The St George’s Club could be sold before the end of the year — but members of the club have voiced serious concerns.

According to a letter sent to members on October 27, a local hotelier — believed to be the group behind the Grotto Bay Beach Resort — had proposed “investing a significant sum” into refurbishing the club and taking over management of the resort.

However, in order for the sale to go ahead the club must pay off more than $3 million of debt, leaving members concerned that they will be footing the bill.

The letter from management stated: “The club has been in discussion with the Government of Bermuda and the Member’s Advisory Committee on this topic for many months and we have come to the conclusion that the best way forward is to offer each member a clear choice so as to ensure that the St George’s Club is unencumbered by debt which is a stated requirement of the investor prior to their investment.”

According to the letter, members were given the choice of remaining members, with a final portion of the accumulated debt levied as a “special assessment”, or buy out their agreements with the club.

“The St George’s Club management have advised the Government of Bermuda at every step of this discussion and they have been in direct communication with the investor. The investor has a very aggressive timescale for this project of the beginning of 2017 and we are all working towards this for the good of everyone involved,” the letter stated.

A subsequent letter to members from the MAC stated the present owners and managers of the club were told by the Minister of Tourism they must pay $3.5 million in debts before the sale can go ahead.

“The MAC has argued, in the past and present, that we have no responsibility for these debts because of incorrect accounting and management issues,” the letter stated.

“The potential new owners, the Grotto Bay Beach Resort, have conditioned their purchase on the same ‘debt free’ status.”

A letter to members, signed by Senator Michael Fahy, the Minister of Tourism, Transport and Municipalities, dated December 1, also stated that while there is a buyer interested in the club, they wanted the property in a “debt-free position”.

“It is envisioned that one of the ways to help clear the debt of the SGC is by way of a ‘special assessment’,” the letter states. “The Ministry’s position is that both the MAC (on behalf of the membership) and the developing owner must agree on the terms and conditions of such an assessment before being levied.”

The letter concludes: “It is our sincerest hope that you, the membership who love Bermuda and wish to return year after year, may do so and, that those members who would prefer to terminate their commitment to the SGC, can do so by paying an exit fee.

“We believe a sale and the imposition of the above, including an agreed special assessment will guarantee the future success of the SGC. We accordingly encourage members to accept the above.”

In recent days several members however have expressed serious concerns about the handling of the proposed sale. One member told The Royal Gazette: “To many of us, it appears they are attempting to pay down this debt to avoid bankruptcy. There are not enough members to possibly retire this debt and we do not see how this is our responsibility.

“The larger question that has the members most frustrated are the unknowns. If we stay, and the debt is not paid in full, does the club default and all our agreements are null and void? If we stay, when will the new owners contact us and provide new legal agreements?”

Another member noted that their purchase agreement specified which cottage they would stay in, explaining: “This is important because amenities in some cottages are greater than others.

“Nothing has been said about compensation for loss of rights to use for members. Nothing in the contract of purchase states there was an obligation to pay for prior or future debt incurred by the club management. The owner/managers allude to a change in time share law that allows them to make members pay special assessments to accommodate past and future debt.”

Responding to their concerns, John Kyle of the SGC said that the sale is not a done deal, adding that if it does go through the rights of all the club’s members would be protected.

“Any talk of a sale is purely speculative at this stage,” he said. “It is getting to a point beyond just being interested, but there is nothing on paper.

“It is not going to affect the members. Their rights will be protected.”

Asked if the assessment was unrelated to the sale: “To be honest, it stimulated it because it gave us the ability to do it.

“Basically, Club Operations, the member’s side of the business, built up a debt and we are trying to reduce it to make the business sustainable. Under Timeshare law we can ask for a special assessment which we have done. We have agreed with Government that there is going to be a special assessment, actual amount to be approved. This will be less than a current annual assessment fee and the developer will pay their share of this too.”

And regarding the change to a hotel model, he noted that the club is already operating more than 50 per cent as a hotel.

On the subject of the buy-out offer presented to the members, he said: “We felt that it was good to offer a lot of our members, many of whom are elderly and cannot travel so often, the opportunity to buy out their contract. It is standard timeshare practice and relieves a member of the financial burden of ongoing fees. It is based on the size, type and length of lease left on unit but is not much more than an annual assessment fee in most cases.”

A spokesman for the Ministry of Tourism, Transport and Municipalities said: “The ministry has been working diligently to assist the current owners of the St George’s Club and the Members Advisory Committee over the past few months in a number of areas. Discussions are ongoing, so it would be premature to comment further at this time.”