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Kalkhoven, Forsythe moved fast for Cosworth

11/18/2004

LONDON -- Kevin Kalkhoven has only been involved in racing for 22 months, but he knows who his opponents are.

After acquiring engine builder Cosworth Racing in conjunction with his partner Gerald Forsythe in a move officially announced Monday, Kalkhoven said he believes that Indy
Racing League founder Tony George was behind a competing bid fronted by Chip Ganassi.

"I seem to have an amazing propensity for dodging bullets, particularly
when they are not well-aimed," Kalkhoven said. "Chip said he needed help
developing his engines for NASCAR, and I'm going to be very happy to talk to him
about that."

Fred Nation, Indianapolis Motor Speedway's vice president of communications, said George has not made a bid for Cosworth and was not part of any other group that has.

"Absolutely not," Nation told ESPN.com. "There was never any interest on behalf of Tony George, the Indy Racing League, the Indianapolis Motor Speedway, or any of the Hulman companies in the Cosworth situation. Like many in the racing industry, we have been watching it from afar. But we did not aid or abet any effort to acquire Cosworth."

Ganassi declined comment when reached Monday.

Kalkhoven said George failed to put the Champ Car World Series out of
business when they engaged in a battle in U.S. Bankruptcy Court for the assets of
Championship Auto Racing Teams back on Jan. 28. He said that Champ Car's enemies could have put the series in a world of hurt had the last-minute shifts of
allegiance to the IRL by Team Rahal and Fernandez Racing not been disclosed until closer to the series opener.

"That would have been more than a negligible problem because we were
contractually required to put 18 cars on the grid at Long Beach," he said. "It would
have been difficult."

But with enough lead time to fill the field out, Champ Car made it through a season many didn't believe would come off as Sebastien Bourdais claimed the title in Mexico City two weeks ago.

Now Kalkhoven thinks Ganassi and Co. tried to acquire Cosworth in
another effort to derail the Champ Car series, which he along with
partners Forsythe and Paul Gentilozzi saved thanks to their victory in Judge Frank Otte's
courtroom 10 months ago. Cosworth produces and maintains the turbocharged engine
that powers every car on the Champ Car grid.

Now the shoe could be on the other foot because if Toyota and Honda
were to follow General Motors out of the IRL in 2006 (a published report says Toyota is evaluating its IRL deal, which is up in '06), George might be looking
for an engine supply. And Cosworth would be the logical place to look because it
designed and develops the Chevrolet-badged IRL engine.

"I am very committed to not only respecting the heritage of Cosworth but
also being able to take it into the future in a motorsports environment,
as well as other forms of engineering, and extend it," Kalkhoven said. "I can
see opportunities for new engine development in the Champ Car ladder
series as well as the Champ Car series itself in the United States. We will maintain
Formula 1, we will maintain the U.S. operations and preserve as many jobs as we
can."

When the Ford Motor Company announced on Sept. 17 that it was
selling key racing assets, Kalkhoven and Forsythe teamed up as equal partners in their bid to acquire Cosworth, which supplies the Ford-Cosworth engines that power every car in the Champ Car World Series. The conclusion of the Cosworth deal, along with
Ford's simultaneous sale of the Jaguar Racing Formula 1 team to energy drink maker Red Bull, allowed Red Bull to meet a Nov. 15 deadline to enter the 2005 F1 World
Championship.

The team's cars will be Cosworth-powered. Cosworth also will supply
engines to the Minardi F1 team.

Ford's decision to back out of F1 created widespread fear in the
British racing industry that 350 jobs at Jaguar Racing and more than 500 jobs at
Cosworth could be lost. Richard
Parry-Jones, group vice president and chief technical officer, said Ford was conscious of the impact its withdrawal could have at a time when many teams are struggling to find the budget to put cars on the grid.

"We focused our attention in securing the best future for those businesses and
in brokering a deal that minimizes the impact or fallout on the sport,"
Parry-Jones said. "We have worked very hard to sell the businesses to reputable
buyers who can provide the most secure future. It was quite a complex deal but we
were able to broker the best feasible outcome."ยท

While Red Bull was soon identified as the only realistic buyer for the
Jaguar F1 operation, Cosworth attracted more than 60 bids, from which the
company's managing director, Tim Routis, said that five merited serious consideration.
Parry-Jones and Routis would not confirm Kalkhoven's belief that his successful bid's
biggest challenge came from Ganassi.

"There were a number of interesting offers, but our decision was very
heavily weighted on the impact the new owners would have on the employees and
the sport," Parry-Jones said. "Kevin and Jerry moved quickly and were able to
complete the deal on time, which was important because Formula 1 had a deadline of
Nov. 15 for registration for the championship.

"We expected Cosworth would generate quite a lot of interest, but a
majority had an unclear idea of what they wanted to do with the company," he added.
"Out of all the people we talked to, the Kalkhoven/Forsythe bid was clearly
the most defined and in the company's best interest and in working with them
from that time to completion, our judgement was validated by the way they
conducted themselves during the finalization of the deal. It was exemplary."

Routis and Kalkhoven addressed Cosworth's 500 employees in a gathering
at the Northampton Rugby Club on Monday morning. Routis was delighted with the
news for the company he will continue to manage under the new ownership.

"The outcome is the best that we could have hoped for when Ford
announced their decision in September," he said. "When we consider transitioning
businesses, we tend to think very hard about balance sheets and contingent
liabilities. But the real asset is the people, and I think in that respect Kevin and
Gerry have landed a massive prize in Cosworth.

"There is a huge sense of relief and excitement within Cosworth at the
moment," Routis continued. "We can see a very clear direction as we go forward
and it's abundantly clear that Kevin and Gerry are absolutely committed to the
base values that we have established in Cosworth over many years. Correspondingly,
it's going to be a force to be reckoned with in the future."

Once again, Kalkhoven seems to have come out on top because his people
were better prepared. Pierre Wildman of KPLJ Ventures and Jim Cox of accountant
firm Ernst & Young spent the past four weeks in the United Kingdom, often working until midnight on the deal.

"In negotiating a deal like this, you spend a lot of time establishing
your position with the seller," Kalkhoven said. "You have to demonstrate that you
understand the whole package. We did the groundwork involving trade union laws and
labor laws. They hadn't fully explored the consequences if contingent liabilities,
which total about $60 million. In other words, we were prepared to take the risk on
a very substantial sum."

John Oreovicz covers open-wheel racing for National Speed Sport News and ESPN.com.