Motorsports promoter and track owner/operator Speedway Motorsports Inc. has increased its available credit to make it easier to add on to existing facilities, as well as possibly buy other companies.
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| SMI may use the extra money to improve its
existing tracks and make acquisitions. |
Lauri Wilks, senior vice president of administration and general counsel for SMI, said the company’s capital expenditure limitation has been increased for 2005 and 2006 from $80 million to $150 million.
According to an 8-K filing, SMI amended its credit agreement with five lenders, including Bank of America and Wachovia Bank, “for the purpose of providing the company with requested flexibility … for motorsports and non-motorsports related transactions and business activities.”
SMI owns and operates six NASCAR Nextel Cup racetracks: Atlanta Motor Speedway, Bristol Motor Speedway, Infineon Raceway, Las Vegas Motor Speedway, Lowe’s Motor Speedway and Texas Motor Speedway.
Wilks said the company amended the credit agreement initially to provide the company with the necessary funds to complete the acquisition of NASCAR merchandiser Action Performance Cos. SMI, together with competitor International Speedway Corp., acquired Action Performance earlier this year under a joint venture called Motorsports Authentics. The $246 million acquisition was announced in August and completed earlier this month.
“Under our prior agreement, those funds would not have been available for that type of acquisition,” Wilks said.
Dennis McAlpine, an analyst for McAlpine Associates, said amending a credit agreement usually comes with some sort of stipulation from the lenders. “The banks are saying, ‘OK, we’ll let you use this for an acquisition, but in return you’ve got to limit your capital expenditures and you can’t do any more big deals,’” McAlpine said.
But Wilks said the amendment will actually allow SMI “the ability to make certain acquisitions that were limited under the prior agreement.”
Wilks would not offer any details about future possible transactions or acquisitions but did say the amendment provides SMI with additional funds that “will be used for capital improvements at LVMS,” including an additional 11,000 grandstand seats and an infield remodeling project.
“It gives us the ability to make certain acquisitions in the motorsports industry, so long as the total amount does not exceed 35 percent of our net worth,” Wilks said.
