Richard Petty Motorsports, the NASCAR team owned by George Gillett, has been in default on a roughly $90 million loan since at least February but expects to soon restructure the obligation, sources said last week. This underscores the collapse of late 2008 and, in particular, the impact of contraction among Detroit’s Big Three automakers on race teams. Gillett, who last year sold the Montreal Canadiens and still owns half of Liverpool FC, lost Chrysler’s backing of his race team when that company filed for bankruptcy protection. Ford is now supporting the four-car team.
“This is a very positive story,” Gillett said. “To lose Chrysler but regain the revenue and not go into the red, and the company is very healthy, that is an amazing story.”
Wachovia, which leads a syndicate of about a dozen financial institutions that issued the loan, declined to comment.
Gillett declined to comment on specifics of the restructuring because of the ongoing creditor talks, but he emphasized the default is technical in nature, meaning that he did not miss a payment but, rather, failed to meet terms of at least one covenant. One finance source, who requested anonymity because of knowledge of the deal, denied Gillett’s characterization, insisting the default was payment-related.
No one would dispute, however, that Gillett had unfortunate timing in his summer 2007 purchase of the team. “George bought right at the peak,” said motorsports consultant Tim Frost. “Manufacturer support has dried up and it was really strong when he bought the team.”
Could this be the straw that broke the Camel’s back? Is Richard Petty Motorsports, owned by George Gillett, on the verge of collapse? Could this be the end of an iconic name in NASCAR? Only time and the courts will probably produce the answer.
What is your view on this new NASCAR ordeal?
TIL NEXT TIME, I AM STILL WORKING ON MY REDNECK!