Minor Details Bid for Most MEC Assets
by Jim Freer
Date Posted: 4/4/2009 10:17:04 AM
Last Updated: 4/6/2009 12:39:37 PM
Part of Minor's plan is to keep racing at Golden Gate Fields.
Technology entrepreneur Halsey Minor said on April 3 that he has submitted a bid to Magna Entertainment Corp. under which he would buy substantially all of that bankrupt company’s assets except Gulfstream Park in Hallandale Beach, Fla.
Minor told The Blood-Horse that he submitted the proposal to MEC and to its bankruptcy court-appointed creditors committee on April 2. Minor said he is offering to buy approximately $200 million of MI Developments’ loans to MEC and to either purchase or reconstruct $225 million of MEC’s debt. MID is the controlling shareholder of MEC. Both companies are based in Aurora, Ont., with Frank Stronach as their chairman.
Minor first contacted MEC last October with offers to buy its MID loans. He said MEC never allowed him to begin due diligence on its operations. Published reports indicate that since MEC’s March 5 bankruptcy filing Minor is at least the third bidder, other than MID, for various MEC properties.
Minor, based in San Francisco, said that if his bid is accepted he would “have control” of as many as nine of MEC’s 10 North American race tracks. He said financing for buying the loans and bonds would come from a combination of his own equity and from other investors, whom he would not identify.
MEC on March 5 filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Wilmington, Del. MID has made a “stalking horse bid” of $195 million to buy a package of several Magna properties that includes Gulfstream.
MEC has a $175 million loan from MID for redevelopment at Gulfstream that includes The Village at Gulfstream Park retail complex that is scheduled to open in February 2010.
“I feel that Gulfstream is not worth $175 million,” Minor said.
He said the new clubhouse/casino building that Gulfstream opened in 2006 has “a failed slots parlor” that he feels is a distraction from racing and said he expects the retail complex could be a “near-empty mall.”
Minor said he is not interested in Gulfstream because “I hope to have Hialeah (Park) in three or four years.”
Last year, Hialeah Park owner John Brunetti rejected an offer by Minor to buy the historic track in Hialeah, Fla. Neither would disclose Minor’s offering price. Hialeah Park last held Thoroughbred racing in 2001. Last month, the Florida Division of Pari-Mutuel Wagering issued Hialeah Park a permit to hold Quarter Horse racing. Florida laws require Hialeah Park to begin that racing by March 2010.
Meanwhile, the Florida House of Representatives is considering a bill that would allow Hialeah Park and other Quarter Horse tracks to have Thoroughbred races as up to 50% of annual total races -- even without approval from Thoroughbred tracks that are holding meets within a 25-mile radius.
The 2009 chapter of the Hialeah saga includes a civil suit that Minor filed on Feb. 9. He maintains that Brunetti, by not holding racing at Hialeah Park since 2001, is in default on agreements under which he purchased that track in 1978.
The suit, in which the city of Hialeah also is a defendant, asks a state circuit court in Miami, Fla., to “impose a constructive trust on the subject property in favor of the City of Hialeah and for the use and benefit of its citizens.”
If the court rules in his favor, Minor said he believes the city would own the historic track. In that situation, he said he would be interested in leasing, rebuilding and re-opening it.
In a March 9 interview with The Blood-Horse, Brunetti rejected Minor’s allegations. He said Florida’s 2001 de-regulation of racing dates is the main reason that Hialeah Park has not held a racing meet since that year.
Minor, 43, is a multimillionaire from his investments in Internet and other technology companies, including CNET Networks which he founded. He owns several Thoroughbreds including filly Dream Rush, who won four graded stakes as a 3-year old in 2007, and the 4-year-old colt Fierce Wind.
In 2004, Fortune magazine estimated Minor’s net worth at $286 million, from investments in CNET and other Internet and technology companies. Minor declined to disclose details of his current net worth and finances. But he said he has the capability to contribute considerable equity to his proposed acquisitions of MEC properties and expects that he could obtain other financing.
Some MEC creditors have indicated they would participate in buying two MID loans that total about $200 million and purchase restructured bonds, he said. “There are investors out there, including hedge funds,” Minor said.
His offer includes purchase of $225 million in MEC convertible bonds, which he said were trading at eight cents on the dollar early this month. Minor said he would purchase those notes “at 25 cents on the dollar” for a total of about $56 million if all bondholders agree.
Or, he would reconstruct that debt into $225 million of non-convertible bonds, with annual interest of 7% and a three-year maturity. “Under new management, we would improve the operations” and have an expectation of paying holders of the new bonds in full, Minor said.
He said part of his goal in pursuing MEC tracks is to “to keep racing at Golden Gate Fields (in Albany, Calif.) and prevent it from being redeveloped as a shopping mall.”
Minor said he feels that MEC’s two Maryland tracks are “incredibly decrepit facilities.” His plan includes refurbishing and rebuilding Pimlico in Baltimore and Laurel Park in Laurel, Md. He would like to redevelop Pimlico into “a Camden Yards of racetracks” -- a reference to the Baltimore Orioles stadium. Minor’s plan also includes selling MEC’s corporate headquarters and its Magna Racino near Vienna, Austria.
On April 3, the Baltimore Sun reported that Carl Verstandig, a Pikesville, Md.-based developer, said he plans to submit a bid to buy Pimlico and Laurel Park.
Verstandig said he would redevelop the two properties as shopping centers. He added that he would consider preserving Pimlico racetrack and building around it if a buyer is required to preserve the Preakness Stakes (gr. I).
“We would go ahead and consider the Preakness if someone leased the facility; if they modernized the facility,” Verstandig told the Sun. “If no one comes forward, we would tear it (Pimlico) down.
Cordish Cos., a Baltimore-based developer, has said it plans to submit a bid to buy the two Maryland tracks and continue racing at them. Cordish in February submitted a bid to operate a slots facility in the state’s Anne Arundel County.
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