Members unaware that ATC had already signed an exclusive agreement on the sale of land

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

When the TAC Board of Directors presented a motion to the AGM on October 21, 2020, authorizing it and a three-person committee to sell the land, none of the members knew that one day earlier, the club’s CEO Mauro Barsi had signed a deal. which gave the exclusive rights to the Sydney financial firm Gleneagle Securities.

The deal, launched to prevent a possible discount on the club’s assets, was not disclosed to members but was well under way.

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

The deal included not only a $ 50 million price tag, but details such as the size and timing of the progress payments, which would run until June 2023, the demolition of the Epsom booth, landscaping and road construction.

A clause in the conditions sheet, stating that ATC was not allowed to deal with any other party for 90 days, then infuriated one of the three appointed committee members, former club president Terry Quinn .

Quinn and his fellow ATC members Mark Sumich and David Turner were supposed to “enter into negotiations and complete, execute and execute all documents and deeds necessary to sell the 15,000 square meters of land” to reduce debt. club bank resulting from the development project. .

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

“We haven’t had any effective input,” Quinn said. “We found out about the Gleneagles deal sometime before last Christmas and they didn’t tell us when the exclusivity was over.

“The property should have been tendered, like the land we sold to Manukau Rd and the land sold by the Auckland Racing Club. We had meetings with Barsi and (club president) Rod Croon when we repeatedly asked to do so.

At the end of July 2021, when the board of directors and the subcommittee met to vote on the Gleneagles deal, there was no sale and purchase agreement, only an unsigned draft from the month of December. precedent, which was clearly obsolete, and a host of special clauses.

No independent legal peer review has ever been carried out, as Quinn had requested.

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

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

Auckland Trotting Club Apartments

Transaction used as leverage with the bank

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

“Our financial situation with Westpac had a major influence on our decision to continue negotiations with Gleneagles and the agreement was used – at various times – as leverage to gain their continued support.

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

“If we had lost Gleneagles and gone into the open market without getting a satisfactory offer, Westpac would have forced a sale by a mortgagee not only on that property, but potentially on all of the securities in which they held title. While I don’t mind a legitimate strategy bet, the stakes in this case were just too high. “

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

In the 2021 annual report, the auditor reveals that as of July 31, the same month that ATC’s board of directors voted in favor of the Gleneagles deal, its liabilities exceeded its assets by $ 76.2 million. dollars, casting doubt on its ability to continue operating.

Inside sources say the bank was also instrumental in sacking Canam from the construction project and his successor CMP was the bank’s preferred contractor to clean up the mess.

Croon said in the letter to Quinn that he accepts that the Gleneagles transaction has taken much longer than expected or anticipated.

Croon rod

“However, it was equally evident that this was a complex transaction with a number of aftermarket protections and rights that would always take time.

“It was equally important that our lawyers ensure that ATC is 100% protected in the future. The time taken in this transaction is a good thing, not a disadvantage.

Croon noted that at the time of the board vote, Sumich and Turner took a business approach by agreeing that the Gleneagles deal was the best way forward, with Quinn being the sole voice of the opposition.

In his letter to Quinn, Croon claimed that the resolution passed at the 2020 AGM was “misinterpreted”.

“The Membership Sub-Committee was appointed in an advisory capacity and, based on the experience of the three members, was intended to make recommendations to the TAC Board of Directors on the proposed sale. Your experience in the real estate market being the obvious reason for your appointment – not your ability to negotiate or close a complex transaction.

In his letter, Croon said the board could dispense with Quinn’s negative comments given he was dealing with the ramifications of decisions made many years ago.

By Barry Lichter