K Club in the rough as new accounts reveal €20m loss
THE future of Ireland's most prestigious golf complex, the K Club, is uncertain as the property owned by Dr Michael Smurfit and developer Gerry Gannon struggles to pay off bank loans and escape large losses.
The latest financials from the company behind the Ryder Cup venue show annual losses of €6.5m for 2009 and the company reveals that operating losses will continue in 2010 and 2011 too. A bank loan, believed to be from Irish Nationwide, is now repayable on demand as the group behind the club "has not met all interest and capital repayments'' under an agreement with its lender.
The loan and accompanying security have been transferred to NAMA and a business plan has also been submitted. The scale of the losses is likely to put further pressure on the company, which is owned by Mr Gannon and Dr Smurfit.
According to the balance sheet, the firm is sitting on accumulated losses of €19.9m. Dr Smurfit was not available to comment on the future of the complex yesterday, although he has told the Irish Independent previously he remains a backer of the facility.
The club in Straffan, Co Kildare, has been hit by the general economic downturn, lower tourist numbers, and intense competition from similar golf venues.
The failure, so far, of NAMA to pass the K Club's business plan "indicates a significant uncertainty'' over the company's ability to continue as a going concern, say the accounts.
The accounts state that the carrying value of the K Club is "not supported by an external valuation or a detailed valuation appraisal''.
The directors believe current values of similar venues are not relevant as there is no sale plan.
Shareholders, believed to be mainly Dr Smurfit, have been pumping money directly into the business.
According to the accounts there was a shareholder's loan of €5.3m in the business at the end of 2009, up from €2.5m in the previous financial period.
A number of bank loans due to be repaid in 2015, explain the accounts, are now repayable within one year "as a result of a breach of covenant conditions''.
The current pressures on the club's finances are a long way from its greatest moment in 2006 when it hosted the Ryder Cup.
Dr Smurfit was a major participant in the event, greeting the players at the Kildare venue.