Frat Club's $9 million offer to avert bankruptcy

By Mario Christodoulou
Updated November 5 2012 - 6:11pm, first published August 11 2008 - 11:45am
The Fraternity Club at Fairy Meadow, which will close its doors unless members approve a $9 million offer from an Illawarra developer.
The Fraternity Club at Fairy Meadow, which will close its doors unless members approve a $9 million offer from an Illawarra developer.

Fairy Meadow's Fraternity Club is on the verge of selling its premises to an Illawarra developer in an effort to stave off financial ruin.Chief executive officer Albert Palamera said the club would close its doors for good unless members endorsed a $9 million offer to buy and redevelop the land.The club's "saviour" is 75-year-old developer Frank Capocchano. The Albion Park man, who was voted on to the club's board at the weekend, has offered to develop the land into retirement villas or student accommodation, then lease it back to the club for more than $20,000 a week.Mr Palamera said members had no choice but to endorse the deal if they wanted the 56-year-old club to survive."This is the last hope for the club ... this is the only lifeline we have got," he said.But not everyone agrees. Board member Attilio Tomasi said there were a number of alternatives that had not been fully explored."I still believe that there are other options," he said.Crippled by two high interest bank loans and riddled with factional infighting, the club has struggled to service its million-dollar debt since it came out of receivership last year.The latest offer has been endorsed by the majority of the club's board, but needs to be rubber-stamped by members to go ahead."It will go in front of the members through the proper legal process - the members will have all the information before them to make a decision," Mr Palamera said.Mr Capocchano's development plans, however, could be blocked by Wollongong City Council, which has labelled the land as flood prone. In March, a previous attempt by the club to sell a portion of the car park collapsed after the flooding issues were raised.The club's battle for survival stretches back to November 2006 when it filed for voluntary administration with debts of $11 million.It survived only after anonymous investors, including businessmen from the Italian community, came to its rescue with a $2.2 million loan.But when the loan collapsed earlier this year, the club secured two emergency high interest loans.A number of resignations have also rocked the board amid claims of factional infighting.The 10,000-member organisation was set up by a handful of Italian immigrants in 1956.Members will vote on the latest offer in September.Mr Capocchano was unavailable for comment.

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