Money not received because of what?

IT IS something everyone is working hard to avoid, but the dreaded Coronavirus is reported to have claimed its first harness racing victim…well, sort of.

Despite practising a form of social distancing, it appears the developer involved with the Globe Derby land sale has suffered from contagious virus in some degree.

Owing millions to the financially struggling club for more than a year (hence the social distancing reference), the developer’s latest account settling date was last Friday according to club President Anne Mowday.

Just to recap, with the club in millions of dollars debt the committee elected to sell a portion of its unused land to raise money.

As such, a section was sold to a developer with the proceeds to help reduce the club’s deficit.

The deadline for the money to be received was December 2018, but that passed without the funds arriving.

Since then the club’s Presidents have been issuing statements on a regular basis about how the money will arrive at “end of the month” or “very soon”.

Former President Richard Miller saw several “end of the month” timeframes pass by before losing his position.

Taking up the role late last year, Anne Mowday stated the club was due to receive the money by the end of January!

Mowday was positive the payment would arrive despite ASIC moving to “strike-off” the club’s development company GIC Globe Derby, along with other names associated with the developer in mid-January.

Shifting the goal post once again, Mowday stated the money was as good as in the bank by March 27.

As predicted, the money did not arrive, however, according to one curious participant Mowday responded to his text relating to the payment.

It appears payments cannot be electronically transferred due to Coronavirus.

“Settlement had been deferred to this week because of delays caused by corvid-19, but is booked in for this week. Anne”

When asked by the same participant if the money had been paid Vice President Chris Haskett offered “No our lawyer is still negotiating with GIC paper work is still proceeding.”

Haskett confirmed this during a phone interview from our office just moments ago.

Yesterday Mowday released a booklet which states the club is in $3.1million debt.

The remarkable news is between the developer and Harness Racing SA the club is owed almost the identical amount in $3.104, which will leave the club not only debt free but $4000 in surplus.

With the club finally out of debt – should the money be paid – after years of financial difficulty, Mowday then proposes to borrow $2million to help the club “further develop a workable business plan”.

Should the money owed not arrive, Mowday said the plan was to still borrow $2million and use some of it to chase the owed funds via lawyers.

“We remain hopeful the land settlement and the amounts owed by HRSA will be completed. But if not, these funds ($2million) will also give us the ability to pursue them legally for payment through this loan,” Mowday wrote.

The $2million will be at seven per cent interest over three years, with a reported higher interest rate of 12 per cent if the club fails to meet payments.

According to Mowday borrowing the $2million is the best way to “retire debt”.

Mowday did not explain what collateral the club will use to secure the loan or how the club will manage to make the loan payments given it has been unable to do so with its current loans.

For example, the club had previously borrowed $1million from a member, and due to interest on the loan, owes the same person approximately $1.8million according to figures supplied by a committee member.

The committee member also revealed Mowday’s proposal involved using the entire Globe Derby Park, including gaming machine licence, as collateral for the $2million loan.

Therefore, should the club fail to satisfy the loan Globe Derby Park will be become privately owned and may be lost to the industry.

With the club shutdown due to the Coronavirus restrictions, leaving it with no income or cash flow, and its problem of running at substantial losses during the past few years, the club’s ability to repay the $2million is “a major concern for the industry”.