The company had hoped to turn the listed building into a 153-seat theatre, to replace their ailing building in London Road but, after five years of negotiations and planning time, it seems, may have run out for the thespians.
While in no way blaming the company for the delays, the owner of the premises, PMC Construction and Development Services of Portsmouth, has decided to call it a day and look at an alternative use.
The result is the submission of an application for housing on the site which, according to Holybourne Theatre chairman, John Priddle, came as a surprise to members who, considering their own plans for the church, were disappointed to read about it in the local press.
In a letter to Alton Town Council, he said: "We have been negotiating with the owner for a considerable time. This has been extensive due to various reasons but we always thought that we were making progress.
"The project was always meant to be self-financing against the value of our existing site at Holybourne. Any additional funding, ie local authority or lottery grants would be used only for specialised items.
"On these terms," he confirmed," we are still interested in the United Reformed Church or any other site in the town that may become available."
Mr Priddle said that the theatre company was currently considering all options, one of which is remaining at its existing site.
Planning permission has recently run out for three new dwellings on the site and the aim, would probably be to re-apply for five, in line with new government guidelines.
The administration of the amateur group has recently been re-structured to form a limited company in order to progress the plans for a new theatre and, John Priddle assures, this latest bombshell will not deter it from continuing to grow and thrive.
Formed originally in 1948, the company is said to be going from strength to strength. "The atmosphere is very enthusiastic amongst members, patrons and friends, not forgetting our active youth theatre section who have just finished a drama workshop week," writes Mr Priddle.
"We have been operational for over 50 years and are here for the service of the community, both for members and audience - especially children.
"With the help of the community and local authorities, we will be vibrant for many years to come."