INDIANAPOLIS -- The proposed merger between Open Wheel Racing Series and CART, scheduled for a vote by stockholders on Dec. 19, might not happen under the conditions first proposed.

CART announced on Tuesday that OWRS informed CART that some conditions of the pending merger between the parties won't be met. Specifically, the condition requiring "the absence of a material adverse effect" won't be satisfied because CART expects to have fewer teams participating in the series in 2004. OWRS has indicated it will not waive any conditions of the proposed agreement. OWRS had offered $7.4 million -- about 56 cents a share -- in August for all the outstanding stock of the company.

OWRS made a new proposal to CART on Tuesday with the goal of permitting OWRS to continue the CART racing series next year. The plan proposes that OWRS would acquire certain assets of CART and provide secured financing to CART in an amount to be determined to allow the league to operate until the merger is completed. OWRS said that CART is currently considering the proposal.

"This proposal will allow OWRS to acquire the assets necessary to continue the CART racing tradition into 2004," OWRS partner Paul Gentilozzi said. "OWRS expects to retain a sufficient number of cars to meet CART's contractual obligations with our race promoters."

CART said in Tuesday's statement that its board of directors is evaluating alternatives to the merger, including the possibility of ceasing operations and liquidating its remaining assets.

CART also acknowledged the OWRS preliminary proposal, under which CART could file for Chapter 11 of the Bankruptcy Code and OWRS would purchase certain assets of the company and/or CART and assume certain liabilities. OWRS is hoping to keep the Champ Car World Series viable for next season.

"OWRS plans to maintain, and ultimately expand the CART racing series in the Americas and throughout the world," Gentilozzi said. "While OWRS is disappointed that the previously announced transaction appears no longer feasible, it remains committed to the CART racing series."

OWRS is a newly formed holding company owned indirectly by a group of investors, including Gerry Forsythe, Kevin Kalkhoven and Gentilozzi. OWRS currently has beneficial ownership of 3,377,400 shares of CART common stock, approximately 22.9 percent of the outstanding shares of Championship Auto Racing Teams.