Finance for Speedway Racetrack in upstate NY

Saturday, May 25, 2019
Borrower   The owner of a speedway track near Watertown, NY
Loan   A 10-year, $700,000 loan at 15% for the first year and 18% thereafter, falling to 10% for the last 3 years of the term.
Collateral   A first mortgage on the speedway track and the 76 acres it sits on, together with its buildings and the land and buildings owned by a moving and storage company under the same ownership.
Guarantors   The owner of the borrower and his wife personally guaranteed the loan.
Purpose   The loan was needed to clear outstanding bills on the speedway track and to pave additional areas of the car park.
Exit strategy   The borrower planned to repay out loan out of the cash flow expected to be generated by race track operations.
Outcome   The weather in Watertown, NY was unusually wet in 1998 and 1999. As a consequence the speedway track was not able to run the expected number of racing days. The loan went into default. When foreclosure was almost complete the borrower entered bankruptcy. We received adequate protection payments during the term of the bankruptcy. The moving and storage company has been sold, and we received a payment of 65% of the outstanding amount out of the proceeds. We expect to get full recovery when the the racetrack has been sold or re-financed. Meanwhile, we are receiving interest on the outstanding amount and our collateral is more than adequate. - all rights reserved

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