Com'on Tony Here's Your Chance - CART Shares Fall, Stock Price Nearly Equals Company's Cash

June 4, 2002 Bloomberg News reported that CART shares fell 8 percent or 74 cents to $8.50 per share, sending its stock price to levels that nearly match its March cash and short term investments

of $121.5 million. Divided by 14.7 million shares outstanding, that equals $8.25 a share. The company has no debt.

The stock price raises the possibility of either taking the company private or a takeover, said Glen Reid, an analyst with Bear Stearns, who does not own shares. If the company took itself private, he said, it could no longer rely on its cash and would have to add debt "to finance its growth objectives."

The company's shares fell today after A.G. Edwards analyst Timothy Conder downgraded the stock to "sell" on concern that Honda Motor Co.'s decision to end its involvement in CART after this season and switch to the Indy Racing League next year. Honda had included CART drivers in advertisements and promoted CART races.

CART executives could not be reached for comment. Derrick Walker, a CART team owner and a director, said the company "has some big challenges" and is evaluating future strategy. "It's a work in progress," he said.

Chief Executive Officer Christopher Pook on Saturday said he was concerned about the stock price although he had "zero ability to manage that," according to the text of a press conference supplied by CART.

CART went public in 1998 at $16 a share. Team owners in the CART series originally dominated ownership of the company. Most team owners have sold off shares. The largest shareholder in CART is Gerald Forsythe, a team owner who has boosted his stake. He owned 11.8 percent of CART shares as of April 2.

CART teams provided the bulk of competitors at the Indianapolis 500 until 1995. The privately held Indianapolis Motor Speedway began its own series, the Indy Racing League, in 1996, and made the Indy 500 part of that circuit. CART teams mostly boycotted the race until 2000.