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Auditor Questions Golf Firms' Viability


The independent auditor of National Golf Properties Inc. and American Golf Corp., two Santa Monica-based companies that have agreed to merge, raised doubts about the viability of both firms in light of financial problems and a barrage of lawsuits, according to filings with federal regulators. National Golf shares fell more than 20%.

National Golf's annual report to the Securities and Exchange Commission also provided details about the deteriorating financial condition at the two sister companies founded by Los Angeles businessman David G. Price. National Golf, a publicly traded real estate investment trust, agreed to merge with American Golf, a private company that manages nearly all of National Golf's properties.

PricewaterhouseCoopers, which serves as the auditor to both firms, said American Golf's difficulty making rent payments to National Golf and other problems "raise substantial doubt about [National Golf's] ability to continue as a going concern." During 2001, National Golf reported a loss of about $363,000, contrasted with net income of $19.79 million in the previous year, the annual report said.

The auditor also was concerned about the viability of American Golf. At the end of 2001, American Golf reported current liabilities that exceeded current assets by $149.5 million. American Golf also reported a loss of $60.4 million for 2001, compared with a loss of only $200,000 in the previous year.

During the first three months of this year, American Golf was $17.5 million behind in its rent payments to National Golf.

"PricewaterhouseCoopers' concerns regarding our primary tenant underscore why maintaining the status quo is not an attractive solution," said Charles S. Paul, chairman of National Golf's independent directors' committee and interim chief executive of the company. "By joining National Golf and American Golf together, we can create a unified, focused corporate structure to unlock the full value of our combined property portfolio."

Shares of National Golf fell $1.52 to $5.65 on the New York Stock Exchange.

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