Hollywood Park leaves door ajar De Francis closes it

January 22, 1994|By Ross Peddicord | Ross Peddicord,Staff Writer Staff writer Jon Morgan contributed to this article.

Hollywood Park left the door open yesterday that it could be involved in future negotiations to buy Laurel and Pimlico race courses.

But Joe De Francis, who will own 100 percent interest in the tracks together with Martin Jacobs and Karin Van Dyke, has shut "The deal is off. It's dead," De Francis said yesterday. "I'm pleased with the relationship that we have with Hollywood. I've worked hard with Dee Hubbard [Hollywood's chairman] and I have high regard for him. I want to maintain a warm relationship with Hollywood. We do a lot of business [simulcasting] together.

"But all further discussions are off," De Francis said of Hollywood's attempt to buy majority control of the tracks. "If sometime in the future they wanted to come in as a limited partner, then I'd be interested in talking to them. But not now."

On Thursday, De Francis obtained financing through Washington Redskins owner Jack Kent Cooke that will allow him to buy out his estranged partners, Bob and Tom Manfuso, for $8.2 million. Before working out the deal with Cooke, De Francis came within hours of selling majority interest in the tracks to Hollywood Park.

Hollywood Park issued a news release yesterday saying that negotiations had broken off "but could be resumed later."

The company's chief financial officer, G. Michael Finnigan, said yesterday morning that he and Hollywood Park's attorney, Alvin Segel, had stayed in Baltimore overnight on Thursday to meet with De Francis and Van Dyke, De Francis' sister.

"If we didn't think the door hadn't been left open, we wouldn't have stayed," Finnigan said.

De Francis said: "We attended the meeting to further explain the situation and because they wanted to meet Karin. Hollywood made no new proposals, and that was it."

Finnigan said Hollywood Park officials never had contact with Cooke. That was confirmed yesterday by Walter Lynch, Cooke's project manager. "It wasn't our deal and I don't know anything about it," Lynch said. He added that he knew nothing about Hollywood's news release that said negotiations could resume.

"It just sounds hypothetical to me," Lynch said.

Cooke had been negotiating with De Francis for months on the sale of Laurel land Cooke will use to build a stadium for his team. Sources said Cooke stepped in to help De Francis finance the buyout of the Manfusos after reports that Hollywood Park might buy the tracks.

Cooke is a friend of Marje Everett, the former operator of Hollywood Park who was ousted by Hubbard in 1991, after a bitter proxy fight.

De Francis sent formal notice to the Manfuso brothers and their attorney, Herb Garten, yesterday that the De Francis group will be buying the Manfusos' shares.

De Francis said a specific date for closing will be set next week, but that it probably would be Feb. 7. "We might do it earlier just to get it over with," he said.

Garten said he received the official notice of the transaction yesterday. "Everyone's interest is for this to go forward and settle," he said.

Under the terms of the complicated agreement, De Francis will pay the Manfusos $8.2 million, beginning with a $1.6 million payment at closing. He will then have to sign a promissory note calling for the balance to be paid quarterly, with interest, over five years.

To "secure" this loan, De Francis and his co-investors and spouses will have to personally guarantee payment and hand over as collateral their stock in the tracks.

"It's an ironclad, crystal-clear agreement with no possibility of dispute," De Francis said. "No approval on how we obtain the financing or anything of that nature must be approved by them [the Manfusos]. It's cut and dried."

De Francis said that in securing the $8.2 million from Cooke that "Mr. Cooke helped me arrange the financing. We have agreed to keep the specifics confidential. It's just good business to do that."

Sources said the financing from Cooke could be considered a "bridge" loan, to be used until De Francis locates additional investors. Cooke said Thursday he had invested "not a penny" in the tracks.

A number of events could trigger the requirement for a rapid pay-off of the balance of the loan, including De Francis' selling some of his stock. That means that if he brings in investors, it may force him to pay the balance of the note on the track.

Bruce Spizler, the attorney representing the Maryland Racing Commission, said yesterday that the board "will make an inquiry into the financial arrangements. It's a highly publicized situation and they will want to know what the deal is."

De Francis said he will "be happy to provide the details" to the commission.

Spizler said that if Cooke is not becoming an owner in the track, the board doesn't have to approve the deal "because there is no beneficial transfer of ownership," meaning a transfer of more than 2 percent of the stock in the tracks.

De Francis said that in the future "if we desire to, we could resell part [of the tracks] and bring in new investors. But at this time, we're not interested in doing that."

De Francis added that as far as his group is concerned, "we are looking at the situation as if we were buying a new company. The huge albatross of the Manfusos has been removed. Finally they are gone and are out of my life forever.

"At the time of closing, I plan to announce very specific plans about improvements we will make that I think our horsemen, and especially our fans, will be excited about."

He said the company has "cash reserves" that will pay for the improvements.

Louis Guida, who heads a group of investors that owns half of Laurel but has no management control, said he was sorry the Manfusos didn't end up in control, but acknowledged he was powerless in the transaction.

"My reason for investing was my respect for Joe's father. . . . unfortunately he suffered an untimely death. When this all clears, we'll probably retain Maryland based legal counsel to protect our interests up there," Guida said.

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