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'Cash clock ticking,' Bonita Bay members slow to bargain |
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Article Courtesy of The Tallahassee Democrat By DICK HOGAN Published May 27, 2009 Some club members in Bonita Bay Group communities reacted angrily Tuesday as the financially troubled upscale builder started outlining its plans to sell off the clubs. At the same time, the pressure is building on members and management as time and cash run short. Members face several big deadlines in the next two months on the value of the clubs and possible closures. The company's operating cash is "projected to run out in August" so it's a "cash clock ticking" situation, according to minutes of an advisory committee. A turnaround specialist hired by the company told the community's turnover committee that the Bonita Bay group is "in the zone of insolvency" and that its cash may not allow the company to operate past this summer, according to the minutes. The clubs are for sale because the company cannot afford to keep them running. As home sales fell, the cost of keeping the clubs operating became a big financial drain on the company. The clubs are for sale because the company cannot afford to keep them running. As home sales fell, the cost of keeping the clubs operating became a big financial drain on the company. Bonita Bay president Kitty Green announced last week she will resign shortly and that the Bonita Springs-based company is now being managed by crisis management specialist Timothy Boates of RAS Management Group LLC. The firm is based in Newport, R.I., and Gurley, Ala. Green declined to comment Tuesday, referring all questions to the management company. Bonita Bay was required to employ Boates by the company's lenders, a consortium led by KeyBank, because the company was having trouble paying off a $120 million line of credit. Last week, Bonita Bay community's Advisory Board, for example, met with Boates and other company officials and learned the plan is for the clubs' value to be determined by June 6-8. Club representatives would negotiate with Boates starting June 14 and concluding by August. Also, if members' quarterly dues were unpaid by July 1, Boates would consider shutting down all club operations July 6, the minutes said. About 30 to 35 percent of Bonita Bay members use the club year-round. But Boates, who did not respond to phone calls and e-mails last week and Tuesday, started talking with residents' representatives in the past week about how the clubs might be sold to their members, according to minutes of committees representing the members. The Bonita Bay advisory group minutes said the board's members "felt that the RAS approach was typical of a professional restructuring action, respectfully direct, businesslike without embellishment, and, markedly matter of fact." Others were more skeptical. "It stinks," said Mike Kozlow, a Shadow Wood resident who was involved with that community's efforts over the past three years to negotiate the purchase of the community's golf club. "They're trying to sell us the clubs for something more than we've already given them. We've given them here $54 million" in deposits and membership fees. Now, he said, "if they want to take our deposits, fine. Just give us the clubs for the deposits and we'll walk away." But Bonita Bay Group officials in 2006 and 2007 negotiations asked for an additional $2 million "and we said, 'That's not going to happen'," said Kozlow, who was on the elected Turnover Committee and Advisory Board when the negotiations were ongoing. "Boates hasn't responded" to the community's position, Kozlow said Tuesday. Michael Lissack, a homeowner at Mediterra, scoffed at the prospect of "negotiations" at his community. "There is no negotiating," said Lissack, an entrepreneur and director of Knowledge Ventures (Florida) in Naples. "The Bonita Bay people's attitude is 'We'll tell you what we're doing, take it or leave it'." He also questioned the right of the Mediterra Advisory Board to represent the community, noting that the board's members were appointed by the company. "It's like Bonita Bay's talking to itself," Lissack said. Rather than the negotiations, Lissack said, "everyone is much better off if they go bankrupt" and let the court handle the situation. Other comments in committees' minutes indicated that relations between company and club members could cool off fast this summer if the members don't play ball with Boates. "Tim stated that if a sufficient number of club members across all of their clubs withhold payment of their quarterly dues on June 30, they will have insufficient funds to meet payroll obligations required to keep the clubs open, and will therefore close all of the clubs on July 6," the Mediterra Advisory Board minutes state. "This decision will not be made on a club by club basis. It will be all or none." At least one community is raising a war chest to deal with the negotiation process. The Bonita Bay Club's Turnover Committee sent out a May 19 memo to all club members asking for "$200 from each golf member, $100 from each sports member, and $50 from each social member" to pay for the costs of attorneys and other expenses. The community Advisory Board is kicking in $15,000, according to the memo. Members at Bonita Bay and Shadow Wood expressed dismay in correspondence with their communities' Advisory Boards that Bonita Bay apparently secured its $120 million credit line with the banks by offering the clubs as collateral. Residents face difficult decisions on Bonita Bay clubs' fate |