MEC: Other Assets to be Sold Separately
by Ryan Conley
Date Posted: 3/6/2009 10:05:28 AM
Last Updated: 3/7/2009 4:14:28 PM

Santa Anita Park is among the assets owned by MEC to be sold separately.
Photo: Benoit

Several assets owned by Magna Entertainment Corp. will apparently be offered separately for sale from a $195-million “stalking horse bid” its parent company has tendered in relation to MEC’s Chapter 11 bankruptcy filing March 5.

According to a series of “Frequently Asked Questions” documents listed on MEC’s Web site, among the assets being marketed separately by Miller Buckfire & Co., are Santa Anita Park, The Maryland Jockey Club (which includes Pimlico Race Course and Laurel Park), Remington Park, Thistledown, and Portland Meadows, among other properties.

Also included in assets not part of the “stalking horse bid” affiliated with parent company MI Developments are MEC’s joint-venture interests with Churchill Downs Inc. in HRTV and TrackNet Media Group.

Miller Buckfire & Co. is described as MEC’s financial advisor and investment banker. The "stalking horse bid," which can be topped by a third party in a court auction, includes the assets of Gulfstream Park, Golden Gate Fields, Palm Meadows Training Center, Lone Star Park, AmTote International, and the company's advance deposit wagering entity, XpressBet.com.

A "stalking horse bid" is a financial term commonly defined as a first offer to purchase a company's assets involved in a bankruptcy proceeding.

MEC announced March 5 that it filed for Chapter 11 bankruptcy protection. The Associated Press is reporting court documents claim the company has between $500 million and $1 billion in liabilities, and up to 25,000 creditors.

A separate FAQ said the reorganization should have no impact on MEC’s ability to pay winnings to horsemen competing at its tracks.

“We are required by law to keep a separate horsemen account that is established solely for paying horsemen winnings,” the FAQ stated. “This account will remain an account strictly for horsemen and continue to pay the winnings due in the same manner as before the filing.”

MEC also said that customers of XpressBet.com should feel secure about funds held in their accounts.

“As required by Oregon law, XpressBet deposits and maintains account holders’ funds in a restricted-use custody account with an FDIC-insured bank,” the company said. “Funds in the custody account shall remain the property of the individual account holders for all purposes until wagered by the account holder or otherwise withdrawn or used in accordance with the account holder’s instruction or agreement.”

XpressBet is licensed in the state of Oregon, where it operates a hub, and regulated by the state’s horse racing commission.

Wall Street reacted in different ways to the bankruptcy announcement. Trading of MEC's Class A shares was halted on the Nasdaq exchange shortly after noon, closing at 22 cents, or about one cent per share when factoring in a 1-20 reverse stock split the company implemented last July. (MEC said NASDAQ will determine whether to allow continued listing of the Class A Shares or terminate the listing).

Shares of MI Developments closed at $4.55 on the New York Stock Stock Exchange, up 15.2%, or sixth in percentage gain among all NYSE listings. MID's volume of 583,183 shares traded was about six times its three-month average.

Both the Nasdaq and NYSE composite averages fell about 4% March 5.

In a separate press release, MID vice chairman and chief executive officer Dennis Mills said the company is extending the stalking bid and $62.5 million in debtor-in-possession financing “with the intent of preserving the value of our secured loans to MEC.”

MID said it has total loans with MEC in excess of $370 million, including $171 million for the Gulfstream Park redevelopment, and a $125-million bridge loan, among others.



 



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