Magna Entertainment announced a recapitalization plan July 22 that includes two binding loan agreements with its subsidiary, MI Developments. The plan also includes a bridge loan that a Magna press release said "will permit us to proceed with an orderly marketing and sale of non-strategic real estate, racetracks, and other assets."
The recapitalization plan includes the replacement of an existing $77 million construction loan for The Meadows racetrack and slots facility in Pennsylvania with a loan for up to $34.2 million to fund the development, design, and construction of an alternative gaming facility at Remington Park. In addition, certain terms of the existing $115 million Gulfstream Park loan will be amended.
Renovations at Remington Park, according to the release, are expected to be completed by November 2005.
The bridge loan is for up to $100 million and is part of a plan, the release said, to help MEC sell assets to "generate proceeds of approximately $150 million" with the proceeds used to reduce debt, including repayment of the bridge loan.
The sale of Flamboro Downs will be the first asset reduction for MEC.
"We are pleased to advise our shareholders of our continuing progress in implementing our strategic plan, and our commitment to achieving debt reduction through asset sales, a possible gaming partnership, and a possible future equity financing," said Tom Hodgson, MEC president and chief executive officer. "We appreciate the support of our parent company, MI Developments, in providing the financing to complete the build-out of a gaming facility at Remington Park."
The release also notes MEC's recapitalization plan "contemplates a possible partnership to pursue alternative gaming opportunities at MEC racetracks, and the possible raising of equity in 2006."