Editorial

Vannini advocates major overhaul to rescue CART series

 

 by Mark Cipolloni
October 26, 2001

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All the bad news about CART this past season has shaken the entire organization to the bones.  There is so much uncertainty about CART's future, even from the ranks within, it's an organization that's begging for someone to right the sinking ship. A series with so much potential, yet with so many problems, has the outside world scratching their heads and saying how and why can this have happened? Jonathan Vannini to the rescue. 

Already a major CART stockholder, today Vannini filed an SEC form 13D, excerpts of which are shown below.  As can be seen from this SEC filing, Jonathan Vannini has bought more CART stock. He now owns approximately 1.2 million shares, or about 8%. 

What's even more noteworthy about this filing is the fact that Vannini plans on applying significant pressure to replace Joe Heitzler as President and CEO, and to remove team owners from the board due to their significant conflicts of interest.  My guess is he plans on putting stronger businessmen in place in an effort to turn CART around. 

And if you doubt Vannini can do it, think again. As this article on Bloomberg.com points out, Mr. Vannini is just the kind of guy who will start a proxy fight to get what he wants. The lawsuit referred to at the end of the Bloomberg article, was settled in Mr. Vannini's favor.  The guy he beat, Ronald Perelman is listed in the Forbes 400 top businessmen.  Perelman has a reputation of being a ruthless entrepreneur who is noted for his scorched earth, win-at-all-costs litigation tactics.  He's not used to losing and will spend whatever it takes to win.  Well guess what, Mr. Vannini beat him.  I doubt CART's team owners/board members have the stomach to fight him on this, and given how poorly CART has performed under their leadership the past five years, I would think in the end they will yield to someone who might actually help them turn CART into the huge success it could be.

I wonder if Vannini has lobbied the biggest investors to help make this happen? He doesn't strike me as being someone who would not back up his words with actions.  We do know Mr. Vannini is a business associate of James Grosfeld, a successful businessman in his own right, and recently appointed to the CART Delaware Board.  We also know Vannini and Forsythe share a lot of the same views.  Combined these three men control about 35% of CART stock.  Don't be surprised if all three end up agreeing on Vannini's prescribed course of action.

From what I hear, Chris Pook appears to be the favored candidate to replace Joe Heitzler as President and CEO, with Heitzler staying on as Chairman of the Board.  Pook is highly regarded by most of CART's sponsors, team owners and even Bernie Ecclestone.  He can be charming, funny, articulate and cunning, all in the same breath.  He is the only person we know who has stood toe-to-toe with Bernie Ecclestone and came out with his shoes still on his feet.  In fact, it was Bernie who backed down at the end of the day.

The CART sponsors I spoke to all hold Mr. Pook in very high esteem, and with sponsors looking at the IRL as an alternative, Mr. Pook might just be the medicine the doctor prescribed.

Time will tell if Mr. Vannini is successful in what it sounds like he has in mind, but if we were a betting man, we wouldn't bet against him.

Excerpts from today's SEC Form 13D filing
According to CART's most recent Quarterly Report on Form 10-Q, filed on August 9, 2001, there were issued and outstanding 15,179,567 shares of Common Stock on June 30, 2001. As of the date hereof, the Reporting Person (Jonathan Vannini) has beneficial ownership of 1,189,700 such shares, representing approximately 7.838% of the outstanding shares of Common Stock of CART. (a) The Reporting Person has the sole power to vote or to direct the vote of and the sole power to dispose or to direct the disposition of a total of 1,189,700 shares of CART Common Stock.

Recent CART Stock Purchaes by Vannini Shares

Cost/Share

10/17/01

59,900

$13.183

10/18/01

6,600

$13.243

10/19/01

13,400

$13.179

10/22/01

100,000

$13.302

10/24/01

36,500

$12.372

10/25/01

223,300

$12.670

10/26/01

10,300

$N/A

The Reporting Person has acquired the CART Common Stock owned by him for investment purposes, because he believes that the trading prices of the Common Stock in the public market do not adequately reflect the potential value of CART's underlying businesses and assets. 

The Reporting Person is considering a number of actions which, in the Reporting Person's judgment, would improve the management, product offerings and business prospects of CART. Among the actions which the Reporting Person believes would achieve these goals are a change in senior management, including, but not limited to, the appointment of a chief executive officer and president with greater experience in the motorsports industry. The Reporting Person further believes that certain members of CART's Board of Directors might have actual and potential conflicts of interest with CART and its stockholders. If such conflict exists, the Reporting Person advocates the resignation and/or removal and replacement of some or all of these persons as directors. 

In addition, the Reporting Person expects and intends to explore and be receptive to opportunities to improve the management, product offerings and business prospects of CART, including changes to CART internal policies, procedures and governance. In particular, the Reporting Person intends to encourage CART to review its policies, procedures and governance and, depending on CART's response, may consider pursuing alternative courses of action on his own or with third parties. These courses of action may include, without limitation, the solicitation of proxies from other stockholders of CART in favor of proposals made by the Reporting Person and/or nominees to CART's Board of Directors. However, other than as described in the paragraph above, the Reporting Person currently has no specific plans or proposals with respect to these matters. 

The author can be contacted at markc@autoracing1.com

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