Members Recommendation Report
Rosehill Bowling Club Amalgamation
Background
The Australian Turf Club (ATC) has been working on an amalgamation process with Rosehill
Bowling Club (RBC) prior to and since the AJC and STC clubs merged to form the ATC in Feb
2011. On 3 June 2015, both clubs executed a Memorandum of Understanding (MOU) outlining the terms of the proposed amalgamation.
The process is now in its final member’s approval stages with the RBC Board and Members having now respectively approved the amalgamation. A copy of the MOU is included in the documentation sent with the Notice of Meeting.
As a result of the favourable RBC Members vote on 28 June 2015, the ATC commissioned a detailed due diligence process which included:
I. Finance and Tax review by KPMG;
II. Property - Physical property and building report including a preliminary contamination assessment by KPMG;
III. Legal report carried out by club expert lawyers Pigott Stinson;
IV. Gaming and industry report by TGS a subsidiary of Tabcorp; and
V. Property survey report by Rygate surveyors.
These reports have resulted in a satisfactory risk profile, in the opinion of the ATC’s Executive and
Board, which has provided the necessary comfort to make a recommendation to the ATC’s members to ratify the amalgamation. Subject to the ATC members voting in favour of the amalgamation an application will be lodged with the Liquor and Gaming Authority to ratify the completion of the amalgamation which is estimated to take up to six (6) months.
In accordance with the terms of the MOU, members of the ATC are being asked to consider and approve the proposed amalgamation in accordance with section 17AEB(d) of the Registered
Clubs Act 1976 (NSW) (Registered Clubs Act), in the form of the resolution at Item 4 of the Items of Business in the accompanying Notice of Meeting.
ATC Summary Business Case in Support of the Amalgamation
The ATC proposes to utilise the existing RBC facilities to build both its expertise in registered club management and use the site as an asset to acquire poker machine licenses and build machine numbers to a critical mass that is proposed to provide significant revenue uplift to assist in the viability, and therefore financial viability, of a new registered “lifestyle” club facility to be constructed on the Rosehill Gardens Racecourse site – please refer Figure A - Masterplan
Massing and Figure B - Lifestyle Club facility below for indicative images of the proposed Rosehill
Gardens masterplan including the proposed Lifestyle Club. Over the next five years and beyond portions of the annual profits from the RBC will be reinvested in poker machine licenses and machines prior to approval of the new Rosehill Gardens masterplan which is targeted to commence within 5 years subject to rezoning approval.
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Figure A – Masterplan Massing
Figure B – Proposed New Lifestyle Club Facility on Rosehill Gardens Racecourse
In addition to the above the RBC site is strategically located on the corner of Hassel Street and
James Ruse Drive which is a gateway to both Parramatta CBD and the Camellia peninsula. This site has major rezoning potential with the current ATC masterplan indicatively proposing a 40 level residential tower with podium showroom – refer Figure C below for indicative masterplan of the
RBC site. The RBC site, along with the Rosehill Gardens Racecourse, will benefit significantly from construction of the proposed Parramatta Light Rail link to which the New South Wales State
Government committed $1 billion of funding as part of its election campaign. The rezoning and light rail would result in a significant uplift in land value from the sites current book value of $1.4 million as reported in RBC’s 2013/2014 audited accounts (subject to rezoning).
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Figure C – Indicative Perspective of Potential RBC Site Redevelopment
Rosehill Gardens Racecourse – indicative development scenario
RBC Site – indicative development scenario
The existing RBC club facility also provides a venue for racegoers both pre and post raceday.
There is a great opportunity to market to our racegoers to attend the venue pre and post racedays to avoid leakage of revenue to neighbouring venues such as the bar in the Rydges hotel opposite the course which currently captures a high percentage of post raceday patrons.
MOU Key Terms
1. An amalgamation of two registered clubs must be undertaken in accordance with the
Registered Clubs Act.
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The proposed amalgamation between ATC and RBC will involve the dissolution of RBC and the continuation of ATC.
The terms of the amalgamation are set out in the MOU.
A copy of the MOU signed on behalf of ATC and on behalf of RBC is included in the information sent to members with the Notice of Meeting and a copy of the MOU is also displayed on the ATC web page.
5. In the following paragraphs is a summary of the main features of the amalgamation as provided by the MOU. However members are encouraged to read and consider the MOU in its entirety and if they have any questions to direct them to Matt Galanos, Chief
Financial Officer & Company Secretary before the meeting.
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Strategic Benefit
6. As part of ATC’s strategic plan, the club is seeking additional income streams outside its core racing and wagering channels to allow a more diverse revenue base to fund its strategic objectives. Operating a registered club is seen as a natural extension of the club’s activities and mirrors similar operations in Melbourne and Brisbane, where some race clubs have registered club facilities.
7. The amalgamation for ATC is that it will secure for ATC a registered club site directly opposite Rosehill Gardens with all the usual facilities and amenities of a registered club including a club licence under the Liquor Act , gaming machines and gaming machine entitlements.
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In due course it is intended to relocate those club premises to Rosehill Gardens as part of the major redevelopment of the Rosehill Gardens site.
In the meantime the premises of RBC will be upgraded and promoted to increase patronage and revenue.
10. The amalgamated club will therefore operate from two premises being the club premises at Royal Randwick Racecourse and the club premises currently occupied by RBC, but in due course at Rosehill Gardens.
Operation of the RBC Premises
11. There will be an Advisory Committee for the RBC premises which will be able to make recommendations to the Board of ATC about the operations of the RBC premises, club grants attributable to the RBC premises, membership matters and the operation of the
RBC premises.
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The operation of bowls at the RBC premises will be conducted by sub clubs for men’s bowls and for women’s bowls. For the first three (3) years after completion of the amalgamation, have a budget of $5,000.00 per annum, to be increased by the Consumer
Price Index on each of anniversary of completion of the amalgamation.
The traditions and amenities of RBC will be maintained and will be carried over to the premises to be constructed at Rosehill Gardens and will include annual bowling presentations and competitions and the maintenance of honour boards and memorabilia, either in existing form or in an agreed electronic form.
ATC will maintain the current bowling activities of RBC. For a period of ten (10) years,
ATC will provide not less than two (2) bowling greens either at the current premises or at the proposed Rosehill Gardens premises. However, if the number of fully paid up Bowling members drops below thirty (30), the bowling greens may be reduced to one and if the number of Bowling members drops below fifteen (15), ATC may eliminate all bowling greens.
However, ATC will actively promote bowls, both at the existing RBC site and at the intended site at Rosehill Gardens as part of the promotion of the site and to increase revenue.
ATC also intends to invest approximately $200,000 to upgrade the RBC premises and facilities until the move to Rosehill Gardens.
For a period of ten (10) years from the date of completion of the amalgamation, the amalgamated club will not sell any of the existing thirty seven (37) gaming machine entitlements currently held by RBC. Indeed, it is the intention of ATC to increase the number of gaming machine entitlements and corresponding gaming machines at the RBC premises and in due course at Rosehill Gardens.
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Relocation to Rosehill Gardens
18. The timing of the relocation of the RBC club facilities and bowling greens to Rosehill
Gardens is not certain but it will not happen in under three (3) years from the date of completion of the amalgamation. Also, certain conditions precedent will have to be satisfied and they are:
· all relevant local council, financing and other consents have been obtained for the construction of a licensed club and two (2) bowling greens at Rosehill Gardens as part of the overall master plan for that site;
· an application to remove the club licence from the current RBC premises to Rosehill
Gardens has been granted by the Independent Liquor & Gaming Authority;
· the new club premises and two bowling greens have been constructed and fitted out ready to trade at Rosehill Gardens;
19. After the club facilities and bowling greens have been relocated to Rosehill Gardens, it is the present intention of the ATC Board to sell the RBC site.
RBC Employees
20.
· the Independent Liquor & Gaming Authority has approved a threshold increase for gaming machines in the Rosehill Gardens premises equivalent to the gaming machine threshold at the RBC premises at that time (currently thirty seven (37) gaming machine entitlements).
21.
All of RBC’s employees will be offered employment in the amalgamated club. Any employee of RBC who accepts the offer of employment with ATC will have continuity of employment from their employment with RBC. This means their accrued entitlements for holiday pay, long service leave and other entitlements will be preserved and honoured by
ATC as if their period of employment with RBC was employment with ATC.
Any employee of RBC who does not accept the offer of employment of ATC will be paid out their full entitlements when their employment with RBC comes to an end.
What happens if RBC is not viable?
22. If the RBC premises cease to be financially viable, the Board of ATC may cause it to cease trading.
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The formula for determining financial viability is set out in clauses 9.4 and 9.5 and
Schedule C to the MOU.
ATC does not have any intention to cease trading from the RBC premises other than for the purposes of transferring all trading and bowling activities to the proposed new club premises at Rosehill Gardens.
25. However, ATC would cease trading and/or would cease bowling activities if required by law to do so or if the RBC premises are destroyed and it was not economically viable to restore them.
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RBC Members
26. RBC members will be known as Rosehill Bowling Club members which will be a sub club of Ordinary membership under the ATC Club Rules.
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RBC members who become members of ATC will be able to use only the social Club facilities at Royal Randwick Racecourse as determined by the Board of ATC. However they will not have voting rights or the right to nominate for or hold office on the Board of
ATC. If RBC members wish to have more rights, they can transfer to another class of membership of ATC (if they qualify) and pay the higher subscription.
The following additional benefits will also be made available to current members of RBC who become members of ATC pursuant to this amalgamation:
· for one year from the date of completion of the amalgamation, these members will be entitled to a 25% discount on entry fees to all race meetings at Rosehill Gardens;
· life members of RBC will be recognised as life members of the RBC premises but because they will not be Life members of the amalgamated club they will be required to pay an annual subscription of $2.20 (being the minimum subscription required under the Registered Clubs Act );
· bowling members will receive an $85 discount on bowling fees for women and $95 discount on bowling fees for men for 5 years from the date of completion of the amalgamation.
Other Matters
29. There may be other matters which are of importance to individual members and if members have questions about these matters, they are asked to direct them Matt
Galanos, ATC Chief Financial Officer & Company Secretary who will either provide answers or seek appropriate legal advice in order to provide answers.
The Amalgamation Process
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Each club must hold a meeting of its members to approve the amalgamation by way of ordinary resolution in accordance with section 17AEB(d) of the Registered Clubs Act .
The members of RBC held a meeting on 28 June and overwhelmingly passed a resolution of this nature. The resolution for ATC members is being proposed in the form of the resolution at Item 4 of the Items of Business of the Notice of Meeting ( Resolution ).
Once ATC approves the Resolution, an application will be made to the Independent
Liquor and Gaming Authority for the transfer of RBC’s liquor licence to ATC in accordance with sections 60(6) and (7) of the Liquor Act 2007 (NSW) (Liquor Act) .
ATC will have the carriage of that application.
32. Once the approval of the Independent Liquor and Gaming Authority has been obtained
(and subject to due diligence being satisfied and all other necessary steps being completed) there will be a formal commercial settlement. On the day of that settlement the following things (among others) will happen:
· RBC will transfer all its assets to ATC;
· All members of RBC who have consented to become members of ATC will be admitted to membership of ATC;
· RBC employees who are offered and accept employment with ATC will become employees of ATC.
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33.
· the club licence under the Liquor Act held by RBC in respect of the premises at
Rosehill will be transferred to ATC (the gaming machine entitlements attach to that licence and will be transferred with it); and
· ATC will become responsible for the management of the amalgamated club and will be responsible for the debts and liabilities of RBC from that time on.
After completion of the amalgamation:
· RBC will proceed to a member-approved voluntary winding up;
· ATC will continue as the body corporate of the amalgamated club;
· The constitution of the amalgamated club will be the constitution of ATC;
· The Board of the amalgamated club will be the Board of Directors of ATC;
· The Chief Executive Officer and Secretary of the amalgamated club will be the Chief
Executive Officer and Secretary of ATC.; and
Procedural Matters
34. All Life and Ordinary members of ATC, other than Junior members and Employee members, Honorary, Temporary and Provisional members are eligible to attend this meeting and vote on the Resolution.
35.
· The RBC premises and facilities will become additional licensed club premises of
ATC.
To be passed, the Resolution requires approval by a simple majority (at least 50%) of those members who are present (either in person or by proxy) and entitled to vote on the
Resolution at the meeting.
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Further information regarding voting and proxy appointments is set out under the heading
“Information regarding Voting” in the Notice of Meeting.
The Board of RBC unanimously recommends that the members vote in favour of the
Resolution.
Recommendation
The ATC Board supports the proposed amalgamation and recommend that members of the ATC vote in favour of the amalgamation with Rosehill Bowling Club in accordance with the resolution listed in Item 4 of the Items of Business outlined in the Notice of Meeting.
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