The group has requested a court order for a reappraisal of their shares, which they contend are worth tens of thousands of dollars more than the value assigned to them at the time of the club’s sale to McConnell Golf last fall.
Seven former members of the County Club of Asheville (N.C.) are requesting a court order to appraise the value of the membership shares they forfeited after the club’s sale last November, the Asheville Citizen-Times reported.
The oldest private club in North Carolina, with a golf course designed and built by Donald Ross in 1928, was sold, through a 222-96 vote of members, (http://clubandresortbusiness.com/2014/11/21/members-approve-sale-cc-asheville-n-c/) to John McConnell, President and owner of Raleigh, N.C.-based McConnell Golf, which operates 11 properties in North and South Carolina.
The former members requesting the court order feel they have not received fair-value compensation for their former shares, Robert Lewis, an Asheville resident who had been a member since 1956, told the Citizen-Times.
“A willing buyer and a willing seller reached an agreement on the sale of the property,” Lewis said. “They agreed on the market price. The evidence is fairly simple. We did not get fair-market value for our shares as shareholders.”
The group contends their shares are worth tens of thousands of dollars more than the value assigned to them at the time of the sale, the Citizen-Times reported.
The club purchase agreement valued each membership share at $300, said Paul Farago, an Asheville acupuncturist, who is among the former members pursuing the appraisal. “We feel all of the members’ shares are worth much more,” Farago told the Citizen-Times.
The country club comprises hundreds of acres in the high-end real estate area of North Asheville, Farago noted.
Lewis added that former and current club members received “nowhere near the value of our shares” for that amount of land, which also includes a clubhouse and several tennis courts.
Board members initiated discussions last June for the club’s potential sale due to increasing costs and concerns that the club would not be able to make debt payments, club President Ralph Damato said in November.
Damato did not return a phone message left by the Citizen-Times.
Under the sale agreement, McConnell pledged to invest $4 million during the next three years for renovations that would encompass improvements to the clubhouse, greens and facilities.
McConnell also assumed up to $2.3 million of club debt, according to country club documents obtained by the Citizen-Times.
And McConnell agreed to spend an additional $150,000 each year for 10 years for capital improvements, those documents state.
An appraisal of the club put the organization’s value “as an ongoing concern at $4.9 million,” according to the documents.
North Carolina state law allows shareholders who don’t agree to an offer for their company to pursue legal recourse to establish fair value of their shares, Ronald Payne, an Asheville lawyer who is among the seven former members seeking legal redress, told the Citizen-Times.
That value may be determined by a court-appointed appraiser, Payne said.
“This is not a commonplace event,” Payne said, explaining why he could not offer a time line for when an appraisal might occur.
McConnell told the Citizen-Times that he hasn’t encountered this legal situation during prior golf-course acquisitions. But, McConnell added, the lawsuit “doesn’t have anything to do with us. The former corporation would be paying” whatever value an appraiser might assign to the shares, he noted.
Farago conceded that possibility could then exist, however, that the former country club corporation might not have enough money to pay additional value. Lewis, however, said that the state statute includes a mechanism that ensures shareholders would receive their money.
A complaint filed on April 10 in Buncombe County Superior Court lists the country club as the plaintiff and Lewis, Farago, Payne, David Gray, Jeffrey Owen, Philip Smith and David Wilkerson as defendants.
The complaint also lists Dr. William Young as a defendant, but a court official said Young no longer is part of the suit.
Country club officials request the court “determine the ‘fair value’ of a share of its stock as of November 18,” according to the complaint.
Clifford Marshall Jr., a lawyer at the Asheville firm of Marshall, Roth & Gregory, who is representing the club, declined comment “since the matter is in litigation,” the Citizen-Times reported.
No hearing is currently scheduled, Marshall added.
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