Was the Taupo Motorsport Park sale always doomed to fail?

| Photographer Credit: Euan Cameron Photography

Much has been said about the AGM of the Taupo Motorsport Park Ltd (TMP), held on 29 July 2021, in which shareholders voted on a deal put to them by their board of directors. It recommended that they go ahead with a sales and purchase agreement which involved liquidating the company and selling the assets and business to Tony Quinn’s Keltic Motorsport subsidiaries, Taupo Motorsport Park (NZ) Ltd (set up in June 2021) and Popeye Development Ltd. It was never going to get the 75% ‘yes’ vote that it required and was always doomed to fail for two very good reasons.  Either on their own were enough to scupper the deal.

First, the Taupo Motorsport Park, even though at the time was not looking for a buyer, negotiated a deal that was encumbered right from the start.  Their unresolved disagreement with the Taupo Car Club (TCC) created uncertainty for TMP’s 191 shareholders and should have been tidied up by both parties long before a deal was struck with Keltic Motorsports. A point that needs to be considered that the majority of the 191 are investors with very little interest in motorsport.

Second, for shareholders, the deal changed from an initial offer by Tony Quinn’s entity to purchase 100% of the TMP at $1.04 per share ($6.68m), take over the Company’s term loan from Taupō District Council  ($0.56M)  and  contribute $0.9M to Miles Advisory Partners’ fee (engaged by TMP to advise on the sale).  That offer was subsequently replaced by conditional agreements for sale and purchase submitted by Keltic Motorsport (NZ) Ltd subsidiaries, Taupo Motorsport Park (NZ) Ltd and Popeye Development Ltd – also owned by Quinn (the purchaser), to purchase the company’s assets and businesses for $NZ 7.1 million. The directors resolved on 9 July 2021 to enter the agreements and to submit them for shareholder approval at the Annual General Meeting of the Company on 29 July 2021.

The problem for shareholders with the new proposal was that they had no certainty on what their return would be.  The company would be liquidated meaning an independent liquidator would be appointed and it would be their decision on ultimately what return would be made to the shareholder after their ‘fee’ and expenses, other costs of negotiating, entering, exchanging and settling the agreements; and – The costs of liquidating the Company (early repayment of liabilities including non-current liabilities such as the Government COVID-19 small business loan, the liquidator’s fees and disbursements, and contract termination payments).  The directors estimated that up to $6.5 million (up to $1.01 per share) should be available to be returned to shareholders, though nothing was guaranteed.

For Tony Quinn’s Keltic Motorsport Ltd, it was a smart move as this proposal was much cleaner.  To purchase 100% of the shares, as originally proposed, could be fraught with problems either unseen or unexpected further down the track. To purchase the business and assets meant there would be no liabilities. These would be taken care of by the liquidator.

So, what of the disagreement between TMP and TCC over an original agreement and its ongoing interpretation.  Well, if you speak to both parties it is like a playground fight with ‘he said’ and ‘she said’.  It has typically resulted in some sort of Mexican standoff between parties (or personalities) of which it could and should be resolved over a cup-of-tea. 

The point here is that the directors of TMP should have found a resolution before agreeing on a deal with Quinn.  You don’t take a house to market with an encumbrance on it.  A ‘clean’ deal is always easier to sell.

Three days before the vote was to take place, the TCC made a claim requiring the sum of $450,000 be paid to the club as a condition of giving its consent to the sale.  Note that the TCC is the third largest TMP shareholder owning 5.45% of the company and effectively had the power to veto the sale. If the directors agreed on paying this sum of money, it would reduce the return to shareholders from approximately $1.01 to $0.91-93c/share. Remember, the shareholders are investors so this would create a real dent in their return.

While the TCC may have thought that their intentions were honourable, their timing was less than ideal.  Their point was to make sure that all shareholders were aware, before they voted, of the TCC ‘claim’ with the TMP. Timing is everything and theirs was not subtle. Did they not think of the consequences of that action and the affect on the vote? Maybe they did and that this claim would galvinise some action in resolving their dispute with TMP.

So, what of the future?  Chris Abbott, chairman of TMP says that they don’t need to sell, but we know that the directors are keen.  Well, they wouldn’t have bothered too much taking a proposal to the shareholders if they weren’t. 

Terry O’Brien, president of the TCC says that they are in favour of the sale to Keltic Motorsport Ltd, that Tony Quinn’s investment in the circuit has got to be good for all.

And Quinn?  He’s a dealer and a collector and has patience, so all is not lost. 

All three want the sale to go ahead and we shouldn’t be surprised if a new deal is on the already on the table. This time it will not be doomed and should be a matter of course that it receives the 75% ‘Yes’ vote required by shareholders.

Benjamin Carrell is a freelance motorsport writer and currently edits talkmotorsport.co.nz. He writes for a number of Kiwi drivers and motorsport clubs. That's when he's not working in his horticultural day-job or training for the next road or mtb cycle race!


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