[TLK]

Here's an artice from Speed that gives the facts about the buyout, CART, OWRS and TG. I thought the article was pretty fair and an accurate assessment of what's going on.....

Critical Days
Written by: David Phillips
Pittsburgh, Pa. – 1/20/2004
David Phillips is a Senior Editor of RACER magazine.

How many times in the past seven months have the words “the coming days are critical to the future of Champ Car racing?” been written in this space and elsewhere? In June came the formal announcement that Championship Auto Racing Teams was in dire financial straights, and, absent a major infusion of capital, there were no guarantees a 2004 Champ Car World Series would be staged. Then came the “quiet” period in July and August when anyone with interested in taking control of CART could have made a proposal to do so. Alone, Gerald Forsythe, Paul Gentilozzi, Kevin Kalkhoven, Jamie Rose and Carl Russo assembled the Open Wheel Racing Series, LLC partnership in the hopes of acquiring CART lock, stock and barrel.

Next? That would have been in late August when OWRS made its bid to buy CART at $0.50 a share followed, at the urging of CART’s Board of Directors, by an offer of $0.56 a share, which the Board accepted. Then came an autumn in which first Rose, then Russo dropped out of the partnership while the Securities and Exchange Commission reviewed the OWRS/CART “merger” plans and Messrs. Forsythe, Gentilozzi and Kalkhoven & Co. prepared to put their bid to a vote by the CART shareholders, even as rumors of an uprising led by Jon Vannini and other disgruntled shareholders percolated from Web sites to race paddocks and back.

But before the shareholders could vote, CART and OWRS adopted new tacks. CART filed for protection from its creditors under Chapter 11 of U.S bankruptcy laws and Forsythe, Gentilozzi and Kalkhoven decided simply to buy the assets necessary to run the Champ Car World Series in 2004, principally –- although not exclusively -– the contracts with the promoters of most of the events on the ‘03 schedule.

That, of course, led to December’s hearings during which Road America and the International Speedway Corporation subsidiary 88 Corporation objected to the sale of CART’s assets to OWRS, objections Judge Frank Otte took into account even as he granted conditional approval of the CART/OWRS plan. Those conditions included making the sale subject to the approval of a creditors’ committee and set Jan. 23 as the deadline for competing offers for the CART assets and Jan. 28 as the date for a hearing when, it is hoped, the matter will be resolved once and forever.

Since then, of course, representatives of the Indy Racing League made a less than clandestine visit to the CART offices where they had a look at the books –- among other things -– and signed a non-disclosure agreement. This, in turn, prompted widespread speculation the IRL was planning to tend a competing offer to that of OWRS, an offer expected to focus on the most successful events of the CART calendar, namely Long Beach, Toronto, Montreal, Mexico City, Surfers Paradise and perhaps Denver.

That concept is pretty much is a non-starter for 2004, as there is no realistic chance the IRL, its teams and suppliers could overcome the logistical and financial hurdles necessary to stage five or six additional races this year, let alone five or six road and street races beginning in mid-April at Long Beach. That would effectively mean the cancellation of all or most of those races in ‘04, not to mention the other dozen or so events with which CART has contracts. Add the other liabilities associated with what would, effectively, be the cancellation of the ’04 season -– think Ford and Bridgestone among others –- and the $3 million or so CART now owes its creditors pales in significance.

Although the ISC’s Grand Am series could conceivably integrate an additional half dozen road/street course events into its ’04 calendar, that would still result in the liabilities associated with the cancellation of the remainder of the Champ Car schedule at places like Milwaukee, Cleveland and Vancouver, as well as the obligations to Ford and Bridgestone. Small wonder an ISC spokesman reportedly told the Indianapolis Star last week that the organization “has no present interest in acquiring the interests of CART.”

In the wake of Judge Otte’s rulings, some were quick to paint a gloomy picture for the OWRS plan, in effect assuming that Messrs. Forsythe, Gentilozzi and Kalkhoven were small-time players who have been trying all along to get CART on the cheap and who would fold their cards at the first hint of Tony George or the France family digging into their deep pockets. They also seemed to think that Judge Otte and the creditors committee believe CART and/or its creditors would be best served by the IRL or ISC taking over a handful of headline events and leaving the other events –- and creditors –- twisting in the wind.

However, the fact remains that the OWRS principals are pretty formidable individuals. Fortune estimated Kalkhoven made upward of $246 million from the sale of his holdings in JDS/Uniphase prior to his retirement in Y2K. As chairman and CEO of the Indeck Group, Forsythe builds and operates power plants in the Midwest and the Northeast –- among other things. What kind of numbers does Forsythe deal with? He spent $60-70 million revamping the Autodromo Hermanos Rodriguez. The projected construction cost of one of the power plants currently on the Indeck agenda is $966 million. Gentilozzi may not be in quite that league, but his real estate company owns half a dozen office buildings in Lansing, Mich., and recently invested upward of $30 million renovating a couple of them.

Again, the numbers floating about are misleading. It’s true that OWRS bid $1.5 million for the assets of CART, and is on the hook for perhaps twice that amount in debts. But by seeking to run a 2004 Champ Car World Series that in most respects fulfills CART’s commitments to existing promoters, OWRS avoids tens of millions in liabilities that figure to accrue if any of the “cherry-picking” scenarios were to unfold.

If this whole Byzantine process has taught anybody who writes about racing anything, it should be that nobody has all the answers. I will be the first to admit I could be dead wrong about this. It’s not as if Forsythe, Gentilozzi and Kalkhoven are omniscient. It was Forsythe, after all, who spurred much of last summer’s talk of Bernie Ecclestone playing a role in the future of CART; and it was under the auspices of Gentilozzi that Rose and the MotoRock concept emerged as the panacea to all that ails the Champ Car World Series.

If nothing else, the last eight years have shown Tony George is not shy about investing in the Indy Racing League and, when last we checked, ISC has something like $270 million in cash laying around. As for ISC’s protestations that it has no present interest in CART, the operative words there are “at present.”

As has been the case since mid-June, about the only thing that can be said with certainty is “the coming days are critical to the future of Champ Car racing.” Still, if I were a betting man, I’d put my money on OWRS emerging as the winner in the bid for CART’s assets.