Malibu Grand Prix Strikes Deal to Restructure Debt

Debt-ridden Malibu Grand Prix Corp. of Woodland Hills, which previously said there was no assurance it could stay in business, said Monday it had reached a key agreement with creditors to restructure its debt and obtain new working capital.

Under the restructuring, Crocker Bank, the company’s main creditor, will give Malibu five years to repay a $16.8-million debt on which Malibu defaulted. Crocker also will lend Malibu $1 million for working capital and $1.2 million to help settle the debts of Castle Entertainment, which merged with Malibu Grand Prix.

The deal also would retire a separate $24-million, interest-free loan to Castle. In exchange for its claim to 60% of that note, Crocker’s Bracton unit would receive 4.9 million preferred shares of Malibu and a seven-year warrant to buy 20% of Malibu for $2.5 million.

The other creditors would split $3.2 million in cash. The deal still requires the approval of a majority of the creditors and a bankruptcy judge.

Malibu, which owns and runs about 45 recreational centers, many featuring miniature race tracks, lost $4.0 million on sales of $24.8 million in the first three quarters of 1985.