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AUGUST 18, 2003

F1 watches as CART takeover bid arrives

The future of CART will be decided within a matter of weeks following an offer for the company by Gerry Forsythe, Kevin Kalkhoven, Paul Gentilozzi and Carl Russo. They are offering to buy all the outstanding shares in the company for $0.50 a share, which values the company at $7.4m. The shares are currently trading at $1.87, which values the company at $27.5m. The bid for the company was invited last week by the CART board of directors and the four investors then got together to form Open Wheel Racing and this now controls the stock previously held by Forsythe, which amounts to 22.9% of CART. Although a number of different companies are involved all can be traced back to the four principal investors. They have agreed to provide $15m in funding as soon as the acquisition is completed to run the series. Their stated aim is to broaden the fan base and sponsor appeal of the series 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. They have indicated that they intend to increase the number of street races in the longer term. If the takeover goes ahead the new series will be run by a "Board of Managers" consisting of Forsythe, Kalkhoven and Gentilozzi.

The offer "reflects the fact that CART will require significant additional capital to maintain its ongoing operations" but will come as a shock to current shareholders although they may conclude that it is better to sell out than to allow the series to die and be left with nothing.

Bernie Ecclestone is not involved in the bid.

However, the stated aim of moving the racing to the street tracks will inevitably free up some of the US's best known venues as at the moment the Indy Racing League races only on oval tracks. This could provide F1 with the opportunity to move in at venues such as Laguna Seca and Road America. Of these, the most attractive for F1 would undoubtedly be Laguna Seca, which would open up the West Coast of the United States but it is not clear how the circuit would be able to pay for a Grand Prix. There is a similar problem with Road America.