MEC May Reconsider Sale of Some Assets

MEC May Reconsider Sale of Some Assets
Photo: MEC

Magna Entertainment Corp., which posted a $21.25-million loss for the second quarter of 2008, said Aug. 5 it’s reconsidering the sale of some assets it expected to unload as part of a debt-elimination plan.

The net loss was down from $23.43 million for the same period in 2007. But for the first six months of 2008, net loss was $67.71 million, up considerably from $20.96 for the first six months of 2007, according to financial statements.

Revenue from continuing operations was $166.28 million for the three months that ended June 30, down $1.1 million, or 0.7%, compared with $167.4 million for the same period last year. The company attributed the drop to a $4.4-million decline in revenue from Maryland operations, and a $4 million decline in California revenue.

Florida revenue, however, increased $5.5 million from the second quarter of 2007 because of an increase in gaming proceeds and pari-mutuel handle at Gulfstream Park, which is now open year-round for full-card simulcasts.

MEC executive vice president and chief financial officer Blake Tohana said the company continues to attempt to reduce debut, but because real estate and credit markets in the United States are weak, it may not complete the debt-elimination plan on a previously set timeline.

“Although we continue to take steps to implement our debt-elimination plan, real estate and credit markets have continued to demonstrate weakness to date in 2008, and we do not expect that we will be able to complete asset sales at acceptable prices as quickly or for amounts as originally contemplated,” the earnings release stated. “Also, given the announcement of the reorganization proposal for MI Developments Inc., our controlling shareholder, and pending determination of whether it will proceed, we are in the process of reconsidering whether to sell certain of the assets that were originally identified for disposition under the debt-elimination plan.

“As a result of these developments, combined with our upcoming debt maturities and our operational funding requirements, we will again need to seek extensions or additional funds in the short-term from one or more possible sources. The availability of such extensions or additional funds from existing lenders, including our controlling shareholder, or from other sources is not assured and, if available, the terms thereof are not determinable at this time.”

MEC already has a deal to sell Great Lakes Downs in Michigan. Other properties it said it hoped to sell are Remington Park in Oklahoma and Thistledown in Ohio.

MEC said handle through its XpressBet.com advance deposit wagering system increased 21% in the second quarter of 2008, while slot-machine revenue at Remington was up 17%.

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