NJMP bankruptcy update
 

Dear Driver’s Club Members,

We are excited to begin our exit from our bankruptcy proceedings! We anticipate that the court will approve our Plan of Reorganization on July 14th, which is well ahead of the originally projected date. To detail our progress, there will be a press statement going out this afternoon from our Financial Advisors, The Brownstein Corporation, explaining an Investment Opportunity which is part of our pre-packaged re-organizational plan.

NJMP made the decision to reorganize in order to restructure its balance sheet. It had taken on too much debt, and like many businesses dealing with the events of 2008-2010, our original forecasts proved to be too optimistic. So, like many businesses in our situation, we are utilizing a bankruptcy proceeding to restructure our debts and equity. Fortunately, our secured lender, Merrill Lynch Mortgage Capital, Inc., is co-sponsoring our Plan of Reorganization, and we anticipate emerging from the bankruptcy process within several weeks with reduced debts, stronger than ever. In the meantime, we are managing our business as usual, and making exciting plans for the future which we’ll announce after our Plan has been confirmed. The bankruptcy process has had and will have no effect upon our 2011 scheduled racing events or other social events. Drivers Club Memberships, season passes, pre-event ticket sales, VIP suite and Villa rentals, track rentals and all other NJMP operations have not been affected, and we expect business to be conducted as usual throughout the remainder of the bankruptcy process and after we exit within the next several weeks.

If you have any questions regarding the press statement or investment opportunity please call or email Angela Phillips at (302) 521-5194 or angela@brownstein.com. Any NJMP operating questions may be directed to Brad Scott, General Manager of NJMP at bscott@njmp.com

We look forward toward moving into the future and appreciate all your support during these recent proceedings.

Thanks.

Joe Volpe
Director of Motorsports Activities
New Jersey Motorsports Park
47 Warbird Drive
Millville, NJ 08332
856-327-7225
856-327-8835 Fax
jvolpe@njmp.com

Seems like a lot of words without saying much.

From here: http://www.thedailyjournal.com/artic...524003/MILLVIL

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MILLVILLE: Motorsports park expects to leave bankruptcy behind in July

New Jersey Motor Sports LLC said this afternoon it has proposed a definite plan to emerge from bankruptcy following a July 14 hearing in U.S. Bankruptcy Court in Camden.

At that hearing, the park said, it expects the court to confirm its Plan of Reorganization. “This will mark the end of a remarkably quick restructuring process, whereby NJMP filed Chapter 11 bankruptcy on March 7th with an agreement with its secured lender, Merrill Lynch Mortgage Capital Inc.,” the park said in a statement.

As part of the plan, Merrill Lynch is reducing its secured debt from $30.4 million to $20 million. Merrill Lynch also will act as co-sponsor of the reorganization plan along with NEI Motorsports LLC. NEI will pay $2,000,000 to fund certain obligations pursuant to the Plan.

“In the event this stalking horse $22,500,000 transaction is determined to be the highest and best, NEI will be a majority owner of NJMP upon bankruptcy emergence and Merrill Lynch will hold a minority interest, along with its $20,000,000 restructured secured loan,” the park stated. “NEI’s shareholders include some of NJMP’s shareholders.”

NEI’s and Merrill Lynch’s proposal is subject to “higher and better cash offers” — with a minimum of $23 million.

Brownstein Corporation, NJMP’s court-approved financial advisor, will send solicitations via email and mail to determine whether there are interested parties with better terms. There are specific bidding procedures to which any interested parties must adhere.

“Importantly, the plan will not affect the longstanding and valuable relationships NJMP has established with its members, patrons and sponsors, nor will there be any material changes in the company’s operations, including its scheduled events, the Drivers Club, Shade Tree Garages, Breighton Villas, hospitality suites, sponsorships, or other aspects of its operations,” NJMP stated.

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Seems like someone could put together a bidding group for $24mm pretty easily and have a shot at a takeover. Would not be difficult to raise $8mm in equity, $16mm in debt, and take it over.

And the return?

I wonder how much the real estate (villas) plays into this. I assume sales sucked, but was that a big drag on the financial performance. As far as I could tell, they had the track as booked up as you could expect, and they had a good promo team attracting pro races.

A decade of heartburn ?

The fancy stuff (villas) could have been how they were projecting to get a return. I assume that's pretty high margin for them over time.

I heard just the opposite. No industry contacts, no real push. An "if you build it they will come" marketing plan.

Out of 62 possible May bookings (2 tracks x 31 days) I heard they had 16-18. Gonna be tough covering your nut at that rate.

This is just what I've heard from people closer to the situation than me, but I have no idea how accurate it may/may not be.

Still, that's a lot of debt forgiveness and should make it much easier for them to be profitable and therefore around for a long time. :rockon:

The return is there, it may be at exit, but it is there.

I am a firm believer that the barriers to entry for building tracks are only going to continue to increase.

NJMP may need to consider dropping some of the pro races where they have to pay and focus more on paying customers.

Whatever is going on, it looks favorable to me (what does a dentist know about business?).
But more importantly, something has happened in the last 5 or so years that there have been more new track constructions since the sport first went off public roads in the 50's.

Just looked at their calendar. Looks like there are 17 days that aren't booked between the 62 possible May bookings. Not as full as VIR is for the same month but nearly 75% usage rate. Not sure what the magic number to cover the nut is but it has to be in that neighborhood.

The number of pro races on the books are a drop in the bucket for total days of use. Most of their 'spectator' calendar is filled with groups that do pay for the track.

Having been involved with the planning and construction of CMP, VIR and TBolt, this is very true.

Having heard of and seen the failures of Rausch Creek, the Poconos track, Dragon's Ridge, the Savannah course, High Rock and others and knowing the economics of operating these venues, it's a hard row to hoe...

Not to mention the tracks that have disappeared over the decades, and tracks that have died and come back to life (VIR). Personally, I would pay 25% more for track costs if that keeps my hobby alive.

So, what characteristics do the "successful" tracks share?

That's great to hear. I thought the figure I was told sounded really low, but I didn't know any figures. If they keep up with 75% and a reduced debt load you've got to figure they should be on firm footing.

The lost villa sales must have been the killer. I heard (again, I'm no insider) that they were planning on 150, had deposits on 50 or so, and ended up with 8. Selling 150 villas would have paid down a huge portion of their debt which would have left them with great margins. Sounds more like a spec real estate development play (remember, market was sizzling at the time) with a track attached, than the other way around.

No matter. As long as they're around, I'm happy.