The company said in a transaction last Oct. 19, the note was exchanged for 452,603 shares of CDI stock. Accounting rules required the company to mark down the value of the note by $4.3 million because the convertible note was judged to be a financial derivative, the company statement said. The company said the non-cash loss mainly reflected the increase in the value of CDI stock.MEC, which announced a restructuring of top management, also saw its stock fall Wednesday. It traded at $6.58 per share as of 1:45 p.m., down $0.25 from Tuesday's closing price of $6.83.
Following the defeat Tuesday of a referendum that would have permitted slot-machine gaming at Churchill Downs Inc.-owned Calder Race Course in Florida's Miami-Dade County, company president and chief executive officer Tom Meeker said CDI is encouraged by slots approval in a neighboring county and would continue to seek alternative gaming."While the outcome in Miami-Dade County was not what we had hoped for, we are very encouraged by the results in Broward County and the benefits that can be realized by Florida schools, state and local governments, and Florida's horse racing industry once alternative gaming is in place at the four locations authorized in Broward County," Meeker said in a statement.In Broward County, voters cast 105,939 votes, or 57%, in support of the plan to allow slot machines at pari-mutuel facilities, compared with 79,875 votes, or 43%, against. In Miami-Dade, 79,884 votes, or 52%, were against the measure, compared with 73,327 votes, or 47%, in support of the plan.Gulfstream Park, owned by Magna Entertainment Corp., is located in Broward County and will be able to proceed with plans to install slot machines. Specifics under which slot-machine gaming will be implemented will be determined by the state legislature.Meeker said it was clear Gov. Jeb Bush's opposition to slots played a role in the election's outcome, but that CDI continues to believe revenue from slots can enhance education and the economy in South Florida. He noted that because existing non-pari-mutuel gaming operations in Broward and Miami-Dade counties are unregulated and not taxed, the communities don't achieve the same economic benefit they do from pari-mutuel wagering operations."We continue to believe that allowing slot machines at South Florida's existing pari-mutuel facilities will provide new revenue streams to improve Florida schools, create new jobs, help local governments meet the needs of Florida citizens, and ensure the long-term health and viability of Florida's pari-mutuel industry, which provides tens of thousands of jobs and millions of dollars in revenue to Florida every year," Meeker said. "Churchill Downs Inc. and Calder Race Course are now focused on 2007 and the opportunity to again take this important message of economic opportunity to the voters of Miami-Dade County. We are committed to South Florida horse racing, and will continue to work with members of the pari-mutuel coalition in both Miami-Dade and Broward counties to further this important issue."Additionally, we would like to express our sincere appreciation to members of the coalition's campaign staff, as well as our team members at Calder, for the countless hours they have dedicated to this endeavor. We have learned a great deal in Florida about the pari-mutuel industry's potential to generate tremendous benefits for education, state and local government, and the horse racing industry through the addition of alternative gaming, and we look forward to bringing these lessons back to the other jurisdictions where we operate."Meanwhile, CDI stock tumbled in trading Wednesday. As of 1:45 p.m. (EST), the stock's price had fallen $5.44 (12.22%) to trade at $39.06. Also Tuesday, CDI announced it had incurred a non-cash expense in the fourth quarter of fiscal 2004 to reflect an unrealized loss of $4.3 million, or 32 cents a share, related to terms of a convertible note issued with the redemption of common stock.