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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, For Use of the
( ) Definitive Proxy Statement Commission Only (as
( ) Definitive Additional Materials permitted by Rule 14a-
(x) Soliciting Material Under Rule 14a-12 6(e)(2))
CHURCHILL DOWNS INCORPORATED
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(Name of Registrant as Specified in Its Charter)
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( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
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EXHIBIT 1
Contact for Arlington International Racecourse: Thom Serafin
(312) 943-1955
thom.serafin@serafin.com
Contact for Churchill Downs Incorporated: Karl Schmitt
(502) 636-4594 / (502) 551-1395
karls@kyderby.com
CHURCHILL DOWNS INCORPORATED AND ARLINGTON INTERNATIONAL
RACECOURSE ANNOUNCE PLANS FOR MERGER
LOUISVILLE, Ky. (June 23, 2000) -- Churchill Downs Incorporated (Nasdaq:
CHDN) ("CDI") and Duchossois Industries Inc. ("DII"), a privately held
company that owns Arlington International Racecourse, today announced that
the companies have signed a definitive agreement whereby Arlington
International Racecourse Inc., Arlington Management Services Inc. and Turf
Club of Illinois Inc. would merge with subsidiaries of CDI. As wholly owned
subsidiaries of DII, Arlington International Racecourse Inc., Arlington
Management Services Inc. and Turf Club of Illinois Inc. hold and operate
the Chicago-area racetrack and five off-track betting and pari-mutuel
operations in Illinois.
Under the terms of the agreement, CDI will issue 3.15 million shares
of its common stock upon closing to DII. The agreement also specifies the
issuance of up to an additional 1.25 million shares of CDI stock to DII
depending on certain developments and conditions over a future period. CDI
currently has approximately 9.9 million shares outstanding, which had a
closing price of $22.69 yesterday. DII has entered into a stockholder
agreement that will provide for restrictions on the voting and transfer of
the shares of CDI common stock received in the merger. The transaction
remains subject to customary closing conditions, including the approval of
the Illinois Racing Board and approval of CDI shareholders at a special
meeting that is expected to be held during the third quarter. Assuming
those conditions are met, closing of the transaction is expected promptly
following the shareholders' special meeting. The transaction will be
accounted for as a purchase.
Richard L. Duchossois, chairman of DII, will serve as a CDI director,
as a member of the board's executive committee and as chairman of
Arlington's operating board. DII will be entitled initially to designate
three members of the CDI board of directors, which will be expanded from 12
to 15 members. Scott Mordell will continue as the track's president and
chief executive officer.
"The horse racing industry is consolidating in response to a changing
market and new distribution systems," said Thomas H. Meeker, CDI's
president and chief executive officer. "Our merger with Arlington is the
beginning of a strategic relationship that will enable us to combine
resources with a world-class operation that is committed to quality live
racing, positioning both companies for future growth in this changing
industry.
"Arlington and Illinois racing are important to the national racing
industry. As CDI continues to pursue opportunities to aggregate more racing
content under our brand, Arlington will boost the annual number of CDI
racing programs by 18 percent. Additionally, this agreement will
particularly enhance our position in the sizeable Chicago market and expand
the Churchill Downs Simulcast Network by adding a signal that is well known
throughout the United States and in major international markets. We are
truly excited about having Dick Duchossois join CDI as a member of our
board. He has shown a true passion for our industry and effective
leadership in showcasing racing at Arlington.
"Our successful integration of Ellis Park, Calder Race Course and
Hollywood Park into our existing operations over the last two years
reinforces our optimism about this transaction. With the resulting four
racetracks in Illinois, Indiana and Kentucky, we believe our merger with
Arlington will create exciting opportunities to strengthen the Midwest
racing circuit. Additionally, the demonstrated capability of Arlington's
management will help us embrace the racetrack under our brand and ensure
that Arlington continues to offer the premier racing experience to its
guests and maintain its important role in the community.
Duchossois, commenting on the merger, stated, "We believe this merger
will allow us to complement the Arlington brand of excellence with that of
Churchill Downs, the best-known brand in horse racing.
"We believe CDI's business strategy and commitment to excellence are
aligned with our own operating philosophy. We have a shared vision of
dedication to customer service, commitment to the live racing experience
and growth of simulcast sales. This business combination will enable us to
coordinate quality racing schedules throughout the Midwest and will greatly
benefit Illinois racing. I look forward to joining with a dynamic company
like CDI and continuing my involvement with Arlington."
Meeker added, "Our decision to use stock to facilitate this
transaction will have a positive impact on CDI's overall financial
position. We will strengthen our balance sheet by decreasing our leverage,
and combining resources with a well-managed organization like Arlington
should increase our access to capital, positioning the Company for
continued growth."
The contingent shares involved in this transaction relate principally
to the timing of the planned opening of a relocated riverboat casino in
Rosemont, Ill. Under full implementation of legislation recently passed by
the state of Illinois, Arlington will receive certain payments from the
Illinois Horse Racing Equity Fund, whose funds are derived from the
riverboat casino's revenues. The final determination of any additional
number of shares to be issued will be based on the financial benefit
derived through the Fund in the casino's first year of operation.
Arlington International Racecourse is one of the world's premier
Thoroughbred racetracks. The racetrack's 2000 meet runs from May 14 through
Sept. 30 and features the $2 million Arlington Million, one of the world's
richest races, on Aug. 19. Located outside of Chicago in Arlington Heights,
Ill., Arlington originally opened in 1927 and was rebuilt after a 1985
fire. The racetrack operates pari-mutuel facilities in Chicago, Arlington
Heights, Rockford, Waukegan, and East Moline, Ill. Arlington can be found
on the Internet at www.www.arlingtonpark.com.
Churchill Downs Incorporated, headquartered in Louisville, Ky., is
one of the world's leading horse racing companies. Its flagship operation,
Churchill Downs, is home of the Kentucky Derby and hosted its 126th running
on May 6, 2000. The Company owns additional racetracks in Kentucky,
California and Florida and has interests in an Indiana pari-mutuel
operation as well as various racing services companies. Churchill Downs
Incorporated can be found on the Internet at www.kentuckyderby.com.
A conference call regarding this announcement is scheduled for 10
a.m. EDT on Friday, June 23, 2000. Interested parties can access the call
in listen-only mode by calling (913) 981-5510 or using the Internet at
www.kentuckyderby.com.
This press release contains forward-looking statements made pursuant
to the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. The reader is cautioned that such forward-looking statements
involve risks and uncertainties that could cause CDI's actual operating
results and financial condition to differ materially. Forward-looking
statements are typically identified by the use of terms such as "may,"
"will," "expect," "anticipate," "estimate," and similar words, although
some forward-looking statements are expressed differently. Although we
believe that the expectations reflected in such forward-looking statements
are reasonable, we can give no assurance that such expectations will prove
to be correct. Important factors that could cause actual results to differ
materially from our expectations include: the financial performance of
Arlington International Racecourse; litigation surrounding the Rosemont,
Ill., riverboat casino; market reaction to CDI's agreement with Arlington;
the impact of gaming competition (including lotteries and riverboat, cruise
ship and land-based casinos) and other sports and entertainment options in
those markets in which we operate; a substantial change in law or
regulations affecting our pari-mutuel activities; a substantial change in
allocation of live racing days; a decrease in riverboat admissions revenue
from our Indiana operations; the impact of an additional racetrack near our
Indiana operations; our continued ability to effectively compete for the
country's top horses and trainers necessary to field high-quality horse
racing; our continued ability to grow our share of the interstate simulcast
market; the impact of interest rate fluctuations; our ability to execute
our acquisition strategy and to complete or successfully operate planned
expansion projects; our ability to adequately integrate acquired
businesses; the loss of our totalisator companies or their inability to
keep their technology current; our accountability for environmental
contamination; the loss of key personnel and the volatility of our stock
price.
A proxy statement will be filed by Churchill Downs Incorporated
("CDI") with the Securities Exchange Commission ("Commission") as soon as
practicable. CDI URGES INVESTORS TO READ THE PROXY STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE COMMISSION BECAUSE THEY CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free
copy of the proxy statement (when available) and other documents filed by
CDI with the Commission at the Commission's Web site at www.sec.gov. The
proxy statement and other documents filed with the Commission by CDI may
also be obtained for free from CDI by directing a request to Churchill
Downs Incorporated, 700 Central Avenue, Louisville, Kentucky, 40208, (502)
636-4400.
CDI and its officers and directors may be deemed to be participants
in the solicitation of proxies from CDI's stockholders with respect to the
transactions contemplated by the merger agreement. Information regarding
such officers and directors is included in CDI's proxy statement for its
2000 annual meeting of stockholders filed with the Commission on May 15,
2000. This document is available free of charge at the Commission's Web
site at www.sec.gov and from CDI at the address set forth above.
FACT SHEET
About the Merger
o Terms include initial tranche of 3.15 million shares of CDI common
stock
o Second tranche includes two earn-out provisions:
-833,000 shares paid one year after opening of Rosemont riverboat
casino
-Up to 417,000 shares paid on a pro-rata basis based on payments
Arlington receives from the Illinois Horse Racing Equity Fund in
the riverboat casino's first year of operation
o Stockholder agreement required
o Corporate governance provision includes a seat on the executive
committee of the CDI board and designated board seats
o Management agreement to allow CDI to earn 80 percent of Arlington
EBITDA generated after July 1
o 10-year lease agreement for approximately 60 acres that include training
track
o Closing expected by Aug. 31
About Arlington International Racecourse
o One of the world's premier racing facilities, located just outside
Chicago in Arlington Heights, Ill.
o Opened Oct. 12, 1927
o Offers live Thoroughbred racing with simulcasting on-track while
operating off-track pari-mutuel facilities in Chicago, Arlington Heights,
Rockford, Waukegan and East Moline, Ill.
o Home of the Arlington Million, Thoroughbred racing's first-ever
million dollar race, which will be run as part of the Emirates World
Series Racing Championship with a $2 million purse on International
Festival of Racing Day - Aug. 19, 2000
o A long-time leader in innovation within the Thoroughbred industry,
renowned for creating a new generation of racing fans with its
emphasis on family entertainment, and customer service and
satisfaction
o Rebuilt and reopened the track on June 28, 1989, after it was
destroyed by fire in July 1985
o Site for historic racing events such as the 1985 "Miracle Million"
following the fire and the record-tying 16th consecutive win by Cigar
in the 1996 Citation Challenge
o First racetrack ever awarded an Eclipse Award for the running of the
"Miracle Million"
o Owner and Chairman Richard L. Duchossois has been recipient of numerous
prestigious awards including the American Jockey Club Gold Medal, the
Jockey Club of Canada's Special Sovereign Award and the Horserace Writer
and Reporters Association of Great Britain's Lord Derby Award as well
as being an inductee in both the Horsemen's Benevolent and Protective
Association and Chicago Sports Halls of Fame.
About Churchill Downs Incorporated
o Headquartered in Louisville, Ky.
o Conducts live horse racing and simulcast wagering
o Listed on the Nasdaq National Market under symbol CHDN
o Owns and operates Churchill Downs, its flagship racetrack in
Louisville, which has conducted Thoroughbred racing since 1875
o Owns and operates the Kentucky Derby; hosted the race's 126th running
on May 6
o Owns and operates: Hollywood Park in Inglewood, Calif.; Calder Race
Course in Miami; Ellis Park in Henderson, Ky.; and Louisville Sports
Spectrum, an off-track betting facility (OTB)
o Operates and holds majority interests in: Hoosier Park at Anderson in
Anderson, Ind., which conducts live Standardbred and Thoroughbred
racing; and OTBs in Indianapolis, Merrillville and Fort Wayne, Ind.
o Holds a majority interest in Charlson Broadcast Technologies, a video
services and software company for racetracks and OTBs
o Also holds interests in: Kentucky Downs Race Course in Franklin, Ky.;
Kentucky Off-Track Betting Inc., an alliance of Kentucky's racetracks
that operates OTBs in Maysville, Jamestown, Pineville and Corbin, Ky.;
NASRIN(TM)Services LLC, a telecommunications company specializing in
the simulcasting needs of racetracks;EquiSource LLC, a company that
provides group purchasing and productivity services for the Thoroughbred
industry.
EXHIBIT 2
THE MERGER OF CHURCHILL DOWNS INCORPORATED (CDI)
WITH ARLINGTON INTERNATIONAL RACECOURSE
Q: After the merger, who will manage Arlington International Racecourse?
A: Like other racetracks owned or managed by CDI, Arlington will maintain
its name and unique characteristics. Scott Mordell will continue to serve
as Arlington's president and chief executive officer. Additionally, Richard
Duchossois will continue to serve as chairman of Arlington's operating
board. CDI will oversee the existing management team at Arlington.
Q: What will the new company look like?
A: The company will retain the name of Churchill Downs Incorporated and
will continue to maintain a corporate headquarters at Churchill Downs in
Louisville, Ky. Richard Duchossois will join CDI's board of directors and
will serve as a member of the board's executive committee. Tom Meeker will
continue to serve as president and chief executive officer of CDI, and Will
Farish will continue to serve as CDI's chairman.
Upon closing, six racetracks will be branded a Churchill Downs
company: Churchill Downs in Louisville; Arlington International Racecourse
in Arlington Heights, Ill.; Hollywood Park in Inglewood, Calif.; Calder
Race Course in Miami; Ellis Park in Henderson, Ky.; and Hoosier Park at
Anderson in Anderson, Ind.
Q: How will Arlington be affected by the transaction?
A: Arlington will retain its commitment to live racing and quality
operations. By combining resources with CDI, Arlington is securing its
future in a dynamic, changing industry and moving Illinois racing to the
national marketplace. The racetrack will operate under its current
management. Arlington will continue its commitment to quality and work to
maintain its important role in the local community.
Q: How will this business combination affect other CDI racetracks?
A: Bringing a world-class racing operation such as Arlington together with
CDI will benefit all CDI-owned racetracks. The merger enhances CDI's
position as the preeminent live racing operator in the country by
contributing approximately 100 additional racing programs to CDI's
current offerings, including prestigious Grade I races such as the
Arlington Million, the Secretariat and the Beverly D.
Like CDI, Arlington has shown an impressive commitment to excellent
customer service and is dedicated to the concept of racing as family
entertainment. Arlington offers its patrons many innovative programs,
designed to educate, entertain and improve the quality of each guest's
experience at the racetrack. Arlington has long been considered an industry
leader, and the pioneering spirit of Arlington's management and employees
fits well with CDI's management philosophy.
The Merger of Churchill Downs Incorporated (CDI) with Arlington International
Racecourse
Q: How will this combination benefit the Midwest racing circuit?
A: CDI has an opportunity to integrate the racing programs at Churchill
Downs, Arlington, Ellis Park and Hoosier Park and tailor those programs to
benefit each racetrack. This transaction provides an opportunity to improve
the promotion and quality of live racing in all of the markets in which CDI
operates. CDI's racing officials are truly excited about how each operation
stands to benefit from these combined resources.
Q: What is the strategic significance of CDI's merger with Arlington?
A: CDI's strategy has centered on increasing the Company's presence in the
interstate simulcast market, and the key to that task is aggregating
content. Arlington is offering more than 100 racing programs this year. It
is an outstanding racing property that will greatly enhance the Churchill
Downs Simulcast Network (CDSN) and create synergies among the racing
operations of Churchill Downs, Calder Race Course, Ellis Park, Hollywood
Park and Hoosier Park.
Additionally, Arlington brings great value to the CDI brand and
positions the Company for new growth through exposure in one of the
country's largest commercial markets, the Chicago area. The merger enhances
CDI's commitment to live racing and strengthens its position in the
increasingly important simulcast market.
Q: When will the transaction be completed?
A: The agreement is subject to customary closing conditions as well as
approval of the Illinois Racing Board and CDI shareholders, who will vote
on the issuance of the shares at a special meeting that will be held during
the third quarter. If all of these conditions are met, closing of the
transaction is expected promptly following the shareholders' special
meeting.
A proxy statement will be filed by Churchill Downs Incorporated
("CDI") with the Securities Exchange Commission ("Commission") as soon as
practicable. CDI URGES INVESTORS TO READ THE PROXY STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE COMMISSION BECAUSE THEY CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free
copy of the proxy statement (when available) and other documents filed by
CDI with the Commission at the Commission's Web site at www.sec.gov. The
proxy statement and other documents filed with the Commission by CDI may
also be obtained for free from CDI by directing a request to Churchill
Downs Incorporated, 700 Central Avenue, Louisville, Kentucky, 40208, (502)
636-4400.
CDI and its officers and directors may be deemed to be participants
in the solicitation of proxies from CDI's stockholders with respect to the
transactions contemplated by the merger agreement. Information regarding
such officers and directors is included in CDI's proxy statement for its
2000 annual meeting of stockholders filed with the Commission on May 15,
2000. This document is available free of charge at the Commission's Web
site at www.sec.gov and from CDI at the address set forth above.