months expect more similar stories about other golf clubs across Asia struggling with severe cash flow issues.

 

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