Speedway sued over sale of LV industrial park to CEO

Wednesday, Aug. 23, 2000 | 11:30 a.m.

SUN STAFF AND WIRE REPORTS

Speedway Motorsports Inc., one of the top U.S. racetrack operators, was sued by a shareholder who contends the company wasted money by selling a valuable Nevada property to its chief executive at a cut-rate price.

Concord, N.C.-based Speedway said in January it sold its 1.4 million-square-foot industrial park and 280 acres of adjacent land at the Las Vegas Motor Speedway for about $53 million to O. Bruton Smith, company chairman and chief executive.

Speedway Motorsports acquired the industrial park when it bought the Las Vegas Speedway complex in December 1998 for $212.4 million.

Prior to its sale to Smith, the industrial park had dragged down Speedway's earnings because of sluggish leasing activity at the warehouse and industrial park, one of the largest in Las Vegas. In November 1999, Speedway posted a quarterly loss of $4.8 million and blamed it in part on a $1 million loss from the industrial park.

A Speedway earnings warning issued a few days before that November 1999 earnings report caused the company's stock to plunge from $45 to below $30 in a single day. In a lawsuit filed in Delaware Chancery Court in Wilmington on Friday, Speedway shareholder Crandon Capital Partners says company directors wasted corporate assets by giving Smith a $17 million discount from the property's $70 million worth.

"Speedway sold the improved property at a loss to its controlling shareholder and CEO (for) far less than fair market value in the context of a rapidly rising real estate market in the Las Vegas area," Crandon contends in the suit.

The partners ask a judge to rescind the sale, order directors to reimburse the company for losses and ensure better internal controls over company assets.

Speedway's operations include the Legends Car Racing Circuit and racetracks in North Carolina, Georgia, Tennessee, Texas and California.

The company would not immediately comment on the lawsuit.

But at the time of the sale, analyst Breck Wheeler of J.C. Bradford said Speedway had initially hoped to fetch as much as $65 million for the industrial park but didn't receive any bids above $30 million for the property.

A decline in the stocks of real estate investment trusts dried up the pool of buyers and the poor leasing record of the industrial park reduced its value.

Shares of Speedway, which reported $317.4 million in 1999 sales, fell 12.5 cents to $25.44 in trading this morning.