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SANTA MONICA, CA-American Golf, the privately owned golf course operator that is the primary tenant of National Golf Properties Inc., has struck a deal to restructure its debt with Bank of America and the holders of its private notes.

The agreement, signed Tuesday, July 23 and announced by National Golf, changes the maturity date for the Bank of America debt and the private placement notes to the earlier of March 31, 2003 or whenever American and National complete a proposed merger. The two companies, both based in Santa Monica, announced the merger earlier this year in the wake of financial woes that caused American to fall behind in its rent payments to National. One provision of the merger is that National would cease to operate as a REIT.

The financial woes of the two companies cast doubt on their futures and prompted National’s auditor, PricewaterhouseCoopers, to say in the REIT’s most recent annual report that the problems “raise substantial doubt” about National’s “ability to continue as a going concern.”

As part of the debt restructuring agreement, National will defer payment of rent and certain other fees from American, “but only if necessary and only to the extent necessary” to permit American to make its scheduled payments to Bank of America and the noteholders, the National announcement said. As of July 23, National said, American Golf owed it approximately $15 million of rent and $16 million of lease termination fees.

American’s debt restructuring is the latest in a series of moves that the two companies have made to address the financial troubles caused by the fall-off in business at courses owned by National and operated by American.

National Golf is the largest publicly traded company in the United States specializing in the ownership of golf courses, with 110 courses in 22 states. The company’s shares finished at $11.51 Tuesday, up 7 cents for the day.

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