Taking stock in Cheval's future

© St. Petersburg Times, published July 28, 2000

LUTZ -- The date of Oct. 22 looms like a tornado on the calendar of Cheval Golf & Country Club Inc.

Three years ago, Oct. 22 was set as the trigger date for a fail-safe feature for investors in the new corporation. Anyone buying the stock could sell it back for a full refund after Oct. 22, 2000, and enjoy discounted club dues in the interim.

At least 190 shares were sold, for about $15,000 apiece. The money allowed the new corporation to buy the golf course and country club from Cheval's developer.

But today, the corporation is in no position to fulfill the stock buy-back. Instead, it's in U.S. Bankruptcy Court, trying to quickly reorganize before Oct. 22.

The value of each share is estimated now at $6,000.

"That's why everybody was going to have a run on the bank," said Robert Ableidinger, a retired manufacturing executive who is the country club's newest president.

Yet Ableidinger emphasized that the club went to court to reorganize. It plans to operate and thrive for years, he said.

One of the shareholders, Richard Gunderman, agreed.

"I do not believe that this is the demise of the club in any way," he said.

The corporation was formed in 1997 as Cheval's developer, Profundo Inc., sold off the last of its lots and headed for dissolution.

Residents liked the idea of local control.

"The thought of the country club not belonging to the neighborhood, I think, would be troubling," said Eddie Gomez, who bought a share.

Gomez, who was new to Cheval then, wanted to be involved.

"I think if you are generally interested in being a part of something, you kind of can't get halfway wet in the pool."

The new owners took over the club and on Oct. 22, 1997, gave management responsibility to Gary Koch Golf Inc., a company founded by the six-time PGA winner from Temple Terrace.

The new managers lasted only 10 months. The following August, Koch Golf withdrew by "mutual agreement," said Tony Mattera, the company's chief executive officer.

By the end of that fiscal year on March 31, 1999, the country club had lost more than $700,000, Ableidinger said.

"Cheval suffered from the learning curve of a new owner," the country club's attorney wrote in a document filed in Bankruptcy Court last week. In a hearing, Ableidinger said, "It appears to be apparent with hindsight that the original management company we had was not doing a very good job, for lack of a better term."

Mattera said the situation had been difficult, but he was surprised to hear that statement. Although Koch Golf quit managing golf clubs afterward, Mattera said he considered the Cheval experience a good one.

"I think we helped a lot of people out," he said. "We met a lot of good people there and helped them attain their goals."

During the next fiscal year, which ended last March, the club lost $89,000, Ableidinger said. Staff has been reduced.

He said shareholders realized the problems early on.

"When we lost the $700,000 to $800,000 and brought in the new management company, people knew things were not right in River City," Ableidinger said.

In the short term, shareholders face grim changes.

Cheval's reorganization plan, filed last week, schedules full payments to all creditors except the shareholders. A key benefit of their shares, a $75-per-share deduction from the country club's monthly dues, will be abolished.

The shares themselves are to be redefined and revalued, probably around $6,000 apiece. But even then, shareholders won't be able to promptly sell them for $6,000. They only will be allowed to pool their shares for sale to new buyers. A fifth of the pool's proceeds will go to the club, with the remainder divided among the share-sellers until they've received four-fifths of their share's value.

Ableidinger said several sets of shareholder meetings were held as the problems were sorted out. The club has lost some members.

But Ableidinger believes sentiment has become supportive, and most members are opting to keep their shares in expectation the value will rise over the years.

"The current condition, though it has an ugly flavor to it, is a necessary step," said Gomez, an executive with Ferman Chevrolet. "I'm strong in my belief that it's going to come out of this very strong."

"I think there was a sense that there was going to be an immediate decline, and over the long run, it would be fine," said Gunderman, a pediatric neurologist. "It's too good a club to fold."

Gunderman is an avid golfer who has played "at essentially every course in town." He said Cheval's course remains "wonderful" and the staff is "extremely good."

"The vast majority of the members are pleasant, communicative and nice people."

- Bill Coats can be reached at (813) 226-3469 or coats@sptimes.com.

'The learning curve'

Summer 1997: Residents form Cheval Golf and Country Club Inc. and begin selling shares for $15,000.

October 1997: The corporation buys the golf course and clubhouse complex and hires Gary Koch Golf Inc. to manage them.

August 1998: Koch Golf resigns.

March 1999: The country club ends its first full fiscal year with losses exceeding $700,000.

March 2000: The club ends its second fiscal year with losses of $89,000.

June 2000: The club files for reorganization in U.S. Bankruptcy Court.

August 2000: Judge Michael Williamson must decide whether to accept Cheval's plan.

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