Members unaware ATC had already signed exclusive agreement on land sale

The Auckland Trotting Club was in such dire financial strife it was secretly negotiating to sell its land on Green Lane Rd more than three months before it sought approval from its harness racing members.

When the ATC’s board put a motion to the annual general meeting on October 21, 2020, authorising it and a three-man committee to sell the land, none of the members knew that just one day earlier the club’s CEO Mauro Barsi had signed an agreement which gave exclusive rights to Sydney finance company Gleneagle Securities.

The deal, instigated to prevent a possible fire sale of the club’s assets, was not disclosed to members but was already well underway.

Glenegales would develop a mixed-use lifestyle residential complex, aged-care facilities, retail and commercial spaces.

The agreement included not only a $50 million price, but such specifics as the size and timing of progressive payments, which would continue until June, 2023, the demolition of the Epsom stand, landscaping and roading.  

A clause in the term sheet, stipulating that the ATC was barred from dealing with any other party for 90 days subsequently incensed one of the three committee members appointed, former club president Terry Quinn.

Quinn and fellow ATC members Mark Sumich and David Turner were supposed to “enter into negotiations and complete, execute and perform all necessary documents and acts in order to sell the 15,000 square metres of land” to reduce the club’s bank debt arising from the development project.

But Quinn says it is obvious in retrospect that it was a ploy by the board to give the illusion that the trio were helping to negotiate a sale for the members. 

“We had no effective input whatsoever,” Quinn said. “We found out about the Gleneagles agreement some time before last Christmas and they wouldn’t tell us when the exclusivity finished. 

“The property should have gone to open tender like the land we sold in Manukau Rd and the land being sold by the Auckland Racing Club. We had meetings with Barsi and (club president) Rod Croon when we repeatedly requested to do that.”

In late July, 2021, when the board and subcommittee met to vote on the Gleneagles deal, there was no sale and purchase agreement, only an unsigned draft from the previous December, which was obviously out of date, and a ream of special clauses.

No independent legal peer review was ever done, as requested by Quinn.

The new draft included an earlier final settlement date of February, 2022, the original delayed payment schedule unacceptable to both the board and subcommittee.

Quinn is adamant that the value of the land far exceeds the total of $51.6 million which was agreed to by the ATC board at that meeting.

Deal used as leverage with bank

In a letter to Quinn in September, Croon reveals the real reason why the Gleneagles deal was struck so quickly – and makes a startling admission.

“Our financial position with Westpac had a major influence on our decision to continue negotiations with Gleneagles and the deal was used – at various points – as leverage to have their continued support.

“If Westpac had ‘called in’ their loan, the club would have been in significant financial distress.

“If we had lost Gleneagles and had gone to the open market without getting a satisfactory offer, Westpac would have forced a mortgagee sale on not only this property, but potentially on all the titles they held securities over. While I don’t mind a legitimate strategic gamble, the stakes in this instance were simply too high.”

The extent to which the club was being dictated to by the bank cannot be understated.

In the 2021 annual report, the auditor reveals that as at July 31, the same month the ATC board voted to go with the Gleneagles deal, its liabilities exceeded its assets by $76.2 million, casting doubt on its ability to continue as a going concern.

Inside sources says the bank was also instrumental in the sacking of Canam from the building project and its successor CMP was the bank’s preferred contractor to clean up the mess.

Croon said in the letter to Quinn he accepted the Gleneagles transaction took much longer than was hoped for or anticipated. 

“It was, however, equally obvious that it was a complex transaction with a number of post-sale protections and rights that was always going to take time.

“It was equally important that our lawyers made sure that the ATC was 100% protected in the future. Time taken in this transaction is a good thing, not a negative.”

Croon noted when it came to a board vote, Sumich and Turner took a commercial approach in agreeing the Gleneagles deal was the best way forward, with Quinn the only voice in opposition.

In his letter to Quinn, Croon claimed the resolution passed at the 2020 annual general meeting had been “wrongly interpreted.”

“The member sub-committee was appointed in an advisory capacity, and with the experience of the three members, was intended to make recommendations to the ATC board on the proposed sale. Your experience in the property market being the clear reason for your appointment – not your ability to negotiate or conclude a complex transaction.”

In his letter, Croon said the board could do without Quinn’s negative comments considering it was dealing with the ramifications of decisions made many years ago.

By Barry Lichter