Agreement clears path for buyout of racetracks

December 28, 1993|By Ross Peddicord | Ross Peddicord,Staff Writer

Joe De Francis and Tom and Bob Manfuso ended a month of negotiations yesterday by agreeing to a settlement that paves the way for a buyout by either side of Laurel and Pimlico race courses on Jan. 21.

On that date, De Francis either buys the Manfuso shares in the two tracks for $8.2 million or declines and the Manfuso brothers become controlling owners of Laurel and Pimlico by paying De Francis the same price for his stock.

The settlement means that the disputed Russian roulette provision of a stockholders agreement is essentially in effect, but also stipulates that all litigation between the two sides is now dropped and that there is a full and complete divorce between the two warring camps.

De Francis said there are more than three groups interested in becoming his partners in Laurel/Pimlico, although he said he has not officially decided yet if he will buy or sell.

The Manfuso brothers, De Francis and their attorneys never met face-to-face during the month of negotiations.

"There is now peace in the racing valley," Joseph H.H. Kaplan, chief administrative judge of the Baltimore City Circuit Court, said afterDe Francis, his partner Martin Jacobs and his sister Karin Van Dyke put their signatures on a 147-page document yesterday in his chambers.

The Manfuso brothers had signed the agreement Wednesday.

Kaplan described animosity so strong between the two groups that he kept them apart -- one in his chambers, the other in his conference room -- while he shuttled between the two factions.

"They are all very nice people, but together they couldn't deal with eachother. There were no lines of communication," Kaplan said.

He realized the situation was getting "out of hand" when De Francis threatened to appeal a court decision on the validity of the stockholders agreement. Such litigation could have dragged indefinitely in the courts, putting off any ownership decision.

"Something had to be done, so I grabbed the bull by the horns," Kaplan said.

De Francis initially said he would honor the Russian roulette provisiononly if the Manfusos agreed to a settlement of a number outstanding issues. The Manfusos at first declined, but then with Kaplan's persuasion, entered into the negotiations about a month ago.

In addition to dropping all outstanding litigation and proceeding with the buyout, other key points of the agreement include:

* Closing must be made within 15 days (by Feb. 7) or earlier once one side announces it will buy out the other on Jan. 21.

* Whoever is the seller cannot interfere with the buyer's efforts on behalf of the corporation to build a track in Virginia until that franchise process is completed.

* De Francis and Jacobs are entitled to $2.8 million capital that they invested in Pimlico, but the sum is to be guaranteed by the Maryland Jockey Club corporation and not personally by the Manfusos.

* Should the Manfusos buy the tracks, they will buy out Jacobs' employment contract for $500,000.

* If the Manfusos buy the tracks all members of the De Francis group and the track's counsel, Robert Van Dyke, must submit their resignations at the time of closing.

* The Manfusos will be paid severance payments of $340,598.28, monies owed them after they resigned corporate duties in 1990.

* If any further disputes are raised between the two sides or the Guida Group, part owners of Laurel, Judge Kaplan will be responsible for settling them.

Herb Garten, attorney for the Manfusos, said "we have finally tied down De Francis to a date when he either buys or sells. Our cards are on the table and now it can't be complicated by the threat of appeal."

De Francis, who is actively seeking partners to buy out the Manfusos, said "the settlement is an enormous weight off my shoulders. Now I'm over and done with the Manfusos. I can go to completing amendments to my Virginia application and can go forward with discussions for Jack Kent Cooke to build the Redskins stadium at Laurel."

In addition to groups headed by Toledo Raceway owner Arnold Stansley, local horsemen Arnold Heft and GTECH Corp., De Francis is still said to be talking with Hollywood Park president R. D. Hubbard about becoming involved both in Laurel/Pimlico and the proposed Virginia track.

De Francis would not comment, but did say, "There are also other interested groups."

Both sides praised Kaplan's work in negotiating the settlement.

"Without him, it would not have been accomplished," De Francis said, echoing similar sentiments expressed by Garten.

"It's a good example of ADR or alternative dispute resolution," Garten said.

The Manfusos triggered the Russian roulette provision of the disputed stockholders agreement on Oct. 9, offering to sell their shares in Laurel and Pimlico for $8.2 million. De Francis received the offer Oct. 12 and had until Jan. 12 to respond to it.

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