Auckland Trotting Club left to carry enormous debt as sale falls through

By Michael Guerin

Auckland Trotting Club bosses have heard the words they needed to provide security about the future of the industry after a crucial property deal has fallen through.

The ATC have been informed by Oyster Capital that after completing their due diligence that development company will not be going through with the $70million purchase of the Franklin Park training facility on the outskirts of Pukekohe.

The sale was expected to pay off most of the ATC’s $80million debt still hanging over the club after huge issues with the initial developer of their Alexandra Park buildings.

The ATC won a huge court judgement against that developer Canam, but that branch of Canam was placed into voluntary liquidation and the ATC has been left carrying the can.

The potential sale of Franklin Park was seen as the quickest way to pay most of that remaining debt off but the ATC will now have to start that process again in the New Year, all with an enormous interest bill adding up.

But most importantly they still have the support of their bank Westpac.

“When we told the bank the deal was off they said we have no reason to panic because they aren’t,” said ATC president James MacKinnon.

“The bank have been very supportive and they realise that we still have a lot of assets.

“We haven’t lost an asset through Oyster Capital pulling out, it just means this deal is off the table.

“We have instructed Colliers to inform other parties who were interested before Oyster Capital started their due diligence but if nothing comes of that the property will be re-advertised around February or March next year.

“We are getting close to Christmas and you don’t tend to get a lot people working on large property deals like this in December and January so it might be late summer before the process starts again.”

While the sale falling through creates uncertainty it also leaves the ATC having to pay an eye-watering $450,000 per month in interest, which is loaded on to their $80million-plus debt.

They have moved quickly to capitalise some of their remaining Alexandra Park assets with the commercial units they own at the base of the apartment buildings on the market.

“We have had instant interest in those and all together they could be worth as much as $25million,” says MacKinnon.

“That also helps with the bank, for them to see we have money coming in.”

The club is confident they will be able to sell Franklin Park and pay down the majority of its whopping debt and the most extreme action, the sale of Alexandra Park, is not on the table.

“Under the Auckland Unitary Plan it is a special use facility which primarily has to used for racing,” explains MacKinnon.

“To even start the process to get that changed could take years and we aren’t looking at that at all.

“We have enough assets to clear the debt but we are going to need help from the industry to help with our future.”

Even if the commercial units at Alexandra Park and then Franklin Park are eventually sold and the Auckland Trotting Club’s debts are paid off another issues remains in building a replacement training facility for Franklin Park to house and train horses.

Right now that feels like a problem for another day. 

But it is one that isn’t going to go away when and if the ATC solves its more immediate issues.