President’s Update – Applications Due for Subordinated Notes

Click here to view Information Memorandum

This letter is written to those Members who are eligible to take up the offer of Subordinated Notes. The purpose is twofold, it is to:

The Information Memorandum outlining the terms and conditions of the Notes can be accessed on the Club website or a printed copy will be sent any Member requesting it. The Application Form can be printed by calling up the document and printing page 17 (not 15).

We are currently discussing our borrowing arrangements with our bankers and are asking Members who intend to subscribe to complete and submit their application as soon as possible. The funds can come later as can the accountants certificate if required. Having an idea of the expected amount to be raised from the note issue will help considerably with these negotiations. It will also assist planning the staging of our course renewal project.

The Board remains of the view that the proposal makes sound economic sense and is a prudential approach to management of the course project. There is mutual benefit in the Notes in that it they allow investing Members to achieve interest rates slightly above the highest on offer within the banking system whilst reducing the cost of borrowing to the Club by some 2.25%.

The objective outlined in the Information Memorandum is to raise $2.0 million in 2 tranches, the first of 2 years at 4.75% and the second of 3 years at 5.5% with the right to accept oversubscriptions should demand be high.

A successful Note issue will underpin the construction timeline and cost of the course renewal project.

This is not the first time that our Club has issued a form of Debenture; ironically the first instance was exactly 100 years ago in 1923. At that time debenture funds of $5,000 at 5% were raised by Members within 30 days. Debentures continued to play an important part in the finances of the Club up to reconstruction of the Constitution in 1937 and for some years after that.

The Board is deeply appreciative of those Members who have been early subscribers and lodged their applications and funds. Interest is being paid in the interim at the coupon rate of the Note applied from the day of lodgement to 31 March when the issue closes. The Notes will issue on 1 April and interested Members are invited to respond as soon as possible before 31 March.