Cooke track shares may go to N.Y. firm Sale would gratify industry, De Francis

May 29, 1998|By Jon Morgan | Jon Morgan,SUN STAFF

An investor is apparently close to buying the stake in Maryland's major thoroughbred tracks now held by the estate of Jack Kent Cooke.

The investor, described by sources familiar with the transaction as a small New York investment banking firm with no gaming experience, is in final negotiations for the Cooke shares in Laurel Park and Pimlico.

A deal could come in the next week or two, sources said.

The white knight buyer would be a relief both to the state's racing industry, which had feared a casino would buy the shares, and Joseph A. De Francis, majority owner of the tracks, who would avoid having a hostile minority partner.

The company, whose other investments include an insurance company, is considered a friendly suitor. The name of the firm could not be learned last night.

Cooke's estate came into possession of the shares after Cooke agreed, in 1994, to make $8.2 million in payments on behalf of De Francis to his estranged partners, brothers John and Robert Manfuso.

In apparent preparation for the sale, a representative of De Francis notified the Manfusos that he will make the final $1.31 million payment on their agreement today or Monday. That is eight months earlier than it was required, said Herbert S. Garten, attorney for the Manfusos.

Garten holds all of the tracks' stock as collateral.

"We will deliver it upon payment," he said. He said he was not told why the payment was being made early.

Under their agreement, Cooke made regular payments to the Manfusos on behalf of De Francis. The track owner was required to seek another investor and to make regular payments to Cooke, along with 6 percent interest, according to a copy of the document obtained by The Sun.

In exchange, Cooke received an option to purchase 100 acres of land near Laurel Park for $9 million. Cooke announced in 1993 plans to build a football stadium for the Redskins, which he also owned, on the site. In the face of neighborhood opposition, Cooke instead constructed the team's stadium near Landover.

However, De Francis failed to repay the Cooke loan on time and in 1996 signed an agreement acknowledging that fact and converting the document into a demand loan that Cooke's organization could call at any time. In the event of a call, the document gives the holder the right to 47 percent of the stock of Pimlico Race Course and 50 percent of Laurel Park, along with a 50 percent vote in management matters.

De Francis, his sister Karin De Francis, and his partner Martin Jacobs, own 53 percent of Pimlico and 50 percent of Laurel.

Cooke died in April 1997. A spokesman for his estate declined to comment this week.

The Cooke agreement expressely prohibits the Manfusos from buying back the shares and gives De Francis the right to disapprove a buyer, although approval "shall not be unreasonbly be withheld," the agreement says.

De Francis did not return telephone messages yesterday.

The buyer now negotiating for the deal is considered friendly to ++ De Francis and may have been recruited by him, sources said. Before inheriting the tracks from his father, De Francis was an attorney with Latham and Watkins in Washington, specializing in mergers and acquisitions -- work that would put him in contact with investment bankers.

When the Cooke estate put the shares up for sale, many in the industry feared the stock would be purchased by a gambling company looking to secure a beachhead in Maryland for the potential legalization of slot machines. De Francis is seeking to have slot machines installed at the tracks but Gov. Parris N. Glendening opposes it.

According to some potential investors who considered purchasing the Cooke shares, the deal would be mostly a gamble that slot machines or some other source of revenue will eventually come to the tracks. The shares carry no guarantee of dividends, the tracks are marginally profitable, and it is not clear the 50 percent voting rights Cooke enjoyed would transfer with the stock.

Pub Date: 5/29/98

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