ClubCorp Holdings Inc.'s board of directors has established a strategic review committee to evaluate ways to enhance shareholder value, according to a press release from the Dallas-based public company.
ClubCorp owns 200 golf and country clubs in 26 states, the District of Columbia and two other countries. Many of the clubs have a health club component within them.
The committee, made up of independent directors, is working with financial advisors Jefferies LLC and Wells Fargo Securities LLC to evaluate options that might include a sale of the company or conversion of its real estate to a real estate investment trust, according to Reuters, which broke the story on Thursday prior to the release of the ClubCorp statement.
In September, FourFront Capital Group LLC, an active investor in ClubCorp since soon after ClubCorp went public in September 2013, sent a letter to ClubCorp CEO Eric Affeldt urging the board to consider a sale of the company. The letter urged the sale because ClubCorp's stock price had fallen 40 percent in the past year.
In part, the letter stated:
"In addition, we believe the stock is potentially worth even more in a strategic sale, REIT conversion or real estate monetization scenario. Simply put, the Company's shares are trading at the lowest sustained valuation multiple since the September 2013 IPO and marginally above the Company's $14 per share IPO price, even in light of all of the positives accomplished to date. This valuation discount has created a dynamic where ClubCorp's bolt-on acquisition strategy of creating average pro forma club purchase multiples of ~6x following 3 years of investment and stabilization is no longer accretive. Accordingly, ClubCorp's ability to execute on the stated strategy, the accretive roll-up of the country club industry, has been significantly impaired."
The letter continues:
"We have spoken to other shareholders who share similar frustrations with ClubCorp's current valuation. We believe the status quo is untenable and we fear that without more aggressive action from the Board of Directors (the "Board") to unlock shareholder value, the current discount to intrinsic value will persist indefinitely."
In the letter, FourFront placed the blame for lower stock prices partly on what it said had been the company's "poor communication with investors."
In October, the company acknowledged that its share price had been inconsistent, even as it announced that its third quarter revenue was $259 million, marking the 10 quarters in a row of revenue growth.
Since the company went public, it has been on a buying spree. During the last two years, it has purchased 12 golf and country clubs.
ClubCorp was ranked No. 4 on Club Industry’s Top 100 Health Clubs of 2016 with $1.1 billion in revenue.