Avalon chairman fields complaints at meeting

By Don Shilling

The company’s golfing business needs about 400 more members to become profitable.

VIENNA — The second-largest shareholder of Avalon Holdings pleaded with the company chairman to abandon his focus on money-losing golf courses.

Dr. Anil Nalluri, who owns 10 percent of company stock, complained about company operations for the second-straight year at Avalon’s annual meeting Thursday at its Squaw Creek course.

“Your stock value has plummeted to hamburger level. I can’t even buy a Big Mac with your stock,” said Dr. Nalluri, a Boardman psychiatrist.

Ronald Klingle, Avalon chairman and chief executive, said many companies have seen stock values plummet during the nation’s credit and financial crisis and added that he still thinks the company’s three golf courses will be profitable.

The stock closed Thursday at $1.83, up 5 cents. It was trading at about $5.50 a year ago and nearly $11 two years ago.

Dr. Nalluri, who owns 389,000 shares, said he has invested his life savings in the company. He said he bought about 30,000 shares recently when the stock price dipped under $1 so that he could lower his average purchase price, which now is about $6.50 a share.

In public comments, Dr. Nalluri questioned why the company spent $12 million to upgrade the former Sharon Country Club after acquiring it. The company also spent more than $500,000 on previous upgrades at Squaw Creek.

Dr. Nalluri said the area doesn’t have a strong enough economy or enough wealthy residents to justify such expenses.

Klingle, the company’s largest shareholder who controls the majority of voting rights, responded by saying company officials continue to think the upgrades were good business decisions.

Dr. Nalluri asked Klingle where Avalon was losing money, and Klingle referred him to the company’s annual report.

Dr. Nalluri said he knew the losses were in the golfing business and asked, “Are you going to stop the bleeding?”

Klingle replied simply by saying executives would make good business decisions.

The annual report says the golf operations lost $400,000 last year after losing $300,000 the year before. Golfing revenues last year, which was the first with the Sharon club, were $9.6 million, compared with $7.4 million the year before.

Avalon also operates waste management and brokerage businesses which earned $3.6 million last year before taxes.

After the meeting, Klingle said the golfing business needs about 400 more members to become profitable. Membership stands at about 2,700, up from 2,500 a year ago.

Avalon’s goal is to reach 4,000 members. Social memberships, which do not include golf, cost $600 a person or $1,200 a family. Golfing memberships range from $1,200 to $4,000 a year.

To boost its membership, Avalon recently started offering nonresident memberships at a 50 percent discount. These are available to anyone who doesn’t work or live in Mahoning, Trumbull or Columbiana counties in Ohio and Mercer or Lawrence counties in Pennsylvania.

shilling@vindy.com