(Bloomberg) -- Hong Kong’s American Club has scrapped a contentious plan to buy back membership debentures that would have seen many confronting steep losses.

The Club triggered a backlash this month with a decision to buy back the debentures at face value, a fraction of where they recently traded in the secondary market. Membership debentures for the century-old institution have changed hands for upwards of HK$2,000,000 ($256,000). Under that plan, those affected faced a choice to either leave the club or rejoin at a price tag of HK$1.5 million.

Members have now been given the option to retain their debenture or transfer it into another category of individual membership without paying extra, according to an emailed statement by the club on Tuesday.

The reversal came after the board met Monday to discuss the plan following the outcry. Membership to the American Club gives holders access to amenities including tennis court and upscale restaurants at two prime locations in Hong Kong’s business district and one overlooking the waters in the island’s southern region.

According to an earlier letter by club President Christopher Burgess, the original plan was partly aimed at ensuring the club retains its nonprofit tax status, which requires 50% or more of the club’s operating revenues to come from voting members. Only US citizens are allowed to become voting members in the club, whose mission is to “maintain a commitment to an American identity.”

The original initiative was “driven by our aim to evolve our membership model in a fair and inclusive way,” David Loan, the club’s general manager, said in Tuesday’s statement. “Our intention with this update is, and has always been, to preserve and increase the number of voting and non-voting members, further enhancing the diversity of our community.”

The existence of the debentures dates back to a crucial period of the club, which was founded by businessmen in 1925 and moved locations a number of times over the following decades. After rents surged during the prosperous years of the 1970s and demand for membership increased, the club sought to expand through buying a permanent location.

In 1983, the club cut a deal with Hongkong Land Holdings Ltd. to purchase space in the planned Exchange Square complex in the financial district, as well as a site in Tai Tam on the southside of Hong Kong Island. The timing was good — concern that China would resume sovereignty over the city triggered a property market crisis. The total bill, including construction and outfitting, was estimated at up to HK$200 million, according to an official history of the club.

To help pay for the new clubhouses, the club proposed to borrow as much as HK$200 million through the sale of debentures at HK$300,000 each, as well as a limited number of town-only debentures. The debentures came with a stipulation that the club could always redeem them at face value with one month’s notice.

These debentures were allowed to be resold on the secondary market, with the American Club taking a substantial transfer fee as part of each deal. More debentures were issued by the club over the years until 2007. Over time, the secondhand value rose to more than HK$2 million. 

Those holding membership debentures will be able to retain them, transfer them without any fee to an operating company, exchange them for an individual membership or accept the offer to redeem them at face value, according to an email sent to members Tuesday and seen by Bloomberg News. There won’t be additional costs to retain membership under the new plan.

Private member clubs have been a staple of the former British colony’s social fabric ever since the Hong Kong Club was established in 1846. They cater to everyone from sailors to tennis players and cricketers. Most charge high joining fees as well as monthly membership dues, while waiting lists can be lengthy. The clubs are popular with families, whose children can use pools and sporting facilities not always available in Hong Kong apartment complexes, and often become an established part of a family’s life in the city.

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