CART pushed towards Chapter 11 bankruptcy

The board of US promoter Championship Auto Racing Teams Inc is expected to commence Chapter 11 bankruptcy proceedings, after Open Wheel Racing Series asserted that some of the conditions of the proposed 'merger' would not be satisfied before CART's stockholders vote on the deal on December 19. Pointing to a 'material adverse effect' in that there are likely to be fewer teams competing in the 2004 Champ Car World Series, OWRS has proposed an alternative transaction

CART pushed towards Chapter 11 bankruptcy

OWRS has told CART it will not waive any condition of its offer of $0.56 per share. However the purpose-formed company has offered to provide secured financing until its alternative transaction is finalised.

Under this proposal, CART would commence 'reorganisation cases' under Chapter 11 of the US Bankruptcy Code, and OWRS would purchase its assets of and assume certain liabilities.

CART said that it was reviewing the new proposal but emphasised that there could be no assurance that any agreement would be entered into, or that any transaction, if completed, would result in any payments to its stockholders.

OWRS partner Paul Gentilozzi stated: "This proposal will allow OWRS to acquire the assets necessary to continue the CART racing tradition into 2004. OWRS expects to retain a sufficient number of cars to meet CART's contractual obligations with our race promoters. OWRS plans to maintain and ultimately expand the CART racing series in the Americas and throughout the world. While OWRS is disappointed that the previously announced transaction appears no longer feasible, it remains committed to the CART racing series."

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