Why should OW buy CART?

[hfoto]

In other words, why pay seven million, and acquire any number of potential liabilities and other headaches? Wouldn't it be cleaner to have a funeral for an old friend, then let everyone come into a clean new sanctioning body?

Second question: why, really, shouldn't the strongest teams go into the IRL when they appear so eager to get into Canada, Mexico, Long Beach, etc? Seems to me in a very short time, the IRL becomes just like CART in the old days, only run by TG. Is he really that much more of a jackass than the old CART cabal?

Finally, is there anyone who agrees that the most important figure in American open wheel racing is not TG or Kalkhoven, but Roger Penske? Hasn't he been a "leading indicator" for the last thirty years or so?

[elio]

"IRL when they appear so eager to get into Canada"

I suggest you go to TSN.ca and see what Canadians think about the IRL...

[numrounofan]

Originally posted by elio

I suggest you go to TSN.ca and see what Canadians think about the IRL...

probably not as bad as what they thought of INDYCar in c^rt's home state of Michigan...oh, wait, c^rt doesn't race there anymore.....

[numrounofan]

Originally posted by hfoto
In other words, why pay seven million, and acquire any number of potential liabilities and other headaches? Wouldn't it be cleaner to have a funeral for an old friend, then let everyone come into a clean new sanctioning body?

Second question: why, really, shouldn't the strongest teams go into the IRL when they appear so eager to get into Canada, Mexico, Long Beach, etc? Seems to me in a very short time, the IRL becomes just like CART in the old days, only run by TG. Is he really that much more of a jackass than the old CART cabal?

Finally, is there anyone who agrees that the most important figure in American open wheel racing is not TG or Kalkhoven, but Roger Penske? Hasn't he been a "leading indicator" for the last thirty years or so?

http://www.otcbb.com/asp/quotes.asp?...=28&Bullet.y=6

beats me why they'd touch this, hfoto......

[220mph]

Need to look a little closer . . .

From CART's press release on 3rd Quarter financials:

Outstanding shares 14,718,000

ASSETS:

Cash on hand - $ 2.1 million
Investments - $17.6 million
Accounts Receivable - $3.8 million
Pre-paid exp. & other current assets - $ 6.1 million
Income tax refund - $ 0.7 million
Current portion note payable - $ 0.1 million

Total current assets - $30.37 million

Note receivable - $ 0.9 million
Property & Equip net - $ 11.9 million
Other assets - $ 0.6 million

TOTAL ASSETS - $ 43.65 million

LIABILITIES:

Long term debt-current portion - $ 2.5 million
Accounts payable - $ 3.8 million
Race expense and point award - $ 3.3 million
Royalties - $ 0.9 million
Payroll - $ 0.6 million
Taxes - $ 0.5 million
?? Other - $ 5 million
?? Deferred revenue - $ 3.3 million

TOTAL CURRENT LIABILITIES - $ 18.97 million

Less TOTAL ASSETS - $ 43.65 million

= STOCHOLDER EQUITY - $ 24.68 million

Net loss $ 77,907,000 ytd

CART lost $ 5.29 per share to date this year

CART's remaining Shareholder Equity is $ 24.68 million or $ 1.68 per share, something they avoid pointing out in the release.

Perhaps THAT answers the question of why OWRS would want to buy CART?

You might also note that between cash and investments CART has $19.65 million - I estimated at beginning of season that CART would finish season with approximately $20 million in the bank.

Imagine that . . .

[hfoto]

Those balance sheet figures look a little generous; for example the net PP&E at $11M is progably nowhere near that in terms of liquidation value and the A/R may not be collectible, and I suspect that there are several contingent liabilities that don't appear - for example the new suit over the Fontana sanction fee.

The OW group are smart money guys who wouldn't slip on the due diligence, but those liabilities are the really scary part.

[220mph]

CART Detaile 3rd Quarter Financials

For those who care . . .

[220mph]

Other interesting items:

CART appears to have written down assets to reflect real values, including determining current fair market value of property and equipment:

The Company recognized a non-cash asset impairment charge of $1,262,000 to write-off goodwill and other intangible assets of the race promotions segment. The fair value of the reporting unit was estimated using the present value of expected future cash flows. The Company also recognized a non-cash asset impairment charge of $2,038,000 to reduce the carrying value of the property and equipment of the race promotions segment. In the absence of quoted market prices, the fair values of the property and equipment were determined using estimates of amounts at which the assets could be sold to third parties in current transactions, less any sale costs.

Litigation - nearly $5 million paid to settle claims with $1 million received - appears to be 2 outstanding claims (Rodriguez and Moore):

On September 8, 2000, a complaint for damages was filed against the Company in the Superior Court of the State of California, County of Monterey. This lawsuit was filed by the heirs of Gonzolo Rodriguez, a race car driver who died on September 11, 1999 while driving his race car at the Laguna Seca Raceway in a practice session for the CART race event. The suit sought damages in an unspecified amount for negligence and wrongful death. On November 5, 2001, the Court upheld a release signed by Mr. Rodriguez and the causes of action for negligence were dismissed. On March 13, 2003 a jury verdict found in favor of the Company with respect to the claim for willful and/or reckless conduct and the case was dismissed. An appeal has been filed.

On October 30, 2000, a complaint for damages was filed against the Company in the Superior Court of the State of California, County of San Bernardino. This lawsuit was filed by the estate of Greg Moore, a race car driver who died on October 31, 1999 while driving his race car at the California Speedway during the CART race event. The suit sought actual and punitive damages from the Company in an unspecified amount for breach of duty, wanton and reckless misconduct, breach of implied contract, battery, wrongful death and negligent infliction of emotional distress. On a motion for Summary Judgment, the complaint was dismissed on all counts on October 16, 2002. An appeal of the dismissal was filed on November 25, 2002.

On November 8, 2001, two former team owners, DellaPenna Motorsports and Precision Preparation, Inc., filed suit against the Company in the Circuit Court for the County of Wayne, State of Michigan, each alleging damages in excess of $1.0 million for breach of contract, promissory estoppel, misrepresentation, and tortious interference with contract and business expectancy. The claim was settled for $400,000 in May 2003.

On January 29, 2002, a demand for arbitration was filed against the Company with the American Arbitration Association by Action Performance Companies, Inc. The arbitration demand was filed in regard to a retail licensing agreement entered into on November 16, 1998 and subsequent amendments to the original agreement. The claim sought damages of $3.2 million for breach of contract, breach of implied good faith and fair dealing and fraud and punitive damages of $3.2 million. The Company filed a counterclaim against Action Performance Companies, Inc. The arbitration panel determined that Action Performance Companies, Inc. failed to prove its claim for breach of implied good faith and fair dealing or fraud, but did find that the Company had breached the contract and awarded Action Performance Companies, Inc. the amount of $931,588 in August 2003 for its net unrecoverable expenses and interest. The Company paid the award in September 2003.

On March 26, 2002, the Company filed a complaint against Joseph F. Heitzler, a former director and former chairman, chief executive officer and president of the Company in U.S. District Court, Eastern District of Michigan, Southern Division. The complaint alleged that Mr. Heitzler breached his employment contract, breached his fiduciary duties and intentionally or recklessly omitted to disclose information to the Company in order to induce the continuation of Mr. Heitzler's employment agreement. The suit sought damages of an unspecified amount. On March 28, 2002, Mr. Heitzler filed a complaint against the Company in the Superior Court of the State of California, County of Los Angeles. The suit sought compensatory, exemplary and punitive damages in excess of $2.0 million for breach of contract, fraud, negligent misrepresentation, breach of covenant of good faith and fair dealing and declaratory relief. An amended complaint adding a count for tortious breach of contract in violation of public policy was filed on April 9, 2002. These claims were settled in August 2003 and the Company paid $1.7 million in settlement of any and all claims.

On July 9, 2002, a Demand for Arbitration was filed against the Company with the American Arbitration Association in Indianapolis, Indiana by Engine Developments Ltd. The Demand alleged that the Company breached an agreement to purchase engines and sought unspecified damages. This claim was settled July 29, 2003 and the Company paid $1.75 million in settlement of any and all claims.

In June 2003, the Company received $1.0 million from proceeds received from a bankruptcy settlement regarding claims filed against Eurospeedway Lausitz for loss of sanction fees and other damages that occurred when the 2002 event was cancelled as a result of the bankruptcy of the promoter. These proceeds have been recorded in the quarter ended June 30, 2003 as a reduction of litigation expense.

As we have previously reported, we are party to several lawsuits. We cannot predict the outcome of the litigation, and at this time, management is unable to estimate the impact that ultimate resolution of these matters may have on our financial position or future results of operations.

ACQUISITION OF RACEWORKS, LLC:

On March 7, 2003, the Company acquired one hundred percent (100%) of the membership interests in Raceworks, LLC ("Raceworks"). The results of Raceworks' operations have been included in the consolidated financial statements since that date. Raceworks is a motorsports promotion company and holds a revocable license agreement to annually conduct a street race in downtown Miami through 2017, with an option to extend for an additional ten (10) years. The aggregate purchase price was $1.2 million including $473,000 of cash and a promissory note of $722,000. Commencing on the payment due dates, any unpaid principal bears at ten percent (10%) per annum. During the quarter ended September 30, 2003, the Company was in default of certain payment provisions of the promissory note and the promissory note became due and payable and has been classified as current.

Operating results and cash flows of Raceworks, LLC were significantly lower than expected during the quarter ended September 30, 2003, which we considered to be an indication of impairment. Based on those results and other qualitative information, the future earnings forecasts were revised and the fair value determined. The Company recognized a non-cash asset impairment charge of $1,262,000 to write-off goodwill and other intangible assets related to the purchase of Raceworks, LLC. The fair value of the reporting unit was estimated using the present value of expected future cash flows.

The Company reviewed the carrying value of the long-lived assets of Raceworks at September 30, 2003, using estimated cash flows. The carrying values of the long-lived assets were considered impaired. In the absence of quoted market prices, the fair values of the long-lived assets were determined using estimates of amounts at which the assets could be sold to third parties in current transactions, less any sale costs. The Company recognized a non-cash asset impairment charge of $2,038,000 for the period ended September 30, 2003 to reduce the carrying value of the property and equipment of Raceworks, LLC.

LONG TERM DEBT:

In July 2002, the Company guaranteed a $1.8 million commercial term loan in connection with the operations of Raceworks, LLC. The Company subsequently acquired this loan in conjunction with the acquisition of Raceworks, LLC and has recorded the loan in its long-term debt as of September 30, 2003. The principal on the loan shall be paid quarterly, commencing on October 31, 2003 and on the last day of each January, April, July and October thereafter, in the amount of $50,000 per quarter. The entire unpaid principal amount of the loan and all accrued and unpaid interest and other amounts payable thereunder shall be due and payable in July 2007. The loan may be prepaid, in whole or in part, without a penalty. The rate of interest on the outstanding principal amount of the loan will be equal to The Wall Street Journal prime rate (the "prime rate") plus 150 basis points. (As of September 30, 2003, the rate of interest was 5.5 %.)

At June 30, 2003 and September 30, 2003, the Company was in default of certain financial covenants for which a waiver will be requested. These financial covenants require that total stockholders' equity of the Company not be below $75 million. As a result, the entire amount of the note has been classified as current.

On March 7, 2003, the Company issued a promissory note of $722,000 in conjunction with the acquisition of Raceworks, LLC. Commencing on the payment due dates, any unpaid principal bears interest at ten percent (10%) per annum. The Company is in default of certain payment provisions of the note. As a result, the entire amount of the note has been classified as current at September 30, 2003.

[chuckwagon]

Isn't there a 3Q financials thread already started?

[220mph]

More . . .

DEFERRED TAXES - while CART may have valued these at nothing they are a significant value to any purchaser. Anyone wanna bet that OWRS merges the "private" CART with another company that has significant net profit? This is a SIGNIFICANT ASSET I believe that has been in effect HIDDEN - of course I could be wrong :

SFAS No. 109 requires that net deferred tax assets be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized. The Company has tax assets from U.S. net operating loss carryforwards, foreign tax credit carryforwards and future tax deductions of $28.1 million, $278,000 and $1.2 million, respectively. The carryforward items expire over the next 5 to 20 years. Failure to achieve taxable income within the carryforward period would affect the ultimate realization of the net deferred tax assets. Management believes there is sufficient uncertainty regarding the future generation of taxable income. Because it is more likely than not that deferred tax assets will not be realized, the tax benefit for current year losses and net deferred tax assets recorded at December 31, 2002 has been reduced by a $29.6 million valuation allowance at September 30, 2003. As a result, income tax expense was $660,000 for the nine month period ended September 30, 2003.

RACE DISTRIBUTIONS:

We pay the racing teams for their on-track performance. Race distributions include the following for each event:

- event purse which is paid based on finishing position
- contingency award payments
- year-end point fund, which is paid based on year end finishing position
- participation payments
- entrant support payments
- team assistance

We pay awards to the teams, based on their cumulative performance for the season, out of the year-end point fund. Participation payments are being made in 2003 to each of our entries (to a maximum of 20 cars) on a per car, per race basis. In addition, entrant support payments are being made to participating teams as part of a financial incentive plan to attract and retain teams to compete in our series. The payments are made to teams in exchange for logo advertising space on their cars. We have the opportunity to sell and retain the revenue from the advertising. In 2003, we are providing assistance to certain teams to ensure that there are a sufficient number of race cars competing in our series. We will spend up to $33.0 million in team assistance, spread out over the race season, to make sure there are a sufficient number of viable competitors for the 2003 season. Through September 30, 2003, we have expensed $23.9 million in team assistance. In exchange for the team assistance, we receive certain sponsorship rights from the team.

TELEVISION EXPENSES:

In 2003, we bought the air time for our seven CBS races and a one hour preseason preview show at a cost of $3.5 million. Speed Channel is providing the air time for the races aired on its network, including Champ Car practice and qualifying and a half-hour pre-race show. We pay for production costs associated with the races to be broadcast on the Speed Channel network. One of our races was broadcast on HD Net TV which provided the air time and we shared the production costs. We also incur expenses for our international production for all of our races.

LEGAL - the Action Performance award was $931k - another few hidden gems include that it appears CART has paid apprx $400,000 to terminate early a sanction agreement with IMSA for Miami?? Add $1.4 million in legal & other costs/fees rgarding the "merger":

Litigation and settlements expense was $1.3 million for the quarter ended September 30, 2003, with no corresponding expense in the same prior year period. The expense was attributable to an arbitration award to Action Performance Companies, Inc. in a breach of contract case in regard to a licensed merchandise contract and settlement of an early termination of a sanction agreement with International Motorsports Association, Inc. ("IMSA") in regard to a race in Miami, Florida.

Merger and strategic charges were $1.4 million for the quarter ended September 30, 2003, with no corresponding expense in the same prior year period. The expense is attributable to financial and legal consulting expenses related to the proposed merger with Open Wheel. (Expenses related to the merger are expected to be approximately $3.3 million)

RACE Promotion - CART appears to have lost $10.2 million on 6 CART promoted events in 2003 - England and Germany are supposedly gone if there is a 2004 - what will change for Portland, Cleveland, Mid-Ohio and Miami to make them profitable in future?:

Race promotion revenue for the nine months ended September 30, 2003 was $10.6 million, an increase of $9.2 million, from the same period in the prior year. The increase was attributable to promoting six races in Kent, England, Lausitz, Germany, Portland, Oregon, Cleveland, Ohio, Lexington, Ohio and Miami, Florida in the nine months ended September 30, 2003 compared to one race in Chicago, Illinois in the same prior year period.

Race promotion expenses for the nine months ended September 30, 2003, were $20.8 million, an increase of $11.8 million, or 133%, from the same period in the prior year. The increase in expenses is due to promoting six races in the nine months ended September 30, 2003 compared to two races in the same prior year period. The expenses relate to administrative and direct expenses incurred for all the races we promoted. During the nine months ended September 30, 2003, we promoted races in Kent, England, Lausitz, Germany, Portland, Oregon, Cleveland, Ohio, Lexington, Ohio and Miami, Florida.

HEADQUARTERS MOVE - ouch:

Relocation expense was $1.3 million for the nine months ended September 30, 2002 with no corresponding expense in the current year period. The expense related to the companies relocation from Troy, MI to Indianapolis, IN.

INVESTMENTS:

Our cash balance on September 30, 2003 was $2.1 million, a net decrease of $4.7 million from December 31, 2002. This decrease was primarily the result of net cash used in operating activities of $61.0 million and net cash used in financing activities of $1.0 million, partially offset by proceeds from investing activities of $57.3 million.

Our short term investment balance on September 30, 2003 was $17.6 million, a net decrease of $61.9 million from December 31, 2002. This decrease was primarily due to funding of operations for the nine months ended September 30, 2003.

In May 2003, the Company entered into an agreement with a third party where we paid for the costs of capital improvements retained by the third party necessary to stage an event where we are the promoter. We accepted an unsecured note of $750,000 for said improvements, to be received, without interest over five years. Payment in the amount of $75,000 will be due in each of the first four years with a final payment of $450,000 due in the fifth year. These payments are payable each November 1st, beginning in 2003. The Company imputed interest on the note at a rate of 6% and recorded a discount on the note receivable which reduced the note by $146,000.

In June 2003, the Company entered into an amendment to a sanction agreement with a promoter where we accepted a note in the amount of $400,000 as payment for a portion of the sanction fee. This note is payable in 36 equal monthly installments, bearing interest at 10% per annum, beginning January 1, 2004. The note is secured by all products and proceeds of all other events staged by the promoter at the promoter's facility.

LEASES:

In April 2002, we entered into a lease for our new corporate headquarters in Indianapolis, Indiana. The lease commenced on May 1, 2002 and expires on October 31, 2010. The total amount due through the life of the lease is $2.6 million.

In March 2003, we entered into a lease for office space in Miami, Florida. The lease commenced on June 1, 2003 and expires on May 31, 2008. The total amount due through the life of the lease is $478,198.

[mnkywrch]

For the record, I had no intention of moving this thread until it turned into, well, the usual spiel from the usual suspects.

[220mph]

RELATED PARTY TRANSACTIONS:

RACE TEAM/AFFILIATED PERSON - PURSE DISTRIBUTIONS
-------------------------------------------------------------------------
Forsythe Racing, Inc./Gerald R. Forsythe - $ 1,420,250
Newman/Haas Racing/Carl A. Haas - 1,373,000
Derrick Walker Racing, Inc./Derrick Walker - 538,500
Patrick Racing, Inc./U.E. Patrick - 430,000
Rocketsports, Inc./Paul Gentilozzi - 386,000
PK Racing LLC/Kevin Kalkhoven - 287,000

-------------------------------ENGINE LEASE INCOME ESP PAYMENTS
RACE TEAM/AFFILIATED PERSON----FROM TEAMS----------TO TEAMS
-----------------------------------------------------------------------------------
Newman/Haas Racing/Carl A. Haas - $ 150,000 - $ 1,360,000
Forsythe Racing, Inc./Gerald R. Forsythe - 150,000 - 1,360,000
Derrick Walker Racing, Inc./Derrick Walker - 150,000 - 1,360,000
Patrick Racing, Inc./U.E. Patrick - 75,000 - 680,000
PK Racing LLC/Kevin Kalkhoven - 75,000 - 680,000
Rocketsports, Inc./Paul Gentilozzi - 75,000 - 680,000

RACE TEAM/AFFILIATED PERSON TEAM ASSISTANCE
-------------------------------------------------------------------------
Derrick Walker Racing, Inc./Derrick Walker -$ 4,443,750
Newman/Haas Racing/Carl A. Haas - 1,500,000
Rocketsports, Inc./Paul Gentilozzi - 1,500,000
Patrick Racing, Inc./U.E. Patrick - 1,050,000
PK Racing LLC/Kevin Kalkhoven - 750,000

OTHER Related Party Transactions:

Carl A. Haas, who resigned as a director on September 22, 2003, is a principal owner of Carl Haas Racing Teams, Ltd. which has entered into a Promoter Agreement with respect to the Champ Car World Series race at the Wisconsin State Park Speedway in West Allis, Wisconsin. The agreement granted Carl Haas Racing Teams, Ltd. the option to promote the race in 2003 and 2004. Carl Haas Racing Teams, Ltd. has elected to exercise the option for 2003, but not for 2004. Pursuant to the Promoter Agreement, entities affiliated with Mr. Haas have paid sanction fees to us of $1.4 million for the 2003 event. Beginning in 2004, the Champ Car World Series race at West Allis, Wisconsin will be promoted by the Wisconsin State Fair Grounds and Mr. Haas will no longer have an affiliation with the promotion of this event.

Gerald R. Forsythe is a principal owner of the entities which entered into Promoter Agreements with respect to Champ Car World Series races in Monterrey, Mexico and Mexico City, Mexico. These agreements were amended in 2003 to reduce the amount of the sanctions fees payable to us. Pursuant to terms thereof, a Champ Car World Series race will be held at Monterrey through 2005 and Mexico City through 2006. These entities affiliated with Mr. Forsythe have paid or will pay sanction fees to us in the aggregate amount of $4.9 million for 2003, $5.0 million for 2004, $5.2 million for 2005 and $2.7 million for 2006.

Mr. Forsythe is also a principal owner of the entity that holds our Mexican television rights. In return for granting the Mexican television rights, CART, Inc. will receive a minimum guaranteed payment of $325,000 in 2003 and is due to receive a minimum guaranteed payment of $350,000 in 2004, $375,000 for 2005, and $400,000 for 2006. In addition to the guaranteed minimum payments due in 2004, 2005 and 2006, CART, Inc. will receive a guaranteed payment of up to 70% of the net profits of the entity holding our Mexican television rights, if any, until CART, Inc. receives an aggregate amount of $550,000 in 2003, $600,000 in 2004, $650,000 in 2005 and $700,000 in 2006.

Rafael Sanchez is a principal owner of RAS Development, Inc. which in March 2003 entered into a five year lease agreement with CART, Inc. for office space in Miami, Florida. Payments to RAS Development, Inc. under this lease agreement total $52,528, $91,098, $93,456, $96,812, $101,259 and $43,045 for 2003, 2004, 2005, 2006, 2007 and 2008, respectively.

Mario Andretti, a director who did not stand for reelection when his term ended on July, 17, 2003, has entered into agreements with us whereby he participates in certain public relations events in exchange for compensation totaling $250,000.

Paul Gentilozzi is the managing member of Trans Am Racing, L.L.C. which has entered into a sanction agreement with CART, Inc. relating to the participation of the Trans Am Series at CART, Inc.'s self promoted event in Miami. In 2003, the agreement was amended to move the 2003 race from Miami to Cleveland. CART, Inc. has paid or will pay sanction fees to Trans Am Racing, L.L.C. totaling $200,000 in 2003 and $200,000 in 2004.

We entered into a sponsorship agreement with PacifiCare Health Services, Inc. (PacifiCare), which provides that PacifiCare will be the "Official Health Care Provider" for the Champ Car World Series for 2003. PacifiCare will also be provided with two thirty second advertising slots at no cost (other than production costs) if slots are available on each of the Champ Car race broadcasts during 2003. As consideration for the Sponsorship Agreement, PacifiCare agreed to become a sponsor of Newman/Haas Racing for 2003 and has granted to us the right to negotiate a sponsorship agreement with PacifiCare for 2004. Carl A. Haas is a principal owner of Newman/Haas Racing.

DEFAULTS:

In July 2002, the Company guaranteed a $1.8 million commercial term loan in connection with the operations of Raceworks, LLC. The Company subsequently acquired this loan in conjunction with the acquisition of Raceworks, LLC and has recorded the loan in its long-term debt as of September 30, 2003. The principal on the loan shall be paid quarterly, commencing on October 31, 2003 and on the last day of each January, April, July and October thereafter, in the amount of $50,000 per quarter. The entire unpaid principal amount of the loan and all accrued and unpaid interest and other amounts payable thereunder shall be due and payable in July 2007. At June 30, 2003 and September 30, 2003, the Company was in default of certain financial covenants for which a waiver will be requested. These financial covenants require that total stockholders' equity of the Company not be below $75 million. As a result the entire amount of the note has been classified as current.

On March 7, 2003, the Company issued a promissory note of $722,000 in conjunction with the acquisition of Raceworks, LLC. Commencing on the payment due dates, any unpaid principal bears interest at ten percent (10%) per annum. A payment of $473,000 was due on October 8, 2003. The Company was in default of the payment provisions of the note by not presenting payment by that date. As a result, the entire amount of the note is due and payable and has been classified as current

The above information is direct quotes from CART 3rd Quarter SEC filing. I quoted here those sections which it seems people have talked about in the past - there is a lot of definitive information on what has been speculated in past.

I also think it important, as part of the question of "why would OWRS Buy CART" to look at the benefits to OWRS. It certainly appears CART has likely fully disclosed the material information on the company however it also seems some of that information, significantly that they have shown no value for nearly $30 million in accrued tax benefits, was pretty well buried.

Wrch - I understand this is "financial" information but it seemed relevant to the question.

Besides, I figured this was destined for a move soon anyway . . .

[don7031]

Originally posted by 220mph
I also think it important, as part of the question of "why would OWRS Buy CART" to look at the benefits to OWRS. It certainly appears CART has likely fully disclosed the material information on the company however it also seems some of that information, significantly that they have shown no value for nearly $30 million in accrued tax benefits, was pretty well buried.

But to realise the value of that $30 million OWRS LLC. would have to make money. What isn't outside the realm of the possible is an aborted attempt to run the series followed by the merger of OWRS LLC. with a company that makes money which would allow Forsythe to recoup some of his substantial losses on MPH.

[don7031]

Originally posted by hfoto
In other words, why pay seven million, and acquire any number of potential liabilities and other headaches? Wouldn't it be cleaner to have a funeral for an old friend, then let everyone come into a clean new sanctioning body?

If the guys from OWRS LLC. really wanted to pick up the ball and run they would have started their own series several months ago. By this time could have had a schedule and tv contract in place and be moving forward rather than treading water waiting for the merger to occur.

[220mph]

or OWRS could have continued to buy CART shares on open market until they controlled a majority of the company.

Once CART waived its poison pill and the group disclosed its ownership stake would not I dont think have had to obtain any approval/permission

or they could have made an equity investment to fund continued opewrations - CART could have issued them shares as collateral (50mill authorized I believe)

either way they could have continued running CART as a public company, until such time as it was prudent and/or timing correct to take private. plus much easier to take private when you own majority.

that way shareholders received a "market" price for their shares and CART would not be hamstrung as they ar now as to 2004

[Jim Wilke]

Originally posted by 220mph


You might also note that between cash and investments CART has $19.65 million - I estimated at beginning of season that CART would finish season with approximately $20 million in the bank.

Imagine that . . .

Well, not exactly. First of all, this information is 6 weeks old and they have burned through some more money since then. Second, CART may have had $20 million in cash and liquid assets but they also had, at the time, $19 million in liabilities and that does not include the $2.5 million that ISC wants back for Fontana. Move that figure from one side of the ledger to the other and CART is flat broke. Now.

Maybe that's why they didn't want to race at Fontana on Thanksgiving weekend; they'd have to sell a Xerox machine to buy Pook a plane ticket.

[indycool]

Interesting posts and perspectives all.

Think you're right about OWRS putting this entity under the umbrella of a profit-making company. In that way, they can use the tax credits against owed taxes from the umbrella company.

And I question why anyone would want to move this thread. It's "Racing Biz." It belongs here. A recent Fontana "biz" thread was moved from here to the CART forum and locked. I question the logic of that, too.