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  • CART solicit offer - gets .50 cents . . .

    Not a surprise to any that this group would make an offer to and for CART.

    What is interesting is the fact that CART solicited the offer from this group and has apparently amended its shareholder rights agreement to suspend its application to a group whom CART solicits to make an offer.

    What is really eye-opening is the value these insiders (read: participants, not necessarily stock insiders) place on CART.

    With current outstanding stock in the 14.7 million shares range, this offer amounts to just over $7 million dollars. About a third of CART's current market cap, and less than 30% of CART's current estimated CASH assets alone.

    Pretty scary that even to these insiders, who should know the real situation but also should be those most likely to see positives, that there is little appearance of optimism.

    Championship Auto Racing Teams, Inc. (NYSE: MPH - News) announced today that it has received a proposal from Open Wheel Racing Series to enter into a letter of intent contemplating the acquisition of all of the outstanding shares of CART for approximately $.50 cash per share . . .

    Open Wheel Racing Series is a newly formed holding company owned indirectly by a group of investors including Gerald R. Forsythe, Kevin Kalkhoven, Paul Gentilozzi, Carl Russo and Motorock LLC. Open Wheel Racing Series and the group of investors currently have beneficial ownership of 3,377,400 shares of CART common stock, all of which shares are held by Mr. Forsythe or entities owned or controlled by him. Such shares constitute approximately 22.9% of the outstanding shares of CART common stock . . .

    CART previously amended its shareholder rights agreement to provide that the formation of a group that makes an acquisition proposal at the invitation of CART, such as this group that made the proposal received by CART, will not be covered by the shareholder rights agreement unless CART has advised such group that it no longer wishes to consider a proposal from it . . .
    [feel free to move wrch but it IS about the "sale" of CART so thought this was appropriate forum . . .]
    Last edited by 220mph; 08-18-2003, 11:18 AM.

  • #2
    I'd view this as an opening bid. One of Jon Vaninni's things has been that CART has driven down the price, and isn't doing what is in the shareholders' best interests.

    So, if they convince Forsythe and friends to oh... triple their offer, it is hard to say that CART didn't try to get more for their shareholders.

    More than likely, this is a way to get the other potential buyers to show their cards so that the real bidding can begine.

    Comment


    • #3
      Who will pay Joe and company?
      Will they get paid at closing, before the sale can be approved or never?

      Comment


      • #4
        these guys are willing to spend seven-and-a-half million just to have the opportunity to spend $100 - $200 million over the next three seasons. I guess we'll have to wait to see what other buyers are lined up........
        the man in expensive shoes

        Comment


        • #5
          Plenty more of interest in the filing:

          The players:

          Open Wheel Racing is a specially-formed entity whose principal business is to acquire all outstanding capital stock and attached rights of CART.

          The members of Open Wheel Racing are 21st Century Racing Holdings LLC, Big Bang Racing LLC, and Willis Capital, L.L.C.
          • The sole member of 21st Century Racing Holdings LLC is Mr. Kalkhoven. Mr. Kalkhoven is a member of Kalkhoven, Pettit, Levin and Johnson Ventures, LLC
          • The members of Big Bang Racing LLC are Paul Gentilozzi, Motorock LLC (“Motorock”) and Carl Russo. Mr. Gentilozzi is a shareholder and the CEO of Motorock. Mr. Gentilozzi is also CEO of Rocketsports Inc. and Gentilozzi Real Estate, Inc.
          • Willis Capital, L.L.C., is a specially-formed entity whose principal business is to acquire a membership interest in Open Wheel Racing. The members of Willis Capital, L.L.C., are Mr. Forsythe, Forsythe Racing, Inc., Indeck Energy Services, Inc. (“IES”), and Indeck-Ilion Cogeneration Corp. (Indeck-Ilian”), a wholly-owned subsidiary of IES. Mr. Forsythe’s principal occupation is Chairman and CEO of Indeck Power Equipment Company (IES, Indeck-Ilion, and Forsythe Racing, Inc.).


          SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION:

          The Common Stock is currently beneficially owned by Willis Capital, L.L.C.

          Willis Capital, L.L.C., pursuant to the Open Wheel Racing Operating Agreement dated August 15, 2003 has agreed to contribute its shares of Common Stock towards its capital contribution to Open Wheel Racing. The other members of Open Wheel Racing will contribute cash. Mr. Kalkhoven will use personal funds to fund the obligation of 21st Century Racing Holdings LLC; the obligation of Big Bang Racing LLC will be funded by capital contribution from its members, who will in turn use personal funds or working capital.

          PURPOSE OF TRANSACTION:

          The Reporting Persons believe that an Acquisition presents the best opportunity to continue the CART racing series, including the support series. The Reporting Persons would like CART to continue to provide a forum for open-wheel racing in North America and worldwide. The Reporting Persons believe that CART’s format, which features racing events on superspeedways, ovals, temporary street courses in urban settings and permanent road courses, can be successful with the proper organizational and capital structure.

          As a result, if Open Wheel Racing completes the Acquisition, Open Wheel Racing intends to continue to operate the business of CART, including continuing to sanction the motorsports series currently known as “Bridgestone Presents the Champ Car World Series Powered by Ford.”

          As a result, if Open Wheel Racing completes the Acquisition, Open Wheel Racing intends to continue to operate the business of CART, including continuing to sanction the motorsports series currently known as “Bridgestone Presents the Champ Car World Series Powered by Ford.”

          In order to improve the financial outlook for CART, the Reporting Persons are considering several actions. These possible actions focus on three constituencies: fans, sponsors and teams. For the fans, these actions include seeking to broaden the fan base by maintaining the current series format as well as entering into strategic agreements with other parties (including Motorock) to organize and conduct music festivals, concerts, events and contests in conjunction with CART racing events. The Reporting Persons plan to provide enhanced value to sponsors by increasing the fan base both at race venues and via other broadcast mediums. The Reporting Persons believe that the financial interests of the teams are best promoted by creating a stable business environment to allow the successful operation of the teams over the long term. In order to keep the racing and support series operating, the Reporting Persons may consider taking additional actions including evaluating the racing schedule to support the focus areas of fans, sponsors and teams, expanding promoter relationships and increasing the number of street races in the racing series. The Reporting Persons’ first priority for CART is to stabilize its financial outlook.

          Members of Open Wheel Racing have committed initial additional funding of $15,000,000 by Open Wheel Racing after the Acquisition; this commitment would enable Open Wheel Racing to provide additional funding to CART.

          If the proposed Acquisition is completed, Open Wheel Racing, as the sole stockholder of CART, may (and, in fact, expects to) change the present board of directors and management of CART. Open Wheel Racing may also make changes to CART’s charter or bylaws or take other actions that may impede the acquisition of control of CART by another person. Upon completion of the Acquisition, the Common Stock would become eligible for termination of registration pursuant to Section 12(g)(4) of the Act and the Common Stock would be delisted.

          Comment


          • #6
            INTEREST IN SECURITIES OF THE ISSUER.

            The Reporting Persons beneficially own an aggregate of 3,377,400 shares of Common Stock, representing approximately 22.9% of the outstanding shares of Common Stock based on 14,718,134 shares outstanding as reported by CART in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.

            As of the date of filing, the shares that are the subject of this Schedule 13D are currently held by Mr. Forsythe, Forsythe Racing, Inc., IES, and Indeck-Ilion. Such parties have committed to contribute their Common Stock to Willis Capital, L.L.C. Once the shares have been contributed, Willis Capital, L.L.C., will have the sole power to vote and dispose of 3,377,400 shares of Common Stock until such Common Stock is contributed to Open Wheel Racing Series LLC, subject to the limitations in the Operating Agreement and the Voting Agreements described in Item 6 below. Mr. Forsythe is the sole manager of Willis Capital, L.L.C.

            The Reporting Persons have not made any purchases of CART Common Stock over the past 60 days.

            CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER:

            Pursuant to a letter delivered to Mr. Forsythe by the CART Board of Directors on August 11, 2003 (the “August 11 Letter”), the CART Board of Directors approved the formation of a group for purposes of formulating an acquisition proposal, provided that if the acquisition proposal is abandoned, withdrawn or rejected by the board, such group will disband.

            On August 15, 2003, 21st Century Racing Holdings LLC, Big Bang Racing LLC, and Willis Capital, L.L.C., executed the Operating Agreement. The Operating Agreement, together with the other agreements referred to in this Schedule 13D, represents the agreement among the Reporting Persons relating to the Acquisition. The Operating Agreement also restricts Willis Capital, L.L.C.’s ability to transfer any Common Stock it holds and to the extent such shares are not subject to the Voting Agreements described below, to vote such Common Stock as directed by Open Wheel Racing.

            The shares currently owned by Willis Capital, L.L.C. are subject to voting agreements with CART dated October 16, 2002, and September 11, 2002 (the “Voting Agreements”), pursuant to which all Common Stock acquired in excess of 15% of the outstanding stock must be voted consistent with the recommendation of the CART Board of Directors on all strategic matters for a period of three years. Other than the Operating Agreement and the Voting Agreements, the Common Stock beneficially owned by the Reporting Persons is not pledged or otherwise subject to a contingency the occurrence of which would give a person (other than Open Wheel Racing) voting power or investment power over such stock.

            Comment


            • #7
              Exhibit 99.2

              (CART LETTERHEAD)
              August 11, 2003 VIA FACSIMILE: 847-520-7268

              Mr. Gerald Forsythe
              Indeck Power Equipment
              1111 S. Willis Avenue
              Wheeling, IL 60090

              Dear Mr. Forsythe:

              We understand that in response to CART's invitation for the submission of acquisition proposals you are considering forming a group. This will confirm

              (a) that the Board has concluded that formation of such a group would facilitate submission of a proposal for a negotiated business combination in response to an invitation from the Company and thus is covered by the recent amendment to the CART stockholder rights plan that has been provided to your lawyers and

              (b) that the Board has voted pursuant to Section 203 of the Delaware General Corporation Law to approve the formation of a group for purposes of formulating an acquisition proposal conditioned upon CART Board approval so long as such group disbands such proposal is abandoned, withdrawn or finally rejected.

              Our Board will consider any proposal made by your group in accordance with its duties to stockholders, and the actions described in this letter do not limit in any way the flexibility of the Board in satisfying those duties as it deems appropriate in its sole judgment.

              I look forward to hearing from you.

              Best regards,

              CART,Inc.

              Christopher R. Pook
              President/CEO

              Comment


              • #8
                Misc. Excerpts from the :

                OPERATING AGREEMENT OF OPEN WHEEL RACING SERIES LLC

                Membership Units. Ownership of the Company shall be divided into and represented by Membership Units.

                [each of the 3 "members" pay $333,333.00 and then own 333 (of 999 total) membership units - basically OWRS is owned 33% by each "member" although each "member" may also have multiple principals]

                5.1 Capital Contributions.

                (a) On the signing of this Agreement, each Member shall make an initial cash Capital Contribution in the amount set forth on Schedule 1

                [this is the $333,333 payment referenced above to be made by each "member"]

                (b) At any time after the signing of this Agreement and prior to the completion of the Proposed Acquisition, the Board of Managers may by Notice to the Members require an additional Capital Contribution from the Members in such amounts as the Board of Managers reasonably believes necessary to continue to operate the business of the Company through completion of the Proposed Acquisition

                c) After the signing of this Agreement and no later than the date set by the Board of Managers (which shall be as close as practical to the closing date of the Proposed Acquisition) each Member shall upon call by the Board of Managers make an additional Capital Contribution in an amount equal to its Percentage Interest multiplied by the total cost of the Proposed Acquisition

                The Capital Contribution shall be made in cash or shares of CART, provided that each Member who beneficially owns shares of CART shall, unless otherwise provided by the Board of Directors, be required to first contribute such shares toward its Capital Contribution under this Section 5.1(c).

                [Members will first "buy in" with shares of CART stock, if they own any]

                d) At such time or times requested by the Board of Managers after the completion of the Proposed Acquisition, each Member commits to make additional cash Contributions in an aggregate amount equal to fifteen million dollars ($15,000,000) multiplied by such Member's Percentage Interest provided that the Board of Managers may not call for additional Capital Contributions under this Section 5.1(d) after February 28, 2005.

                (e) Except as expressly provided in this Section 5.1, no Member shall be required to contribute any further capital to the Company, nor shall any Member be required to loan any funds to the Company.

                [there is a finite, limited liability to members of a percentage share of $15 million, plus their initial buy-in of $333,333.00]

                (f) The Board of Managers may elect to require that Members purchase notes or other evidence of indebtedness of the Company in proportion to the Members' respective Percentage Interests in lieu of any portion of any required capital contribution under Section 5.1(a) through (d).

                [if they can not come up with any required payment they can sign a note to the company and not be booted/lose their member status/shares]

                5.2 Failure to Make Capital Contributions. If any Member (such Member being a "Defaulting Member") does not pay to the Company when due, as determined by the Board of Managers, its Capital Contributions required pursuant to Sections 5.1(a) through (d) (whether requested in the form of debt or equity), the Company is entitled to enforce the obligations of the Member to make such Capital Contributions.

                5.4 No Interest on, or Return of, Capital. No Member shall be entitled to any interest on such Member's Capital Account or on such Member's Capital Contributions and, except as provided in this Agreement, no Member shall have the right to demand or to receive the return of all or any part of such Member's Capital Account or Capital Contributions.

                DISTRIBUTIONS
                7.1 Sharing of Distributions. Except as otherwise provided in this Agreement or as otherwise agreed by the Members, all distributions, including distributions in kind, to the Members shall be made in proportion to their Percentage Interests. Notwithstanding the foregoing, if any CART shares have been contributed to the Company and the Company does not complete the Proposed Acquisition, the contributed CART shares shall be distributed to the contributing Members in the same proportion as their contribution of such CART shares. In such event, the Company's liabilities shall be settled and charged against the Members' cash Capital Contributions in proportion to such Members' Percentage Interests; any remaining cash shall be refunded to the cash contributing Members in amounts equal to their respective cash Capital Contributions less their respective shares of liabilities as aforesaid.

                LIMITED LIABILITY OF MEMBERS
                8.1 Limited Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member, Manager or officer shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member, Manager or officer of the Company.

                8.2 Contributions; Return of Distributions. Except as otherwise expressly required by law, a Member, in its capacity as such, shall not be obligated to make any additional contribution in excess of its required Capital Contributions to the Company or have any liability for the repayment and discharge of the debts and obligations of the Company

                MANAGEMENT OF THE COMPANY
                9.1 Board of Managers. ... the business shall be managed by a "Board of Managers". Except as otherwise provided in this Agreement, any action or determination permitted or required to be taken or made by the Board of Managers under this Agreement or under the Act shall be taken upon the vote or written consent of a majority of the entire Board of Managers.

                9.2 Actions Requiring Unanimous Approval. The unanimous vote or written consent of the Board of Managers is required for : (a) admission of new Members; (b) transactions between the Company and a Member or a Member's Affiliate; (c) any increase in the consideration to be paid for the acquisition of CART in connection with the Proposed Acquisition; (d) transactions between CART or other Affiliates of the Company and any Member or Member's Affiliate; (e) any sale of all or substantially all of the Company's assets; (f) selection of the Company's or CART's chief executive officer; (g) appointment of any member to the board of directors of CART or any subsidiary of CART; and (h) any merger or consolidation of the Company or CART with any Person

                9.3 Managers.

                (a) Number, Term and Qualifications. The Board of Managers shall consist of three Managers, who initially shall be Gerald Forsythe, Kevin Kalkhoven and Paul Gentilozzi. For so long as they are Members and except as otherwise provided by this Agreement, each of Willis Capital, L.L.C., Big Bang Racing LLC and 21st Century Racing Holdings LLC shall have the right to appoint and maintain and remove one Manager.

                9.5 Conflicts of Interest for Members. Each Member: (a) agrees that any Member or Manager (and any Affiliates of a Member or Manager) may engage in or possess an interest in other business ventures or every kind and description, independently or with others; (b) authorizes, consents to and approves of such activities, whether or not such activities may conflict with any interest of the Company or the Members or Managers; and (c) agrees that neither the Company nor any Member or Manager shall have any rights in or to such activities or any profits or income derived from such activities.

                13.1 Representations and Warranties

                (a)(vi) The Member is an Accredited Investor and has acquired its interest in the Company for investment, solely for its own account, with the intention of holding such interest for investment and without any intention of participating directly or indirectly in any distribution of any portion of such interest, and without the financial participation of any other Person in acquiring its interest in the Company.

                (b) Willis Capital, L.L.C. represents and warrants that, as of the date of this Agreement, it beneficially owns 3,377,400 shares of CART common stock and has not acquired any shares within 60 days of the date of this Agreement.

                (c) Big Bang Racing LLC represents and warrants that, as of the date of this Agreement, it beneficially owns no shares of CART common stock and has not acquired any shares within 60 days of the date of this Agreement.

                (d) 21st Century Racing Holdings LLC represents and warrants that, as of the date of this Agreement, it beneficially owns no shares of CART common stock and has not acquired any shares within 60 days of the date of this Agreement.

                14.9 Voting of CART Stock. At any time prior to completion of the Proposed Acquisition, each Member shall (a) not transfer any shares of CART stock held by such Member except in accordance with this Agreement, and (b) vote all shares of CART stock held by such Member as directed by the Company, on any matter that relates to the Proposed Acquisition (including without limitation the Proposed Acquisition, any competing proposal or any other matter that would affect the ability of the CART or the Company to complete the Proposed Acquisition), except for those shares of CART stock which are subject to voting restrictions pursuant to prior written agreements with CART, in which case the Member shall vote those shares pursuant to such voting agreements and all other shares as directed by the Company.

                [guess the speculation about skirting the voting restrictions by creating this entity are not correct - at least as far as this agreement is concerned]

                Comment


                • #9
                  What a relief, for a moment there I thought it was Paul Russo, and he's... For a long time. Continue to RIP Paul

                  Comment


                  • #10
                    I don't have the time to read all of that but I have two questions:

                    1. Is there a provision that prevents them from just liquidating the company? If not I'd like to pay $7MM for a company that has $30MM in the bank. Instant liquidation and I walk away with $23MM.

                    Assuming they are willing to continue operations then their commitment to an additional $15MM is worthless without some substantial changes. CART burned through $45MM in the first half of the year this year. I'll be curious to see the cost-cutting measures they propose.
                    Center Grove Trojans
                    2008 5A Football State Champs
                    2015 6A Football State Champs
                    2011 Track State Champs

                    Center Grove Jr. Trojans
                    2014, 2015 & 2017 IEFA State Champs

                    Comment


                    • #11
                      My opinion - take it for what it is worth . . . and then there is the potential involuntary bankruptcy.

                      At this point CART has some serious decisions to make. They amended their Shareholders Rights Plan to specifically deal with this scenario - to allow them to request an offer from this group and suspend the Shareholder Rights Plan (i.e.: Poison Pill) for them.

                      Well, now they have an offer. An offer from their hand picked "white knight" group. A group of individuals in theoretically the absolutely best position to place an accurate value on CART.

                      And that offer says CART is not worth anywhere near it's then current share price - they say that it is actually only worth roughly one third of the share price at time of offer. And worth maybe 25% of the estimated current CASH assets.
                      Now CART has a real dilemma.

                      They've told their shareholders the only way to see CART survive was to spend a huge portion, the majority in fact, of the company's cash assets this year in order to position the company for a sale or additional equity infusion.

                      Now they have a legitimate Buyer. And that Buyer, again comprised of some very experienced and knowledgeable, in both business and racing, people, has said CART is only worth a bit over $7 million dollars - tens of millions less than its CASH assets.

                      In essence, by the value of their offer, the Buyer group has clearly indicated that CART is not a viable ongoing concern without a huge cash infusion. And although they've fueled incessant "Bernie" and other rumors with Pook and others "wink, wink" innuendo and actions, CART has not received any indication that there are either buyers or investors in any way interested in the Company. In fact they had to amend their Shareholder Rights agreement, and it seems practically beg this group to make a last ditch offer.

                      The Pandora's Box that CART has now opened gets very interesting from here. Because a qualified and competent Buyer has established a value that clearly shows CART can not continue without a sale or huge cash infusion and because there seems no prospect of either that huge cash infusion, or a sale that provides a premium over current CASH value, the CART Board is left with a single responsible course.

                      And that is, to protect shareholder value, to shut down the Company immediately and conduct an orderly liquidation of its remaining assets and distribute the proceeds to shareholders. By doing that current shareholders should receive somewhere in the range of $2.00 to $2.50 per share.

                      As unpopular a decision as it will be, CART's Board is really left with no other. If they continue to operate the Company, and further deplete assets, with the knowledge that the Company is not a viable ongoing concern they risk significant shareholder and possibly SEC action.

                      And in the event that CART does choose to continue operations and further deplete assets under that scenario, I suspect you may very likely see a Shareholder action forcing an involuntary bankruptcy, whereby the Court is requested to appoint a Receiver to manage and protect the Company (Shareholder) assets.

                      IMO CART should cease operations immediately to conserve assets. They should then negotiate with this Buyers group and any other interested parties to obtain the best price for each of CART's non-cash assets. That way a buyer can purchase only the assets with positive value, contracts for races etc, and they will have the best opportunity for a clean start. And CART fulfills its fiduciary responsibility by maximizing shareholder value by adding the proceeds of these asset sales to the cash on hand and distributing them to the shareholders of the Company.

                      In reality I'm not sure they have any other choice - at least not one that does not involve some very uncomfortable questions and unpleasant repercussions . . .

                      But then again, what do we know - we're just stoopid lemmings . . .
                      Last edited by 220mph; 08-19-2003, 01:47 AM.

                      Comment


                      • #12
                        No TD, I do not see anything that would prevent the Buyers Group from liquidating the company after the sale. They would own it lock, stock and barrel. And cash.

                        I believe they would tell you they anticipate that there is little cash left by the time they take the company over although I don't remember seeing a projected closing date.

                        A very good question though - and I do not know that there is any real way to force them to do anything after the sale . . .

                        Comment


                        • #13
                          What the buyer groups said about their lowball offer:

                          The offer price is less than the market price of Common Stock on the date of the offer letter.

                          The offer price reflects the fact that CART will require significant additional capital to maintain its ongoing operations.

                          The Reporting Persons believe that if such capital were raised through an equity financing, even if such equity financing were possible, CART shareholders would likely suffer sufficient dilution to reduce the market price of the Common Stock to less than the offer price.

                          If a third party, which intends to continue to operate the business of CART makes a superior offer, the Reporting Persons at present intend to support such superior offer.

                          Comment


                          • #14
                            TERMINATION
                            12.1 Dissolution.

                            (a) The Company shall be dissolved and its business and affairs wound up upon the happening of any of the following events, whichever shall first occur:

                            (i) the sale, lease, exchange, assignment, involuntary conversion, or other dispositions or transfer of all or substantially all the Company's assets except in the ordinary course of business;

                            (ii) Prior to closing the Proposed Acquisition, either

                            (a) the vote of Members holding a majority of the outstanding Membership Units or

                            (b) the Company or any Member notifies the Members that it has been advised in writing by a responsible officer of the CART that the CART no longer wishes to consider an acquisition proposal from the Company;

                            (iii) any event which makes it unlawful for the business of the Company to be carried on by the Members; or

                            (iv) the entry of a decree of judicial dissolution.

                            12.2 Termination of Company. In all cases of dissolution of the Company, the business of the Company shall be wound up and the Company terminated as promptly as practicable thereafter, after each of the following shall be accomplished:

                            (d) The proceeds of sale and all other assets of the Company shall be applied and distributed as follows:

                            (i) To creditors of the Company including Members of the Company to the extent otherwise permitted by law in satisfaction of (A) the debts and liabilities of the Company whether by payment or the making of reasonable provision for the payment thereof, and (B) the expenses of liquidation; and

                            (ii) all remaining assets shall be applied and distributed to the Members in accordance with Article VII.
                            TD - nothing it appears that prevents an immediate liquidation.

                            Section 12.1 (a)(i) is very vague but the wording

                            ". . . other dispositions or transfer of all or substantially all the Company's assets except in the ordinary course of business" as a "cause" for termination of the Company would seem to maybe anticipate the possibility.

                            Comment


                            • #15
                              The relevant portions regarding the groups "intent" in this transaction:

                              PURPOSE OF TRANSACTION.

                              The purpose of forming Open Wheel Racing is to acquire all outstanding stock and attached rights of CART.

                              Open Wheel Racing offered to acquire all the outstanding Common Stock and attached rights, together with any other securities convertible into or exercisable for capital stock of CART, for a total of $7.4 million in cash (the “Acquisition”).

                              The Reporting Persons believe that an Acquisition presents the best opportunity to continue the CART racing series, including the support series. The Reporting Persons would like CART to continue to provide a forum for open-wheel racing in North America and worldwide. The Reporting Persons believe that CART’s format, which features racing events on superspeedways, ovals, temporary street courses in urban settings and permanent road courses, can be successful with the proper organizational and capital structure.

                              As a result, if Open Wheel Racing completes the Acquisition, Open Wheel Racing intends to continue to operate the business of CART, including continuing to sanction the motorsports series currently known as “Bridgestone Presents the Champ Car World Series Powered by Ford.”

                              In order to improve the financial outlook for CART, the Reporting Persons are considering several actions. These possible actions focus on three constituencies: fans, sponsors and teams. For the fans, these actions include seeking to broaden the fan base by maintaining the current series format as well as entering into strategic agreements with other parties (including Motorock) to organize and conduct music festivals, concerts, events and contests in conjunction with CART racing events. The Reporting Persons plan to provide enhanced value to sponsors by increasing the fan base both at race venues and via other broadcast mediums.

                              The Reporting Persons believe that the financial interests of the teams are best promoted by creating a stable business environment to allow the successful operation of the teams over the long term.

                              In order to keep the racing and support series operating, the Reporting Persons may consider taking additional actions including evaluating the racing schedule to support the focus areas of fans, sponsors and teams, expanding promoter relationships and increasing the number of street races in the racing series.

                              The Reporting Persons’ first priority for CART is to stabilize its financial outlook.

                              Members of Open Wheel Racing have committed initial additional funding of $15,000,000 by Open Wheel Racing after the Acquisition; this commitment would enable Open Wheel Racing to provide additional funding to CART.

                              If the proposed Acquisition is completed, Open Wheel Racing, as the sole stockholder of CART, may (and, in fact, expects to) change the present board of directors and management of CART. Open Wheel Racing may also make changes to CART’s charter or bylaws or take other actions that may impede the acquisition of control of CART by another person.

                              Upon completion of the Acquisition, the Common Stock would become eligible for termination of registration pursuant to Section 12(g)(4) of the Act and the Common Stock would be delisted.
                              It seems their stated purpose and intent to continue the operation of CART.

                              However, their commitment is capped at $15 million new capital and only continues thru February 2005. And as other parts of the operating agreement provides, it appears, that there is no real liability for non-performance other than loss of the non-performing members "share" in the venture and even then a member may be able to provide a note for the unfunded members cash contribution and retain their share.

                              Comment

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