NJMP files Chapter 11

[Phokaioglaukos]

FOR IMMEDIATE RELEASE:

NJMP Announces Reorganization Plan

Millville, New Jersey, March 7, 2011. New Jersey Motorsports Park (NJMP)

announced a reorganization plan that includes the restructuring of debt, addition of new

equity, and the filing of Chapter 11today, in a move that management feels confident will

secure the Park’s future operations. NJMP has additionally agreed to terms with its

primary lender that will enable it to restructure its debt through the bankruptcy filing.

NJMP Owner and Managing Partner Lee Brahin stated “Although the decision to file

Chapter 11 was a very difficult one, it was deemed necessary to protect future operations

and to allow the Park to continue providing employment and other economic support to

the local and regional communities.�?

“Our overall plan for the future is still sound,�? he continued. “Our renegotiated debt

financing will enable us to move forward with our existing operational plan, although we

will continue to reduce operating expenses and are in the process of renegotiating debt

with vendors. We are also receiving an infusion of new equity from certain investors,

which will bolster NJMP’s liquidity position.�?

NJMP General Manager Brad Scott stated that the realignment of debt will not affect

employment numbers, chiefly because needed reductions have already occurred.

“We wish to emphasize that none of these changes will affect our scheduled 2011 racing

and social events, Drivers Club Memberships, season passes, pre-event ticket sales, gift

certificates, deposits or any other NJMP operation,�? reported Scott.

[jmr3]

Apparently part of the restructuring was raising the rate of the VIP Suites by 50% to $150/night. 

[opus]

They should make it cheaper to rent the track as part of the reorg.  Doesn't track rental cost more than some of the more well known courses?

[ccm911]

That is a huge operation.  I am amazed they made it this long.  Consider how much it costs to build a track.  Then throw in Condos and a Clubhouse.

You need to read about how Summit Point opened up in order to get a clear comparison.

As they say: "To make a small fortune in racing, one needs to start with a large fortune".

[MikeKling]

And the garages at Thunderbolt by $10.00.  Really, if your plan to prosperity includes ridulous price increases for already overpriced facilities, maybe the owners should consider a different career.

[betegh9]

Hmmmm........... Tough economic times.  I feel sorry for the small contractors that were hired to do lots of the work there.  Under restructuring, they may never see their $$$$$.  Do tracks in Europe have this problem?:?

[Minoclan]

betegh9 wrote:

Hmmmm........... Tough economic times. I feel sorry for the small contractors that were hired to do lots of the work there. Under restructuring, they may never see their $$$$$. Do tracks in Europe have this problem?:?

Amen to that brother. They are going to get screwed.

[Phokaioglaukos]

It's amazing in England. Many tracks are built in part on WWII airstrips right on top of villages and by farms. Met a spectator at one of my races who lives about 100 meters from the track. He gets free entry as a neighbour and comes to lots of races. Also collects vintage tractors.

On the other hand look at the mess the Nurburgring got into. Bankruptcy would help there!

I have hopes NJMP will reorganise quickly.

[Phokaioglaukos]

One of my bankruptcy partners pulled up some of the documents filed with the court.

The certification in support of the motion for a cash collateral order filed at the same time as the case states that the senior secured lender (Merill Lynch Mortgage Capital Inc. has agreed to allow the use of the cash that is collateral for its loans for about four weeks. The cash is needed to pay the Millville Rescue Squad, insurance and other essential services. The certification also states that the debtors have worked with the lender to restructure the loans--$10 million of the $30 million in mortgage debt would be reclassified as unsecured debt and some of the current investors would invest $2 million in new equity for a post-reorg stake of about 75% with the senior lender getting just under 20%. There would be set aside $368,000 for the unsecured creiditors, not including the $10 million of debt newly classified as unsecured debt due to the senior lender. That is expected to allow seamless operation through the racing season and lead to a quick and cooperative resolution of the bankruptcy case.

There is also a series of three term sheets for the debt restructuring that go into greater detail. The current equity is zeroed out, but that does not apply to membership "interests" which are not equity in the debtors. What membership interests are is more of a license that will either be assumed or rejected by the debtors. I did not see anything in the term sheets about the members, but I expect that there will be no change. Membership will continue to mean the right to pay a blacktop fee to drive during a member day and rent suites at a discounted rate.

[Terry]

Who owns the other 5%? Was any part of the initiation fee supposed to be refundable?