Magna Entertainment

(Update) March 30, 2009

Magna Entertainment Corp., the Canadian-based operator of seven horseracing tracks in the U.S., will face creditor, shareholder and lender opposition when it goes to court on April 3 for approval of sale procedures.

According to Bloomberg, Wells Fargo Bank NA, a secured lender with a lien on Magna’s Santa Anita racetrack in California, is opposing the proposed sale procedures in which the first bid for three tracks will come from MI Developments Inc., a Magna affiliate. Wells Fargo argues the auction is “doomed to fail” and at best would result in a sale “well below market.”  

MI Developments is offering to buy three tracks for $44.2 million cash, plus an exchange for $135.6 million in debt. The other tracks are to be sold in companion auctions, if Magna gets its way with the bankruptcy judge in Delaware.

MI is Magna’s majority shareholder and largest unsecured creditor, owed $372 million. In its Chapter 11 petition on March 5, Magna listed assets of $1.05 billion and $959 million in debt. Liabilities include $500 million in senior and junior secured financings and $255 million in subordinated notes. Trade debt is about $10 million, a court paper said.

March 10, 2009

Magna Entertainment Corp said on Thursday it filed for bankruptcy protection in the United States and sought court recognition of that status in Canada as it struggles with a mountain of debt.

According to Bloomberg, Magna has assets of $1.05 billion and $959 million in debt. Liabilities include $500 million in senior and junior secured financings and $255 million in subordinated notes. Trade debt is about $10 million, a court paper said.

MEC said it had a $40 million note due Thursday, and that if it was unable to meet the obligation, it would cause an additional $230 million in debt to come due.

As part of the Chapter 11 filing, MEC said it sought emergency relief to ensure continued payment of employee wages and benefits, as well as track winnings, and to maintain its ability to honor existing customer programs.

Sources and Related Articles:

• Delphi, Lehman, Nortel, Buffets, Magna: Bankruptcy (Update1)
• UPDATE 2-Debt-laden Magna Entertainment seeks protection

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