HISTORY OF BMGC POST 1996

 

 

In 1996 under the leadership of the then Chairman, Martin Brockington, the Committee decided to apply for a Sportlot grant to build a hanger and clubhouse as the existing facilities were deteriorating rapidly and were insufficient to meet the needs of the members.

 

Advisors indicated to us that our Sportlot application was destined to be turned down because Derrick Eckley (DE) and family owned the land on which the proposed hangar and clubhouse were to be built.

 

At this time, the Club hired the field from DE, purchased tugging services from The Tugging Company (also DE), it just owned the gliders housed in the hangar built and owned - being part of the freehold land - by DE.

 

The Committee decided to look to the long-term direction and security of the Club and entered into negotiations with Derrick for the purchase of the airfield land (approx 29 acres) and The Tugging Company business. A year later, agreement was reached with Derrick and the purchase of land and tug business was finalised

 

 

Finance was raised as follows:

 

Business Mortgage

60,000

Two Flexible business loans

30,000

Debentures 

81,800

Member loan to BMGC

28,000

 

 

Total  

199,800

                                                                

 

 

Expenditure:

 

Land

140,000

Tug Business

30,000

Hangar and clubhouse         30%

Of Sportlot grant               

21,000

Legal fees in setting up TAL    

8,800

 

 

Total  

199,800

 

         

At significant cost legal advice was sought and in due course it was decided that two companies were needed to provide the correct structure, tax effectiveness, security for share (debentures) holders and the ordinary members and officers of the gliding operation.

 

In order to protect the debenture stockholders Talgarth Airfield Limited (TAL) was created to become owner of the land with three directors and three trustees. This Limited Company ring fenced the debenture holders stock and provided protection in the event of BMGC as a club failing and its assets thus automatically becoming the property of the BGA. In effect TAL gave BMGC a lease of 99 years and would collect rent from BMGC for the use of the airfield.

 

To explain why things were structured the way they were: -

 

a)       BMGC was in a poor state financially and there was a significant risk that it could fold as a business if it were more financially loaded - in effect it needed to be able to buy in its services of airfield and tug as before - the airfield could be rented from TAL, the Tugging Company invoice was to be replaced by a mortgage repayment.

 

b)       The Committee was asking people to put money into a project - the only tangible asset that could be offered as collateral or security for them was the inherent value of the airfield land - thus this asset needed to be managed separately.

 

c)                 Sportlot would only entertain bids for grants involving property development when the land was owned by the bidder Society/Club/Company and where no situation could arise whereby it could be viewed that a single family or individual would be seen to benefit from the grant.

 

In the meantime Company Law has altered relative to the trade between "linked" companies. Nevertheless the main principles still stood.

         

 

There was a need to prevent the potential scenario whereby any of the following could be set up: -

 

i)        The land being taken into the control of the BGA following any collapse of the Club

ii)       A small group, or an individual, being able to gain ownership of the airfield against the wishes of the majority of the Gliding Club members

iii)       In the short term, the financial value of the gliding club being inflated by the value of the land.

iv)      The situation where debenture holders would see that they jointly and severally owned the gliding club equipment as well as the field, or were entitled to a profit share / dividend resulting from BMGC activity.

 

 

In summary two companies were established:

 

TAL - owning and keeping the field fenced and in condition - renting that serviced field to the Gliding Club on a long-term agreement.

 

BMGC - hiring the field from TAL, owning the flying kit, owning and running the tugging facility, putting up buildings, running the Club operation totally.

 

Both Companies have a similar structure as regards needs for directors etc - however TAL is effectively "subservient" to BMGC - this because only BMGC members can act as TAL directors. This is a critical point - if the BMGC members see something happening in TAL (the debenture holders effectively) which they do not consider acceptable, the relatively simple step of managing that is via the director selection/dismissal route. Remember that with the passage of time, it is quite feasible to have a BMGC and TAL directorship that has not one debenture between them thus no vested interests in play.

 

TAL was born in the full knowledge that it was effectively a transient company that provides protection for the debenture holders until the last debenture is paid off. The edges of the two Companies have been blended somewhat over the years. As soon as all debentures are cleared, TAL can be "hived into" BMGC and cease to exist or operate. In the meantime, the existence of TAL does not pose any negative aspects to the debenture members - just an additional paperwork load for the committee.

 

Much has happened since we took over running the club on behalf of the members The old hangar has gone as is the caravan and wooden buildings around the oak tree and in its place we have a new hangar and club house. When we started in 1998 our turnover was £45,000 and our liabilities amounted to £209,000 we had no track record and a great deal of our business plan was based on a wing and a prayer. We now have a turnover of £108,000 and liabilities of  £91,000, in effect we have more than doubled our turnover and more than halved our liabilities over a period of 7 years. Our track record with the bank and our trade creditors is excellent as is our image as a well-run gliding club.

 

 

Don Gosden

 

Treasurer

 

BMGC AGM 2006