As a lot of readers are no doubt aware, Gold Circle are experiencing financial difficulties to the extent that they have called for a Special General Meeting to be held on 18 June, writes Chris Evans in the Sporting Post Mailbag.
In a nutshell they are looking to the members to vote for the release of the funds that are sitting in deposits, ring-fenced from the sale of Clairwood Racecourse.
This amount is just over R200m.
On Thursday evening the members received a letter from Mr Nicholas Jonsson giving passionate views on why the meeting should be delayed.
It was a very comprehensive and professionally written document that stated the situation from his viewpoint.
On 11 June 2020, Gold Circle Member and leading owner Nick Jonsson wrote:
Dear Friends and fellow Gold Circle members,
Although I do not hold any position in Gold Circle, I am a Life Member and am emotionally invested in this wonderful sport of horse racing with around 60 horses in training.
My great grandfather was a founder steward of the Durban Turf Club and my father Ben Jonsson being a well-known and committed racing man, having been a past chairman of the KZN Owners and Trainers Association, later chairman of the KZN Local Executive of the Jockey Club and for many years chairman of the SA Jockey’s Academy. So I write to you in my personal capacity, supported by a number of Gold Circle members, as a passionate racing man.
Attached is a letter that was sent to the Gold Circle Board this morning on behalf of me and others to ask the Board to delay the Special General Meeting which is scheduled to take place next week.
The background to this is clear: they are wanting us (the members) to remove any impediment in the constitution and the MOI that very cleverly safeguards the ringfenced funds from the sale of the Clairwood property.
This is an outrageous request which needs vigorous debate and one that must be halted forthwith.
The Board and Management of Gold Circle have got themselves into a financial predicament. Although the Covid-19 crisis has obviously worsened it, the losses and financial issues that have befallen Gold Circle are not new. There must surely be questions asked as to the competence of the Board and Management?
The Board have not shared any meaningful strategy with us that details how they intend to deal with this situation or that gives us any confidence in the way forward, except to ask us to release to them in excess of R200,000,000. This is completely unacceptable to me and others.
These funds were not intended to be used to prop up operational losses. Obviously there might well be good reason to release a portion of the funds in some form, under very strict conditions, but this needs to be discussed and debated amongst interested and affected members.
We cannot accept that the format of the meeting that has been proposed will give us the opportunity to question Management and Board Members sufficiently, to then enable us to make an informed decision.
In my view there are certainly other more appropriate ways of dealing with this financial situation.
My sincere hope is that the Board sees the merits of and accepts my letter, and agrees to postpone this very important meeting.
Failing that, I urge you to make sure that you vote AGAINST the Special Resolutions. These votes need to be in by 5.00pm tomorrow, Friday 12th June.
Please also cc your emailed votes to Peter Gibson so we can keep a tally of the votes.
Sadly, and in my opinion wrongly, Gold Circle gave up using their auditors, KPMG, to count these votes some time ago. Peter Gibson’s email is [email protected]
Thank you in advance for “doing the right thing” and supporting us in this mission to help and sort this mess out.
Chris Evans continues in the SP Mailbag:
The reason for me writing is not to back up Mr.Jonsson’s views nor disagree with them.
The reason I am writing is that I am completely incensed with the way the Gold Circle Chairman reacted to the sending of the communication and the disparaging remarks directed to Mr Peter Gibson, a long time and respected contributor to horse racing in SA.
Hollywoodbets Greyville (Pic – Candiese Lenferna)
On 12 June 2020, Gold Circle Chairman Neil Butcher addressed this letter to Gold Circle Members:
The Board of Gold Circle has been made aware that an electronic mail sent by Mr Nic Jonsson has been circulated to all Club Members, the content of which casts aspersions on the competence of the Board of Directors and its Management.
Also included with the electronic mail was a copy of a letter from attorneys Garlicke & Bousfield addressed to “Gold Circle Racing”, on behalf of Mr Jonsson and Others (unnamed), containing a threat of legal action should the Directors proceed with the convening of a Special General Meeting on 18 June 2020 in terms of the due Notice being given to Club Members.
The Board wishes to assure Members that it did not authorise the distribution of Members’ details to Mr Jonsson. This unauthorised distribution was engineered by a member of the Board, Mr Peter Gibson, who in doing so, acted in conflict with his duties and obligations as a Director, as well as in conflict with the Companies Act.
This distribution would be deemed a criminal offence had the Protection of Personal Information Act which has been signed into law become of force and effect. As Members are aware, the enactment of this legislation, which was approved in Parliament, has been delayed because of the pandemic.
As recently advised to Club Members, the demise of Phumelela and the Covid pandemic have had a significant impact on horseracing and betting incomes having been closed from 26 March 2020 through to 3 June 2020. The lack of a revenue base and the necessity to carry a large overhead cost has had a major negative impact on cashflow and the company’s ability to raise alternative financial resources to manage the company out of the currentcrisis.
To counter the effects of the negative financial impact on the company, the Board and Management have continuously reviewed and set operational strategies which has resulted in several business restructures all of which have rationalized and reduced the operational cost of providing racing surfaces, infrastructure and training facilities in KZN.
It is no secret that KZN provides sought-after racing and training opportunities where Gold Circle continues to offer Owners and Trainers the best facilities in the country.
In keeping with its Objectives and Mission, Gold Circle, being a non-profit company, has continued to use operational surpluses to fund increases in stakes paid to Owners and it is proud of its achievement of paying the highest stake levels in the country.
The clear intention behind the ring-fencing of part of the proceeds from the sale of Clairwood Park was to preserve investment funding for the future of racing in KZN.
National disasters were not envisaged at the time that the decision to ring-fence funding was taken when expectations were that a normal business environment was envisaged for the future. The future sustainability of horseracing in KZN is at risk and the Board of Directors and Management once again seek the support of Club Members to release the ring-fenced investment funds to ensure that the company is able to steer the ship into calmer financial waters.
The Board is proud of its achievements but cannot disregard its fiduciary duties and will have no choice but to file for business rescue should funds not be made available for the continuation of horseracing in KZN. The Board has exhausted all potential avenues of raising funds as all lenders require security which the Board cannot supply without being in breach of its Memorandum of Incorporation.
In the event that Members have already lodged a proxy for the meeting and now wish to withdraw their proxy to change their vote, please do so by giving notice in writing to the Club Secretary and the proxy holder by the deadline of 17h00 for submission of proxies. Members who withdraw their proxies to change their vote are welcome also to lodge new proxies by the deadline of 17h00.
Registrations for the Special General Meeting close at 16h00 on Tuesday, 16 June 2020.
Members can register by emailing Melinne Nathram at [email protected].
Members are encouraged to register and join the meeting with a view to gaining a greater understanding of the background to the resolutions and to make their own personal informed decision. Following registration, Members will be provided with all the necessary details in order to participate. We encourage all Members to avail themselves of the opportunity to join the meeting.
Yours in racing,
NP BUTCHER
CHAIRMAN
Chris Evan continues in the SP Mailbag:
In my opinion to make the statement, ‘The distribution would be deemed a criminal offense had the Protection of Personal information Act become force and effect’, is a slight on Mr Gibson’s character.
- Fact 1.The act of sharing the email information is not a criminal act because as the Chairman says it is not in force and effect, so why mention it?
- Fact 2.I think every member is allowed to hear the view, other than the Board’s view, particularly from a respected and known lover of racing.
As I said in the beginning – the purpose of this letter is to express my unhappiness and that of the many people I have spoken to within racing about the tone and high-handedness of the Gold Circle reply.
Was the act criminal or commendable?
