Deal Paves Way for Sale of National Golf

Golf course operator American Golf Corp. reached a restructuring agreement with its lenders, while the company's chairman, David Price, agreed to support a sale of its chief landlord, National Golf Properties Inc.

The agreements follow a separate restructuring of National Golf's debts on June 28. Together, they help pave the way for the potential sale of both companies, which is being engineered by National Golf's interim chief executive, Charles "Skip" Paul.

Several months ago, American Golf, National Golf and several of their affiliates agreed to merge and seek new equity investment, after a slowdown in the golf business placed financial pressures on both.

However, the companies' interlocking interests and obligations complicated any transaction. Also, Price's financial entanglements with American Golf which he controls and conflicting interests in the two concerns made outside shareholders of National Golf nervous.

American Golf has agreed to collateralize its debts to National Golf Operating Partnership, Bank of America and certain American Golf noteholders with leasehold mortgages.

In return, the creditors have waived existing defaults and most potential future defaults until the pending reorganization of the companies takes place, or March 31, 2003.

American Golf agreed to make $24 million in payments to its creditors through March of 2003, while the creditors agreed to defer up to $24 million in rents.

Price pledged 3.6 million National Golf common shares and NGOP partnership units to Bank of America and American Golf noteholders, and granted a second deed of trust on a property that the company didn't identify.

Conor Dougherty

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