Golf chain defaults but gets life raft
A federal judge has appointed a receiver, Atec Inc., to run the Golf Discount store chain, Mid-Rivers Golf Links and other properties associated with entrepreneur and former golf pro Ned Story.
Centrue Bank claims the companies defaulted on $20 million in loans, which came due early this month.
In asking for a receiver, the bank said the borrowers lack the money to keep the business operating until golfing picks up with warmer weather. The bank said it is "legitimately fearful that its collateral has been, is and will continue to be consumed, used or dissipated," according to documents filed with the U.S. district court in St. Louis. Judge Terry Adelman is hearing the case.
In court papers, the bank said it would fund the receiver, which should allow the businesses to continue operating. Golf Discount stores were open for business this week.
The default is another blow to Centrue. The bank lost $22 million in the first nine months of this year and 8 percent of its loans were behind in payments as of September, more than twice the level at similar banks.
The Federal Reserve last month banned the bank from paying dividends to shareholders and told it to clean up bad loans and improve its lending practices cash advance. The bank has $1.3 billion in assets.
Golf Discount, based in St. Peters, has 18 stores in seven states, including stores in Mehlville, Chesterfield, Ballwin and St. Peters. The bank said its loans are also secured by property at Old Hickory Golf Club and Mid-Rivers Golf Links, both in St. Peters, and golf properties near Kansas City and in Kansas, Arizona and Tennessee.
Story and officials of the golfing companies did not return phone calls.
It’s been a rough go for golf clubs in general, says Scott Hovis, executive director of the Missouri Golf Association. An association survey showed that golf club memberships fell 10 to 15 percent in 2008 in the state. Figures for last year are not yet available, but Hovis feels the business has "flattened," with little growth or shrinkage.
"Golf courses throughout America are struggling," he said, as the economy forces customers to cut back on luxuries. Still, club failures in Missouri have been few, said Hovis.