Bid for MEC Properties Dropped by Parent

MI Developments has withdrawn its bid for various properties owned by MEC.

The parent company of Magna Entertainment Corp. won’t be submitting a bid for racetracks after all.

MI Developments said April 20 it has agreed with MEC to terminate its “stalking horse” bid of $195 million to purchase various assets, including racetracks. MEC filed for Chapter 11 bankruptcy protection in early April, at which time MID announced it would buy some of its assets.

“Although the stalking horse bid has been terminated, MID will continue to evaluate whether to bid on MEC assets during the course of the Chapter 11 sales process,” the company said in a statement.

MID vice chairman and chief executive officer Dennis Mills said objections from “a number of parties in the MEC Chapter 11 process” played a role in the decision. He said MID primarily is concerned with maximizing recovery on secured loans made to MEC, which is hundreds of millions of dollars in debt.

“As the process moves forward, MID will continue to evaluate all opportunities to preserve the value of our secured loans to MEC, which may include MID bidding for certain of MEC’s assets,” Mills said.

MID also said the terms of the debtor-in-possession financing provided to MEC by a wholly-owned subsidiary of MID have been amended to extend the maturity from Sept. 6 to Nov. 6, 2009, to allow for a longer marketing period in connection with MEC asset sales; reduce the principal amount available from $62.5 million to $38.4 million, with the reduction attributable to the fact that interest on the pre-petition indebtedness owed by MEC and its subsidiaries to the MID lender will accrue during the Chapter 11 process rather than being paid currently in cash; and provide that MEC has until the week of May 4 to file a motion on the bid procedure relating to the asset sales.

Terms of the financing facility were to be heard in U.S. Bankruptcy Court in Delaware April 20, but the hearing was postponed until May 7.