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A Georgia company that has agreed to provide most of the money for the $70 million Iowa Speedway in Newton will say little about its business, forcing local and state officials to consider giving nearly $30 million in government assistance on the assurances of local developers.

UBG Financial Corp.'s silence about its financing, its operations and its past projects is making some Newton residents and state lawmakers nervous about committing millions of dollars in public money to the project. They question whether the company has the financial muscle to complete the track, which supporters say would lure racing fans to Iowa and boost Newton's hard-hit economy.

Lawmakers are expected to consider legislation this week to provide a $12.5 million sales tax break to the track.

"Confidentiality is fine in the private sector for privately held corporations," said Sen. Brad Zaun, R-Urbandale, who was involved in negotiations for sports projects when he was Urbandale mayor. "But when you are coming to the Capitol and asking for taxpayers' money, I need to know more."

Possible restrictions

A key committee chairman also said last week that changes must be made to the racetrack proposal to make it acceptable for passage. Those changes are expected to include restrictions on how much state money can go into the project. Lawmakers could also prevent an out-of-state owner from getting the sales tax break.

Sen. Bob Brunkhorst, R-Waverly, co-chairman of the Senate Economic Growth Committee, said the proposed restrictions grow out of lawmakers' uneasiness about the project's financing. UBG's entry as the track's major lender had been a closely guarded secret until its disclosure last month in an application from the city of Newton for a $4 million state grant and loan from the Iowa Community Attraction and Tourism program.

The Georgia company, which one track consultant described as offering "commercial real estate financing," has agreed to lend up to $57 million to U.S. Motorsports Entertainment Corp., the track's developers.

Officials of U.S. Motorsports declined last week to confirm the name of the lender or the amount of the loan, even after the disclosures in the Newton application.

UBG also has attracted attention for its apparent role in the pending purchase of the Minnesota Vikings professional football team by Arizona businessman Reggie Fowler for a reported $625 million.

National Football League officials confirmed that the Vikings purchase hinges on Fowler's sale of part of one of his companies, SATCO, a flight simulator and training film company, to UBG Financial for as much as $300 million.

The Minneapolis Star Tribune sent a reporter to the Atlanta area to assess UBG Financial's operations, but the newspaper reported that it found little physical evidence of a company. The newspaper said the company headquarters were located in a suburban office building where 20 unrelated companies share secretarial staff.

Russell Duke, the managing principal of UBG, wrote The Des Moines Register about the company in three e-mails Thursday and Friday. He said the company "does in fact have legitimate, full-time offices with UBG staffing in Alpharetta, Ga."

He said the company "has preferred to say less rather than more" to reporters. "Unfortunately, our reticence has probably led to some misunderstandings."

The seven Iowa investors who make up U.S. Motorsports have declined to discuss UBG, citing a confidentiality agreement that covers financial terms of their loan.

The investors are Dennis Chalupa, a Newton lawyer; Brad Manatt of Newton, president of Manatt's Inc., a Brooklyn construction company that does concrete and asphalt paving; Manatt's co-owners, Tony Manatt of De Witt and John Manatt and Mike Manatt, both of Brooklyn; race car owner Larry Clement of Fort Dodge; and Stan Clement of Newton.

Leaders in the project have completed the necessary due diligence to ensure UBG Financial can provide the financing, said Chalupa. "We've satisfied ourselves with who they've represented themselves to be and what they've said they can do," he said.

Chalupa said investors expect to close on the loan this month. Developers want to start construction next month on the seven-eighths-mile asphalt track and entertainment complex that would be built on 640 acres south of Newton. Racing would begin in the summer of 2006.

Chalupa said his group was aware of UBG's involvement with the Vikings purchase, but he said he had not investigated other projects the company has financed.

David Watson, a founding partner in LWBJ, a West Des Moines accounting and business consulting firm, worked on the racetrack business plan and financing for two years. He said U.S. Motorsports found UBG through referrals from investment bankers.

Watson said he looked at UBG's projects and financial information and was comfortable with its ability to provide the track's financing. He declined to say more about the company out of respect for UBG's desire to remain private.

Adam Claypool, vice president of investment banking at Broker Dealer Financial Services Corp., worked with Watson and agreed with his assessment.

"They've asked the right questions," Claypool said of U.S. Motorsports. "They have asked for the right information."

When asked to describe UBG's past projects, portfolio size or basic operations, Duke, the UBG official, responded with a broad description of the business:

"UBG Financial Corp. is a privately held corporation founded by a group of seasoned executives to provide growing companies and viable projects with a reliable long-term financial partner to service their financial needs. We accomplish this by bringing together the necessary expertise and financial resources to assure the construction and execution of the most suitable transaction to serve the clients' needs."

Duke said he saw "no extraordinary obstacles" to financing the Newton racetrack.

The lack of financial details is causing concern in Newton and at the Iowa Capitol.

Curious readers

Newton City Administrator David Schornack said he has a drawer filled with Minnesota news clippings residents have sent him that ask one question: Who is UBG Financial?

That question still has not been answered, even though Schornack looked at a Dun & Bradstreet financial report on the company. The Dun & Bradstreet business background report obtained by the Register called UBG an investment advisory service.

The report does not contain information about assets, revenue, corporate history or executive backgrounds, as such Dun & Bradstreet reports normally would. A representative said Dun & Bradstreet relies on companies to contribute such information.

Dun & Bradstreet knows only that no liens, court judgments or lawsuits have been filed against UBG. A start date for the company could not be confirmed.

"I'd like to be more comfortable," Schornack said. "We've not been able to obtain any of the financial information on basically the entire project."

Zaun, the Urbandale lawmaker, has similar concerns about the lack of information. The former Urbandale mayor has taken special interest in the project because of his experience in negotiating with the Des Moines Menace over a soccer stadium and with the Des Moines Buccaneers hockey club over Buccaneer Arena.

"This project has got so many red flags, it causes me as a legislator to want to get some answers," Zaun said. He was particularly concerned about the nature of the loan agreement between U.S. Motorsports and UBG and the cost estimates for the project.

Brunkhorst, the Waverly senator, said a meeting last week between lawmakers and track officials increased their understanding of the project. But new restrictions are necessary to reduce legislative concerns, he said.

He and other lawmakers have agreed to propose limits on the $12.5 million sales tax break, he said. Among other things, they will propose to exclude the track group from obtaining any grant money from the community attractions fund and limit the sales tax break only to sales at the proposed track and museum.

In addition, the proposal would require that the tax break be provided only if the majority of track's owners are Iowans.

Chalupa said the project would be more viable with a tax break but would continue without it.

The city has requested $9 million in grants and loans from the state. Both requests are pending.

Schornack, the Newton city administrator, said he was comfortable with the local investors involved in the project.

"We're dealing with some astute business leaders who have done well . . . and we think they're doing the right thing on the speedway," he said. "They have more financially at stake than anyone else here."

Schornack said the track would give Newton residents a much needed psychological and economic boost. The city has been hit hard by factory and management cuts at Maytag Corp. "It's a fantastic project," he said of the proposed track.

Paying for it

Sources of financing for the Iowa Speedway, estimated to cost about $70 million to construct: -$57 million: UBG Financial Corp., Alpharetta, Ga. -$15.3 million: City of Newton. That comprises: -$12 million for roads, sewers and other infrastructure. -$3.3 million grant to pay for 640 acres and some development costs.

PENDING: Requests are pending for $5 million from the Iowa Department of Transportation to help Newton with the cost of the road construction, and a $4 million Community Attraction and Tourism grant and loan to offset the city's cash incentives for developers.

IN ADDITION: The developers also seek $12.5 million in sales tax generated at the track and rebated to developers over 10 years. Legislation that would provide the rebate is pending in the Iowa Legislature.

INVESTORS: Seven Iowa investors also would pump money into the project, but the amount of their investment has not been disclosed.

Loan Agreements