Three local developers sue to halt the pending sale of the cash-strapped Feather Sound Country Club after its board rebuffs their purchase offer.
By WILLIAM R. LEVESQUE
Published October 20, 2004
The Feather Sound Country Club might not meet its payroll this week. Membership is down. It's struggling to repay debts. A buyer is needed to keep it out of bankruptcy.
Question is: Who will save one of Pinellas' best-known private golf and tennis clubs?
An unusual public airing of the member-owned club's finances took place in a Pinellas courtroom last week as three of the area's best-known developers, club members all, asked a judge to block a pending $7-million sale of Feather Sound to MW Development Services, whose officers live in Kentucky.
The developers, Fred Bullard, Ian Irwin and Gary Markel, want to buy the club with another investor, the Echelon Group, and they say the club's board has poisoned shareholders against them.
The dispute is scheduled to move out of the courtroom and into mediation today when the sides meet to determine the immediate fate of the club, which includes an 18-hole course, tennis courts, pool and dining facility.
Bullard, Irwin and Markel sued Sept. 30, alleging a variety of irregularities with the pending sale, including the board's alleged manipulation of a shareholder election last month to assure approval of a lower offer by MW Development.
The club, which has been relying on loans and assessments of its dwindling membership to stay afloat, has signed a contract with MW Development but has not closed.
The local developers say their offer of at least $7.4-million would bring shareholders of the club at least $200 more profit for every share owned, or $1,500 per share.
The board, through its attorney, denies the allegations of manipulation, saying MW's offer was better, though few specifics of the deal were offered in court.
The developers say they wouldn't oppose a sale to MW Development if the process had been fair.
"This is about the best interest of the shareholders," said Bullard, the developer who built Feather Sound and who sold it to members in 1980.
He and Markel own homes on the golf course.
"None of us has an ambition to own the club other than to keep it in local hands," he said. "We live here. I think we'd have more emotion and desire to see the club run in a good manner."
Kevin Woods, a lawyer for the club, said the developers simply lost their bid to buy the club and want to manufacture another chance. He said the club did nothing improper.
"They are going to find fault until we're in bankruptcy . . . and they can buy the company themselves," he said.
For the private club, whose membership is at an all-time low, the stakes could not be higher.
At a hearing Friday, club president Michael Lloyd said the club didn't have enough money to meet its payroll this week and a sale of all Feather Sound assets is the only way to get the club back into the black and keep it open for its 220 members.
That membership figure is down at least 130 from several years ago.
"The club is out of money," Woods said. "When we're on the verge of saving the corporation . . . we get sued."
The developers accuse the club's board of failing to fully inform members about competing offers and rushing through a sale to MW Development.
One of their central complaints is a decision by Feather Sound's board in the weeks leading up to a critical shareholder vote on MW Development's offer to sell 251 outstanding shares of the club to a member who supported the sale to the company.
The board ratified the sale of those shares Sept. 28, just hours before a vote on the sale.
With shareholders able to cast one vote for each share they own, that member's 251 shares tilted the vote in favor of a sale to MW Development, the developers say. An Aug. 19 vote on a different MW offer had been rejected by shareholders.
Henry Hale, the member who bought those shares for $188,250, or $750 per share, said he did so because the club needed an immediate infusion of cash to continue operating. Hale said he wanted to help the club, and he denied his purchase was concocted by the board to seal the sale to MW Development.
"It was my idea," he said.
Steve Dupre, a lawyer for the developers, said Markel offered to pay the club double Hale's price for the same shares. The suit said the club bought the shares from a member years ago for $2,600 each, far above the Hale sales price.
At least part of the board's opposition to a deal with the local businessmen, according to the developers, is that some members think three of the area's best-known developers could hardly resist the temptation to plow over the club's property and develop it.
Bullard and Irwin dismissed the idea as ridiculous, saying the course's zoning prevents it. They propose developing condos on a small part of the property where a maintenance building sits, an option zoning allows and something open to MW Development, they said.
"We're doing this for the club first," said Irwin, developer of Vinoy Place in downtown St. Petersburg. "There's always going to be a golf course there. Under existing zoning, to take that course and plow it up for development is just impossible anyway."
Lloyd, the board president, did not discuss that issue at Friday's hearing and declined to comment, saying the club's attorney does not want him or the board to discuss the litigation.
Bullard began building Feather Sound in 1973, carving a country club subdivision from 1,135 acres he bought from the estate of land baron Ed C. Wright for about $7.5-million.
The club is north of St. Petersburg, near Ulmerton Road and the Howard Franklin Bridge, in unincorporated Pinellas County.
Membership was coveted across the Tampa Bay area. But the developers say financial problems began two to three years ago and members have been asked on occasion to cover operating shortfalls by paying assessments.
A decision by the club in 2003 to take out a $5-million loan to improve its facilities appears to have put financial pressure on Feather Sound.
Members were assessed $1,200 this year to keep the club afloat. Another assessment followed in July. That is in addition to monthly dues of about $365.
"Members have resigned in reaction to those assessments," the lawsuit states. "Those resignations result in an ever-increasing financial burden on the remaining Feather Sound members."
MW Development officials, who operate six golf clubs, declined to comment.
Irwin said he doesn't understand why the board has been so quick to turn its back on a local purchase offer from members who have been part of the club for two decades. "That's the $64,000 question," he said. "We're really quite amazed."
