A minority partner in Hoosier Park is making a second attempt to increase its stake in the Anderson, Ind., racetrack.
Centaur Racing wants to increase its interest in Hoosier Park from 13% to 38%. The privately-owned investment company intends to buy 15% of the share held by majority owner Churchill Downs Inc., which is valued at $4.5 million. Centaur also intends to acquire the 10% interest owned by Conseco, an Indiana insurance conglomerate and limited partner.
Churchill Downs announced today that it expects the deal to close by the end of the year.
The deal, which is subject to certain closing conditions and requires approval by the Indiana Horse Racing Commission, is not assured since Centaur is now under a four-year moratorium that prohibits the company from increasing its share in Hoosier Park or owning a part of another pari-mutuel license in Indiana.
The moratorium was punishment for Centaur failing to disclose information during an attempt last year to increase its ownership. Centaur did not disclose that it had sold options in the racetrack to two Indiana lobbyists before filing a petition with the racing commission to acquire 26% of Churchill Downs' interest.
Since the moratorium was issued, Centaur has appeared before the racing commission and asked for the ban to be lifted. The commission refused, but did give Centaur permission to discuss a sale with Churchill Downs and Conseco, according to Joe Gorajec, the commission's executive director.
"The burden is still on Centaur to show there is good reason and justification to lift the moratorium," Gorajec said.
Tom Meeker, president and chief executive officer for Churchill Downs Inc., said deal is good for Churchill Downs and Hoosier Park.
"Hoosier Park will gain increased local ownership that is essential to its success," Meeker said. "A larger ownership interest by Indiana-based Centaur will enhance Hoosier Park's ability to succeed in the face of competition from a second track in the Indianapolis area and a possible reduction in the riverboat subsidy. We believe this transaction is an important step toward ensuring the long-term prospects for this track and for Indiana horse racing."
The transaction is not expected to have a significant impact on Churchill Downs' earnings. Meeker said the deal is also an opportunity to realize a cash return on a portion of the company's investment in the racetrack.
The Indiana racing commission is not likely to hear Centaur's case before December, according to Gorajec.
"We still have to do some due diligence and investigation," he said.