What effect will this de-amalgamation have on Merimbula?

There will be a once off paper write off of approx 2.3 million on the balance sheet, reducing members’ equity from approx 17.5 million to approx 15.2 million.

There are also some likely operational savings estimated to be approximately $40,000 per annum.

Merimbula will not be exposed to any future Tura trading losses.

And the Board and management will be focusing solely on Merimbula’s priorities.

What price will Tura pay for its land and other assets?

At this stage the conceptual deal is for the Tura related non-current assets as listed on the balance sheet, other than lot 1442, to be transferred to the new Tura club at no cost.  This includes freehold and leasehold land, buildings, fixtures, fittings and equipment etc.

Tura would have no debt (other than a short term interest free loan on working capital if required).

Any stamp duty relating to the transfer of assets will be paid for by MIBC Ltd and this amount will only be repaid to Merimbula by Tura if any of the Tura freehold land is later disposed of or becomes subject to a joint venture with a third party. We are currently looking at strategies to reduce any potential stamp duty.

What will happen to the Tura Staff?

Our intention is to transfer all existing Tura staff to the new entity under the same or similar conditions, with all entitlements protected, if possible.  However, this will ultimately be a decision for the new Tura Board.

Will Tura be viable as a stand alone entity today?

Prior to amalgamation Tura did not own the land the club house, car park and tennis courts are built on.

Tura was paying more than $100,000 rent annually for access to these facilities.

At that time Tura could not borrow money because it had no land to offer as security.

Tura could not really aspire to build accommodation because it did not own the land

Tura was averaging a reasonable trading cash profit, before rent, in the years leading up to amalgamation but this was being severely eroded by paying rent on its facilities or interest on its loans.

Tura is still making a reasonable trading cash profit today.  The cash profit last year and the anticipated cash profit in the current year, exceeds Tura’s average annual capital expenditure of recent years.

The finance committee has conservatively estimated a further $40,000 in net savings to Tura’s bottom line from de-amalgamation, making it arguably more viable than it is today.

Tura will own assets with a written down value in excess of $2million.  Prior to amalgamation Tura’s net assets were valued at only $300,000.

Tura will finally own the land it occupies.  It will go from being a tenant to being an owner.  Owning this property increases the prospect of Tura developing accommodation on the site.  The land will create increased flexibility in financing options.

The Board believes Tura can be viable as a stand alone entity, as long as it is well managed. However, ultimately, the Office of Liquor Gaming and Racing (OLGR) will be the judge of whether Tura Beach Country Club as a stand alone entity is viable or not.  The OLGR would not issue a club licence if it believes it is not viable and if so, the de-amalgamation can not proceed.

What is the process and how long will it take?

No one knows how long it will take, the solicitor says it could take more than 12 months.

The process contains many steps and includes; the formation of a steering committee for the new club, a new company has to be registered and interested members need to join the new club so that a Club license can be applied for.  Sporting Club tax exemption needs to be confirmed.  A constitution for the new club has to be adopted by the new members and all assets including poker machine entitlements, freehold land and buildings, and the crown lease that the golf course and bowling greens occupy, must all be transferred to the new entity.

There are many other minor but time consuming administrative steps to implement also.

(The following questions and answers were added on 30 March 2010)

Will current Tura MIBC Board members become the new Board for Tura?

Current Board members were elected to be on the Merimbula-Imlay Inc Board.  The new Club’s members will elect their own Board members.

How can Tura stand alone without Merimbula-Imlay Bowling Club?

As the CEO, Damien Foley, said in his March Information night address to the members “It was expected that Tura would be able to stand on its own two feet and be self sufficient [after enlarging and renovating the club house].  For the last two years Tura has been self sufficient.  The Board’s policy of neither venue subsidizing the other is consistent with this objective.”  There has been no subsidization of Tura Beach over the past two years.

In applying for a liquor license it is necessary, among other things, to prove financial viability.  If the Office of Liquor, Gaming and Racing (OLGR) is not satisfied that the club meets viability requirements then the de-amalgamation would not proceed. Tura is fortunate in that it has been self sufficient over the past two years (as well as for the current financial year) with good cash flows and will have audited evidence of this.

What are the processes involved in Tura Beach becoming a separate club?

A steering committee will be formed to undertake the necessary work associated with becoming a new club.  An early task is to seek expressions of interest from members to form a new club (200 members are required for Incorporation).  The major tasks include preparation of documentation required by ASIC for Incorporation and OLGR for obtaining a liquor license, and the drafting a new Constitution. (There are also other tasks, such as transfer of employees, contracts and confirmation of sporting tax exemptions to be undertaken.)

When this work has been completed there will be a General Meeting at which Tura members will elect their Board of Directors.  This new Board will be responsible for submission of applications to ASIC and OLGR.  To do this there must be member approval of:

• incorporation;
• the application to ASIC to re-register Tura Beach; and
• the new Constitution.

Once Incorporation and the Liquor License have been approved, the application for transfer of poker machines and entitlements is lodged (a club must first have a liquor license).  

Will the Steering Committee be making decisions about future directions of Tura Beach?

No.  The Steering Committee to be formed is to undertake responsibilities associated with the formation of a new Club.  As such, it will not be making decisions regarding future directions of the new Club nor implementing policies - these will be the responsibility of the new Board.

What will happen to Gaming Machine Entitlements?

MIBC Ltd will apply to OLGR to transfer all current Tura related gaming machine entitlements to the new Tura Club at no cost.  Currently MIBC Ltd holds 43 entitlements for the Tura site and has approval to purchase six more.   It is possible that to transfer the entitlements OLGR may require Club to forfeit a percentage of the entitlements as per current law in relation to sale/transfer of gaming machine entitlements (could be as high as 33%).  The club has had leading gaming machine analyst review Tura machines and he recommends an installation of 30 is the most productive number of machines for Tura.  Our solicitor is investigating best method for minimizing forfeiture due to transfer.