Who's Who Among Who's Owed by MEC
by Ryan Conley
Date Posted: 3/6/2009 3:15:11 PM
Last Updated: 3/7/2009 4:15:56 PM
Magna Entertainment Corp. claims it owes more than $235 million to its largest 50 unsecured creditors, including many prominent names in the Thoroughbred racing and breeding industry.
Included are MEC’s fellow racetrack entities such as Churchill Downs Inc. and the New York Racing Association; horsemen such as Bob Baffert, Jerry Hollendorfer, B. Wayne Hughes, and Juddmonte Farms; and offshore wagering rebate shops such as Elite Turf Club and Racing & Gaming Services.
Those names and other non-racing entities surfaced in court documents filed March 5 as part of MEC’s Chapter 11 bankruptcy petition filed in Delaware federal court.
Heading the list of all unsecured creditors is the Bank of New York, which carries the bulk of those claims with $203,538,542, primarily in convertible subordinated notes issued by MEC in 2002 and 2003. The notes were intended to be exchanged under certain conditions for Class A shares valued at up to $8.50 each.
Court documents indicate the claim calculations were based on MEC’s financial records ending Dec. 31, 2008. The funds claimed owed to specific entities or persons, such as trainers and owners, could have been collected or modified prior to the bankruptcy filing.
Among the largest claims among racing interests is a reported $2,157,327 owed to the Florida Thoroughbred Breeders’ and Owners’ Association. The FTBOA’s executive vice president, Richard Hancock, said the association was just beginning its accounting review of the matter, but believes the listed figure isn’t current.
“To my knowledge, that’s a higher figure than what we are due,” he said, noting MEC has been for the most part up to date in paying out $700,000 to $800,000 a month in Florida breeder and stallion awards. “But we’ve just received all of the court documents, and we will do our due diligence.”
Among racetrack entities, the New York Racing Association is listed with two claims totaling $1,118,460, followed by Harrah’s Louisiana Downs, $274,900; Fair Grounds, $220,591; Churchill Downs Inc., $195,098; and Tampa Bay Downs, $185,081.
Racing & Gaming Services, which offers rebates through its telephone wagering offshore site located in St. Kitts, is listed, along with an affiliated Nevada entity, Red Rock Administrative Services, with claims totaling $2,381,513. Elite Turf Club, which is located in Curacao, is listed with a claim of $695,411.
Among individual horsemen and affiliated entities listed with claims as of Dec. 31, 2008 are: Jerry Hollendorfer and George Todaro, $550,252; Juddmonte Farms, $424,961; Leonard Powell, $329,411; Hollendorfer (individually), $307,846; Bob Baffert, $204,617; Cecil N. Peacock, $200,547; CR Cono LLC, $197,723; B. Wayne Hughes/Spendthrift Farm, $184,882; the Richard J. O’Neill Trust, $170,516; and Lathrop G. Hoffman, $166,788.
Unsecured creditors are generally described as those without claims on specific assets of a company, as opposed to secured creditors, such as banks who have liens or mortgages on properties.
A master list of all creditors, called a creditor matrix, was also included in court filings. The 510-page list, which includes multiple listings for certain individuals and entities, is estimated by the Associated Press to contain between 10,000 and 25,000 individual creditors. The matrix does not include claims of money owed to the creditors.
In court filings, MEC claims it has $1,049,387,000 in total assets and $958,591,000 in total liabilities, including debt.
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