Keeping It Off the Wall|
by Ed Donath
A New Chapter
ATHENS, NY—“Hello again Champ Car racing fans…Todd Wickerbill here welcoming you to another edition of Way Behind the Scenes in CART. It’s true that we might be changing the name of our program pretty soon but for now, anyway, I think long-time fans remember who we are.
“You know, now that the Butcher of Baghdad has been found, the most-asked question in the world is: ‘Where the heck are the Champ Cars hiding?’
“Well, I’m very happy to inform you that, as we speak, plans for the 2004 Champ Car World Series are finally being made by the partnership consisting of three prominent current CART team owners who formed a company known as Open Wheel Racing Series about five months ago.
“While CART itself appears headed for bankruptcy, the OWRS guys will most likely purchase its important assets—including agreements with various popular racing venues—that would enable the new company to run a somewhat scaled-back schedule featuring ’03-spec Champ Cars.
“But let me tell you folks…the business end of this deal is extremely complicated! That’s why we’ve brought our resident expert, J. Paul Gurney Flapp, in to clarify things for us. Welcome, JP.”
“It’s good to be here with you, Todd. If you and the audience will just follow along with me, I’m sure that the mysterious ramifications of the latest OWRS strategy will become crystal clear.”
“OK, lay it on us, JP.”
“Well, Todd, essentially CART has announced that the latest agreement would allow OWRS to purchase the assets of CART, Inc. needed to operate the Champ Car World Series and the Toyota Atlantic ladder series and, if this transaction can be completed, OWRS intends to do exactly that. Are you with me so far, Todd?”
“So far, so good, JP.”
“Now then, Todd, the total consideration that will be paid if the agreement is completed is $3 million…less $1.5 million in 2003 prize money to teams not affiliated with OWRS; which is an obligation of CART that would also be assumed by OWRS. However, OWRS has indicated that only teams racing in the 2004 Championship need apply for back prize money.”
“So what will the holders of CART stock be getting if the new deal is approved?”
“Significantly less than the 50-cents-a-share that was proffered by OWRS in its original offer to purchase back in August…which was later amended to and accepted by the CART Board at 56-cents-a-share. Either of those deals might have amounted to around $15 million—a huge per-share loss for most MPH shareholders. But the latest agreement amounts to merely a dime on the dollar as compared to the original deal.”
“Very interesting JP…and here’s what outgoing CART CEO Chris Pook says about the new arrangement…I quote:
“‘We are very disappointed that the conditions of the merger could not be satisfied. We nevertheless believe this new transaction is CART’s best available option, and we intend to move forward diligently and promptly.’”
“Well, Todd, it should be noted that the agreement requires CART to commence a case under Chapter 11 of the U.S. Bankruptcy Code. Such a filing will include a motion asking the Bankruptcy Court to approve the sale of CART's assets pursuant to the agreement. If the Court approves, CART will then continue to operate its business as a debtor-in-possession during the court supervised sales process.”
“That certainly would represent a ‘new chapter’ in the Champ Car Company Saga [chuckle], JP.”
“Yes, it would, Todd. And one additional point of interest: OWRS—not CART—revealed that it had appointed Richard P. Eidswick as the CEO overseeing the transition through the Chapter 11 bankruptcy proceedings. So, at least in my mind, the plot continues to thicken.”
“Thanks, JP. Well, a cliffhanger like this one is probably the ideal moment in broadcasting to take a commercial break. On the other side we’ll be taking viewer phone calls on the subject: Which concert act would get you to buy tickets to a Champ Car race?
“Hey, don’t touch those remotes folks, Way Behind will be right back…”
Copyright © 2003 by Ed Donath and Deep Throttle. All Rights Reserved.
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